Property Transfer Tax
In all of the condo examples, there is potential for the
Property Transfer Tax (PTT) to be charged twice.
This tax is charged when the builder assembles a site,
and becomes embedded in the cost of the housing.
It then can be charged again if the unit purchaser
does not meet all of the PTT exemption requirements.6
Both of these PTT charges have been included in
the budget of the development projects analysed to
show the range of PTT an end user could pay. There
are several types of exemptions a buyer could qualify
for, including the Newly Built Home Exemption, which
would apply to housing purchased from a developer.
To qualify for this exemption, the unit must:
•
Be located in British Columbia;
•
Only be used as a principal residence;
•
Have a fair market value of $750,000 or less; and
•
Be 0.5 hectares (1.24 acres) or smaller.
All criteria have to apply for the purchaser to qualify for
an exemption. In the Vancouver condo example, the
average unit is above the value threshold and would
not be eligible for a PTT exemption. In the Saanich and
Kelowna examples, the average unit would meet the
fair market value criteria. However, the purchaser could
still pay the PTT at the time of purchase if the unit is
intended to be rented out and would not be the buyer’s
primary residence.
If an investor purchases a new unit for the purpose of
renting it out, rather than living in it themselves, the PTT
on the sale of the completed unit would apply. In the
Saanich example, this could be an additional $10,062.00
cost for the average unit, and would become part of
what the renter would pay. If the purchaser meets all
of the PTT exemption criteria, including the criteria
of purchasing the unit as their principal residence,
the PTT charge on the purchase would be $0 at the
purchaser stage. In the Kelowna scenario, the PTT
charged on the purchase of the average unit could
either be $0 or $9,900, dependant on the purchaser’s
eligibility to meet the exemption criteria.
Public Art Fee
A municipal Public Art Fee is another type of cash
contribution charged to a project to raise funds for
public amenity projects. In the Vancouver condo
example, this is a charge of $1,584.00 per unit, and
in the Vancouver rental example, the charge could
impact rent by $12.50 per month. While this is a lower
charge, it still contributes to the layered taxes and fees
charged on housing.
Municipal Permits
In B.C., municipal permits refer to a wide range of
approvals. In this analysis, the examples have included
development and building permits. In the Vancouver
rental example, it can take anywhere from 6-12 months
to receive a development permit, and a further 6-10
months for a building permit. Municipalities such as
Vancouver are recognizing the negative impacts of
long processing times, and are working to streamline
their reviews and approval processes.
Taxing Growth
Principle Residence
PTT Paid $0
Rented
PTT Paid $$9,900
48-90 MONTHS TOTAL
12-18
Months
Rezoning
6-12
Months
Development
Permit
6-10
Months
Building
Permit
18-42
Months
Construction
6-8
Months
Lease Up
Period
Permitting: 24-40 Months
Construction & Leasing: 24-50 Months
Vancouver Rental Example - Project Timeline
Breaking Down the Taxes & Fees