Homeownership is a dream for most Canadians however, for many young adults in the Lower
Mainland it may remain just that – a dream.
Over the past two years, the housing market in British Columbia has been red hot, driving real
estate prices to unprecedented heights, with condo prices now averaging $714,000 in Greater
While home prices have retreated somewhat over the past few months, they stubbornly remain
23% higher than pre-pandemic prices.
While a small number of first-time home buyers were able to take advantage of the low interest
rates during the pandemic, many were barred from entering the housing market because of the
additional funds required to pay Property Transfer Tax (“PTT”), a provincial government cash
grab which was brought into law by former premier Bill Vander Zalm in 1987. The tax originally
had an upper limit of 2% on property values over $200,000, but since then that limit has
increased to 3% on values over $2M and 5% on values over $3M. Said tax now generates
upwards of 3 billion dollars annually for the BC government.
To alleviate the situation of high closing costs for first time buyers, the government created an
exemption threshold under which no PTT would be payable.
Currently, the First-time Home Buyer exemption from PTT tax has a threshold limit of $500,000
(with a partial exemption up to $525,000). That is not a misprint. It is a mere $500,000. How
many habitable properties in the Lower Mainland can you find with a price tag of $500,000 or
less? Not many! This threshold may be reasonable in the interior and more rural areas of B.C.,
but for the Lower Mainland it is not realistic. However, as most people in this province live in
the Lower Mainland and the Greater Victoria area, it makes sense for the government to have a
low exemption threshold in the higher property value areas to maximize its tax revenue.
We act on many real estate transactions and in the last two years only three of our clients have
been able to claim the First-time Home Buyer exemption with these transactions occurring
outside the Lower Mainland or on leasehold strata properties.
During the spring of last year, we sent a letter to David Eby and Selina Robinson (both of whom
were responsible for housing related matters at the time) asking when the B.C. government
intended to raise the First-time Home Buyer’s exemption threshold. The Office of the Minister of
Finance responded that:
“….raising the First Time Home Buyers’ program exemption would put additional demand
pressure on the housing market, raising prices, and providing most of the benefit to
the seller in the way of increased prices. … The First Time Home Buyers’ program
exemption threshold is not intended to benefit all first-time home buyers, but rather
provide support for those entering the market in lower-cost homes.” (italics mine)
The last time the First-time Home Buyer exemption threshold was raised was in 2017, however
with this government’s illogical reasoning, it may never be raised again for fear of “putting
demand pressure on the housing market and raising prices.”
With a threshold limit of $500,000 and no efforts being made by the B.C. government to raise
the limit in the Lower Mainland, it is clear that the B.C government has no desire to assist first-
time home buyers to get into the market.
Interestingly, while the government continues to assert its “concern” for housing affordability, it
remains the primary tax beneficiary of the current exorbitant housing prices in the Lower
Mainland. If the government was genuine in is concern for affordability, it would take steps to
increase the limit for the First-time Home Buyer’s exemption to at least $750,000.00 (which is
the exemption limit for any purchaser acquiring a newly built property from a developer in
which they intend to reside). Given that the government isn’t even considering this as an
option, it’s alleged aim of creating more housing affordability is no more than empty virtue
With the rising interest rates, sky high inflation, and ever-increasing taxes, most young couples
trying to enter the real estate market are more or less stymied unless they receive help from
the Bank of Mom and Dad or happen to receive an inheritance.
Increasing the threshold limit for the PTT exemption to $750,000 on a home purchase would be
a significant step towards increasing housing affordability for young adults in B.C. and it may
encourage more young people to remain in BC, rather than seeking greener (and less
expensive) pastures in other provinces.
Author: Melissa Valana
For questions about PTT, the First-time Home Buyer exemption, or any other matter concerning
real estate, please call Melissa Valana or Kenneth Pazder at 604-682-1509.
© 2023 Pazder Law Corporation
DISCLAIMER: This is not legal advice, but merely information for our readers. Always consult a
legal professional when making decisions concerning PTT or any other matter concerning the
purchase or sale of real property.