Government reduces tax burden on first-time buyers
First-time home buyers received welcome news in today’s provincial budget.
The government has announced, effective February 19, 2014, under the Property Transfer Tax (PTT) First-Time Home Buyers’ Exemption program, qualifying first-time buyers can buy a home worth up to $475,000. The previous threshold was $425,000.
The partial exemption continues and will apply to homes valued between $475,000 and $500,000.
With this change, the government estimates 1,700 additional first-time buyers will annually be eligible to save up to $7,500 in PTT when they buy their home.
The government estimates this measure will cost $8 million in lost tax revenue each year.
In 2008, as a result of industry lobbying, the provincial government increased the threshold to $425,000 from $375,000. In 2005, the government increased the threshold to $325,000 from $275,000.
The PTT is calculated at a rate of one per cent on the first $200,000 and two per cent on the remaining value of the purchase price. For example PTT calculated on $500,000 is $8000 which is not eligible to be rolled into your mortgage, as is the case with CMHC fee (downpayment < 20%).