Key Changes Impacting the Comox Valley and Beyond

Amidst a wave of new housing legislation in British Columbia, impactful changes are underway that could deeply influence the real estate market for buyers and sellers.

In response to global factors such as the pandemic and soaring housing prices, the BC government has introduced measures to foster a more accessible and equitable housing market. The changes include the introduction of the BC Flipping Tax, expansion of the Speculation & Vacancy Tax to new areas like the Comox Valley, enhancements to the First Time Home Buyers Program and the Newly Built Home Exemption, as well as the implementation of a short-term rental ban.

These actions signal a pivotal moment in the province's housing market and collectively underscore a commitment to ensuring housing remains attainable for all. In case you’ve missed some of them or are looking for further clarification, here’s a quick rundown of the changes and what they may mean to those looking to buy and sell in the Comox Valley and across BC.

BC Flipping Tax

Starting January 1, 2025, a proposed BC home flipping tax will impact property sales held for less than 730 days, including presale contracts. This tax stands apart from federal property flipping rules and income taxes and aims to deter short-term property speculation.

If you sell a property after January 1, 2025, purchased within the last 730 days, your sale income may be subject to this tax. Applicable properties include those with housing units or zoned for residential use, as well as rights to acquire such properties, like presale condo contracts. (For buyers entering presale contracts on developing properties, the acquisition date is considered the contract signing date, even if the property purchase completes later. Similarly, if you're assigned a presale contract and close on the built property, the acquisition date is the assignment date.) Certain exempt property locations are not affected.

The tax is computed as 20 percent of your net taxable income from property sales within 365 days. After 730 days of ownership, the tax no longer applies. For further details, refer to the BC Government website.

Speculation and Vacancy Tax

This tax is designed to turn vacant homes into housing and ensure foreign owners and those with primarily foreign income contribute fairly to BC’s tax system. It’s an annual tax that applies based on how property owners use their residential property; the property owner’s residency status; and where property owners earn and report their income. Since 2018, more than $313 million has been raised through the tax to go back into affordable housing in regional districts where the tax is applied. 

This year sees the tax expanding to new municipalities, including Courtenay, Comox and Cumberland. Residential property owners in these communities will need to declare for the first time in January, 2025, based on how they used their property in 2024. Exemptions include primary residences, properties with a long-term tenant and life events, such as separation or divorce. More than 99% of BC residents are exempt from paying the tax. Also, unpaid taxes are tied to individual owners, not the property itself. For more details, refer to the BC Government website.

First Time Home Buyers Program

This program reduces or eliminates the property transfer tax for first-time homebuyers. Eligible individuals may qualify for a full or partial exemption from this tax. If not all purchasers qualify, only the portion of the property owned by the first-time homebuyer(s) is eligible.

To qualify for this exemption when registering the property, you must:

• Be a Canadian citizen or permanent resident;
• Have lived in B.C. for at least one year immediately before registering the property, or have filed at least 2 income tax returns as a B.C. resident in the last 6 taxation years before the registration date;
• Have never owned a registered interest in a property used as your principal residence anywhere in the world; and
• Have never received a first-time homebuyer exemption or refund.

Additionally, the property must only be used as your principal residence; have a fair market value of $835,000 or less (effective April 1, 2024); be 0.5 hectares (1.24 acres) or smaller; and contain only residential improvements.

If all requirements are met, the purchaser will be exempt from property transfer tax on the first $500,000 of the property’s purchase price. Note: for purchases made before April 1, 2024, the fair market value must be $500,000 or less to qualify for the full exemption. To get more details about the program, click here.

Newly Built Home Exemption

The newly built home exemption reduces or eliminates property transfer tax for qualifying principal residence purchases.

Starting April 1, 2024, the fair market value threshold for a full exemption on newly built homes increases to $1,100,000 from $750,000. Properties valued just above the threshold may qualify for a partial exemption, with the exemption phased out completely at $1,150,000 for eligible purchasers.

A newly built home includes: a house constructed and affixed on vacant land; a new apartment in a newly built condominium; a manufactured home placed on vacant land; an existing house moved to new vacant land (unoccupied since relocation); a house resulting from subdivision of existing improvements on subdivided land (unoccupied since subdivision); a conversion of non-residential buildings (e.g., warehouse to apartments).

If you qualify, you may receive either a full or partial exemption from the tax. If you paid property transfer tax for vacant land and now have a newly built home on the property, you may be eligible for a tax refund. To check eligibility or apply, visit the BC Government website.

Short-term Rental Accommodations Act

The act aims to empower local governments with stronger enforcement tools for short-term rental bylaws, promote the return of short-term rental units to the long-term housing market and introduce a new Provincial role in regulating short-term rentals. It covers rentals offered to the public via hosting platforms (e.g., Airbnb, VRBO), web listing forums (e.g., Facebook Marketplace, Kijiji) and newspaper classified ads. It excludes reserve lands, hotels, motels, RVs, tents and other temporary shelters.

Regional districts can now set fines up to $50,000 for bylaw offences, aligning with municipal fine limits under the Community Charter. Starting May 1, 2024, a provincial principal residence requirement will take effect, limiting short-term rentals to the host’s principal residence plus one secondary suite or accessory dwelling unit, though this requirement may not apply universally. To find more information on the provincial principal residence requirement, visit Principal residence requirement.

Phew, that’s a lot of information! But these changes could significantly impact your buying and selling decisions.

If you have questions or need more information, don't hesitate to reach out. Knowledge and preparedness are key in navigating this evolving landscape – and I’m here to help! Please feel free to contact me, visit my website or get in touch through my Facebook page.