Helpful changes coming for first time home buyers

There were several announcements made recently that I am very excited about – changes that will help make it easier for people to afford to buy homes.

Effective April 1, the B.C. government will increase the purchase price for first time home buyers (FTHB) and buyers purchasing newly built homes to qualify for the Property Transfer Tax (PPT) exemption.

Up until then, FTHB who buy a home with a fair market value of $500,000 or less (assuming they meet all the program qualifications) were exempt from paying PPT. The tax on a home priced at $500,000 would normally be $8,000, so this is a considerable help.

After April 1, the exemption will be granted for FTHB purchasing homes up to a fair market value of $835,000. There will be a partial exemption up to $860,000. On a home with a purchase price of $800,000, that means a savings of $14,000.

This is particularly significant because it is a closing cost that cannot be added to the mortgage, it must be paid up front. Using this same example, the minimum down payment on an $800,000 home is $55,000.

One of the biggest challenges people face is trying to save their down payment, so this increase in the exemption will be a huge help for many clients.

There are other exemptions to the PPT that have also changed. People buying newly built homes, regardless of whether they are a FTHB or not, can be exempt from paying the tax too. Now, the purchase price for this exemption is $750,000. Effective April 1, this exemption will increase to $1.1 million, with a partial exemption up to $1.15 million.

The second program to be introduced April 1 is the Secondary Suite Incentive Program.

In a nutshell, the provincial government will provide a forgivable loan of up to 50% of the cost of renovations to add a secondary suite to an existing home, to a maximum of $40,000.

Applications for this program will be accepted starting April 17.

For the loan to be fully forgiven, there are conditions that must be met:

• The unit must be built in the same location where the homeowner lives.

• The unit must be rented out below market rates for five years.

I attended a learning session about the program with one of my favourite lenders this week and they are still trying to sort out how we will be able to combine this with a purchase or a refinancing to help clients get the funds they need to participate in the program.

There are many details we do not have yet, but you can find the initial information at Secondary Suite Incentive Program | BC Housing .

There are many listings my clients look at that can be easily renovated to facilitate a secondary suite, so it will be interesting to see how we can use the program to help them generate income to help cover their mortgages, while at the same time creating more affordable housing options for renters.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.