If there is one tax that British Columbians hate almost as much as the HST, it鈥檚 the property-transfer tax, which has entered its second quarter-century.
The tax, which was introduced in 1987 by then-premier Bill Vander Zalm鈥檚 government, is paid by just about everyone who buys a house in sa国际传媒 The buyer pays a one per cent tax on the first $200,000 of the selling price, plus two per cent on everything over that. On a house that sells for $540,000 (the median price in Victoria in November), the tax would be $8,800.
In 1987, the tax wasn鈥檛 expected to hit most people hard because only about five per cent of homes would be over the $200,000 mark that kicked in the two per cent tax. That鈥檚 no longer true.
The tax amount cannot be financed as part of the mortgage, so the buyer either has to take the money out of cash that would have gone to a downpayment or borrow the amount separately. It adds a reason not to sell your current home.
The sa国际传媒 Real Estate Association estimates every sale brings expenditures of $60,000 in legal and other fees, appliances and renovations, in addition to $9,000 in other taxes.
Getting rid of the tax, however, would be hard.
One way to ease the pain for homeowners would be to raise the threshold for the two per cent tax to $400,000 or $500,000.
Making up the lost revenue is the tougher question. One option is to replace it with a tax that would be more like the wealth tax originally intended, such as a progressive annual surtax on all houses over a certain value.
There is no question of sa国际传媒 kicking its addiction by going cold turkey, but it has to start weaning itself off the transfer tax.
