The British Columbia released the new budget earlier this week and offers a tiny bit of respite relief for many new home buyers.
The focus of the most recent BC budget was on social program spending, no new taxes and keeping former election promises.
Some of the highlights of the report include a plan to further expand a middle-class tax cut. It means premiums division for Medical Service Plan (MSP) by half last year and fully eliminates them on January 2020. This tax-cut is supposed to put as much as $1,800 per year back in the pockets of BC families.
The budget also introduces the new B.C. Child Opportunity Benefit. This program replaces the Early Childhood Tax Benefit and apparently provides more financial support for families. Beginning in October of this year, parents with one child will receive up to $1,600 per year. Families with two children will receive up to $2,600, and those with three up to $3,400.
Newly graduated British Columbians will be happy to know that the B.C. government will eliminate all interest from B.C. student loans in the new budget. This translates to savings of up to $2,300 over a 10-year repayment period.
How Budget 2019 impacts real estate
The real estate “correction” from 2018 is slowly coming to a halt in 2019. This is a concern for some as many BC social programs are funded by the growing revenues generated from property tax revenues. The year’s budget predicts growth of property tax revenue by 4.2%, twice as high as the rate of economic growth.
Regarding the Homes for B.C. program, the budget reports that on its first year it has finished building or is in the process of finishing 4,900 new affordable housing units. More than 2,000 modular homes will be added, mixed-income rental homes, 280 transition homes for abused children and women along with the addition of 1,750 new social housing units for First Nations people and 2,295 new student housing units.
The current drop in housing sales activity (the demand side of the real estate market) is mostly due to the 2018 mortgage stress test and increasing interest rates. However, some economists and brokers still claim that the drop in sales activity in BC it was due to new taxes imposed on speculators and foreign buyers.
Finally, families who upgraded their homes in order to support green energy efforts will receive up to $2,000 to replace fossil fuel heating systems with an electric heat pump. Also, these homeowners could get up to $1,000 to replace their doors and windows with better-insulated versions and up to $700 to install a natural gas heating furnace.