2026 BC Budget: Key Impacts on the Real Estate and Construction Sector
On February 17, 2026, BC’s Ministry of Finance released the Province’s 2026 Budget. This article highlights the measures most relevant to the Real Estate and Construction sector.
If you’re looking for a full overview of all tax and policy changes announced in the 2026 Budget, you can read our complete summary here: 2026 Provincial Budget Highlights
For developers, investors, builders, and property managers, several key measures introduced in the 2026 BC Budget may have a direct and material impact on real estate projects and operations, including:
Property Transfer Tax Exemption for Newly Constructed Purpose-Built Rentals
Effective January 1, 2025, newly constructed purpose-built rental buildings leased for a maximum of 24 months before their first taxable transaction is registered at Land Title and Survey Authority of BC will be exempt from property transfer tax. This expanded exemption is intended to include developers who lease units in a new construction to demonstrate verified rental revenue to lenders and buyers. The 24-month period begins on the commencement date of the first lease and leases must have a term of one month or longer.
Expanded Property Transfer Tax Relief for Non-Stratified Purpose-Built Rentals
Purchases of newly constructed, non-stratified purpose-built rentals are exempt from the further 2% property transfer tax, which applies to the fair market value of the residential component of a taxable transaction that exceeds $3 million. Further, transactions occurring between January 1, 2025 and December 31, 2030, are also exempt from the general property transfer tax. To qualify for these exemptions, the residential portion of the property must be entirely used for rental purposes and have at least 4 apartments.
New 15% Investment Tax Credit for Manufacturing and Processing Buildings and Equipment
Effective April 1, 2026, a temporary refundable investment tax credit (ITC) is introduced for investments made by Canadian-controlled private corporations (CCPC) in buildings and machinery and equipment used in manufacturing and processing, subject to certain exclusions. The ITC is 15% of eligible investments up to $2 million, for a maximum credit of $300,000. This ITC is available for investments made on or after April 1, 2026, until March 31, 2031. The program will begin to phase out starting April 1, 2031, at a rate of 2.5% per year until it is fully phased out for investments made after March 31, 2026.
Increased Speculation and Vacancy Tax for Foreign Owners
Effective January 1, 2027, the speculation and vacancy tax rate for foreign owners and untaxed worldwide earners is increased from 3% to 4%. This will apply to the speculation and vacancy tax payable based on the use of residential properties during the 2027 calendar year and onward.
PST Expansion to Professional and Real Estate Services
Effective October 1, 2026, PST will apply to the following services:
- Accounting and bookkeeping
- Architecture (30% of purchase price subject to PST)
- Engineering and geoscience (30% of purchase price subject to PST)
- Rental property and strata management
- Commissions related to buying and selling non-residential real estate
Overall, the changes appear to be a mixed bag. Although some of the changes appear to be beneficial to real estate developers and investors, we expect the PST change in particular to cause upward pressure on real estate construction and management costs. This could have a cascading impact as developers and landlords may seek to pass on the added PST costs.
To read Smythe’s full summary of the 2026 BC Budget, please click the following link: 2026 Provincial Budget Highlights
