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On February 17, 2026, the Province of British Columbia released its 2026 Budget (the "Budget"), introducing several measures that affect property taxation, real estate ownership, development, and related services in British Columbia1. This bulletin highlights the key changes relevant to real estate stakeholders.
Increasing Interest Rates for Property Tax Deferment Program
Effective for the 2026 and subsequent taxation years, the Province is harmonizing and increasing interest rates under the property tax deferment program for: (1) homeowners who are 55 years of age or older, as well as surviving spouses or persons with disabilities (the "Regular Program"); and (2) families with children2.
The interest rate on the deferred tax amount will be increased to an annual rate of prime plus 2% compounding monthly3. The prime rate is currently 4.95%4.
This is a significant increase from the existing interest rates applicable to property taxes deferred for prior tax years (including 2025), which currently accrue simple interest at a rate of: (1) prime minus 2% for the Regular Program and (2) prime for the families with children.
Increased Additional School Tax Rates
Effective for the 2027 and subsequent taxation years, additional school tax rates applicable to residential properties and mixed-used properties with a residential component valued at over $3 million will increase:
- for the residential portion assessed between $3 million and $4 million, from 0.2% to 0.3%; and
- for any residential portion assessed at over $4 million, from 0.4% to 0.6%5.
The additional school tax rate applies to most high‑valued residential properties in British Columbia, including detached homes, stratified condominium and townhouse units, and most residential class vacant land.
The additional school tax is not imposed on non‑stratified rental buildings that contain four or more housing units, including apartment buildings.
Expansion of Provincial Sales Tax to Professional Services
Effective October 1, 2026, the scope of the Provincial Sales Tax ("PST") will expand and apply to several new categories of professional services. Such services will include commercial real estate services, such as trading services, rental property management services and strata management services6. Other services that will become subject to PST at the rate of 7% include accounting services, architectural services, engineering and geoscience services, and security services (including private investigation services).
Businesses providing these newly taxable services will be required to register for PST and to collect and remit the tax on taxable transactions. For architectural, engineering, and geoscience services, PST would apply to 30% of the cost of such services rather than 100% of the cost7.
Speculation and Vacancy Tax
Effective for the 2027 and subsequent taxation years, the speculation and vacancy tax rate applicable to foreign owners and untaxed worldwide earners will increase from 3% to 4%8. The increased rate will apply to tax liabilities arising from the 2027 calendar year's use of the residential property and onwards.
Expansion of Purpose-Built Rental Exemptions
Effective retroactively to January 1, 2025, the property transfer tax exemption for purpose‑built rental housing is expanded. The exemption now applies to newly constructed purpose‑built rental buildings that are leased for a maximum of 24 months prior to the registration of their first taxable transaction at the Land Title and Survey Authority of British Columbia.
Repeal of the Northern and Rural Home Owner Benefit
Effective for the 2027 and subsequent taxation years, the $200 northern and rural home owner grant benefit will be eliminated. This benefit was originally introduced under the home owner grant program to offset the impacts of the provincial carbon tax, which is no longer applicable. Following this change, the regular home owner grant will be set at $570 for eligible properties throughout the province.
What Happens Next?
The measures introduced in the Budget represent a meaningful shift in several areas of British Columbia's real estate tax framework, including a significant increase to the interest rates under the property tax determent program and expanded PST obligations for professional services. These changes will have varying impacts on property owners, developers, and real estate service providers, depending on activities across the province.
Stakeholders should consider how the Budget may affect existing holdings, planned transactions, and ongoing development projects.
Footnotes
1. British Columbia, Ministry of Finance, "B.C. Provincial budget tax changes" (last updated 18 February 2026), online: – https:/www2.gov.bc.ca/gov/content/taxes/taxupdates/budget-changes#income
2. British Columbia, Ministry of Finance, "Property tax deferment program", online: – https:/www2.gov.bc.ca/gov/content/taxes/property-taxes/annual-property-tax/propertytax-deferment-program
3. British Columbia, Ministry of Finance, "Interest and fees for property tax deferment", online: – https:/www2.gov.bc.ca/gov/content/taxes/property-taxes/annualproperty-tax/property-tax-deferment-program/tax-deferment-interest-fees
4. British Columbia, Ministry of Finance, "Property tax deferment interest rate history", online: – https:/www2.gov.bc.ca/gov/content/taxes/property-taxes/annual-propertytax/property-tax-deferment-program/tax-deferment-interest-fees/history
5. British Columbia, Ministry of Finance, "Additional school tax rate", online: – https:/www2.gov.bc.ca/gov/content/taxes/property-taxes/annual-property-tax/schooltax/additional-school-tax-rate
6. British Columbia, Ministry of Finance, "Notice to providers of professional services", online: – https:/www2.gov.bc.ca/gov/content/taxes/sales-taxes/pst/publications/noticeprofessional-services
7. Bill 2, Budget Measures Implementation Act, 2026, 43rd Parl, 2nd Sess, British Columbia, 2026, ss 129.21, 129.22,129.31, and 129.32.
8. Supra note 1.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
