Buying Pre-Construction in Kelowna (2026): What’s Really an Opportunity—and What’s a Risk
Buying pre-construction in Kelowna? Discover how new 2025 tax incentives could save you over $60,000, plus the critical risks you need to watch out for today.
If you’ve been watching the Kelowna market lately, you’ve probably noticed two very different stories being told.
On one hand, buyers are hearing about huge tax savings on new construction.
On the other, headlines are talking about rising rental vacancies, slowed or paused developments, and changing tax rules.
It can feel confusing—and a little overwhelming.
This blog post breaks down the essentials in a simple, buyer-friendly way so you can understand what’s worth leaning into and what requires caution.
1. The Opportunity: Big Tax Savings on New Builds
In 2025, both the federal and provincial governments made major changes that created unusually strong incentives for buying new, pre-construction homes under $1 million.
Federal: GST Rebate for First-Time Buyers
As of May 2025, qualified first-time home buyers purchasing a new home can get up to 100% of the GST refunded on homes up to $1,000,000.
This rebate used to disappear at much lower prices, meaning most Kelowna buyers never benefited—until now.
Example: On a $900,000 townhome, a first-time buyer could save roughly $45,000–$50,000 in GST.
Provincial: PTT Exemption for Newly Built HomesBC also increased the Property Transfer Tax exemption for new builds.
- Full exemption up to $1.1 million
- Partial exemption up to $1.15 million
On that same $900,000 townhome, this saves buyers around $16,000 in PTT.
Why this matters today
For buyers purchasing under $1M, these incentives create a “sweet spot” that can dramatically lower the upfront cost of buying a brand-new home. This is especially impactful for first-time buyers.
2. The Risk: A Softer Rental Market
If you're thinking of buying pre-construction as an investment, you need to understand what the rental market is doing today—not what it was doing in 2021.
Kelowna’s rental vacancy rate recently climbed to around 6.4%, one of the highest in Canada. This shift is largely due to a big wave of new apartments completing at the same time.
A softer rental market means:
- More competition among landlords
- Incentives like “one month free” becoming common
- Slower rent growth in many areas
For investors, this means you cannot assume the property will immediately cover its mortgage. Instead, pre-construction needs to be evaluated for long-term value and tax efficiency, not quick cash flow.
3. The Risk: Developer Delays and Project Pauses
High construction costs and interest rates have pushed some developers to slow or pause major projects in Kelowna.Examples include:
- One Varsity (a 35-storey tower near downtown)
- A major redevelopment on Casorso Road
When a project is paused, your deposit remains protected in trust, but it is also tied up—sometimes for years. That’s money you cannot use elsewhere, and delays can affect your moving plans or investment timelines.
This is why choosing the right developer is just as important as choosing the right floor plan.
4. Assignment Sales and the New Flipping Tax
In the past, many buyers purchased pre-construction with the intention of “assigning” the contract (selling it before completion). That strategy has changed.
As of January 1, 2025, BC’s Home Flipping Tax applies to profits made on homes sold within two years of purchase—including assignments.
- 20% tax on profit if sold within the first year
- Sliding scale until it reaches 0% after two years
Importantly, the clock starts when you sign the presale contract, not when the building completes.
If you're hoping to profit quickly, this tax makes short-term assignments far less attractive.
5. Pre-Sale vs. Resale: Which Makes Sense in 2025/2026?
Here’s an at-a-glance comparison to help you think about your options.
Final Thoughts
Buying pre-construction in Kelowna can be an excellent opportunity—especially for first-time buyers who qualify for the new GST rebate and the provincial PTT exemption. These incentives alone can save $60,000 or more compared to just a few years ago.
But today’s market also requires clear eyes: higher vacancy rates, project pauses, and new tax rules mean that not every presale is a guaranteed win.
If you'd like to explore which developments are strong, which ones to avoid, or how the new tax rules might apply to your situation, I’d be happy to walk you through it.