On March 4, 2026, the BC government introduced Budget 2026, which includes a significant expansion of the Provincial Sales Tax (PST) to professional services used in commercial real estate in BC. Effective October 1, 2026, these changes will affect every business leasing, buying, or managing commercial property in British Columbia.
This guide explains what is changing, what it means for your business, and what to do before October 1.
This article provides general information only and is not legal or tax advice. For advice specific to your situation, consult a qualified BC tax professional or legal advisor. These changes are subject to Royal Assent of Bill 2.
What Is Changing: PST Now Applies to These Commercial Real Estate Services
Starting October 1, 2026, BC PST at the standard 7% rate will apply to the following services that were previously PST-exempt:
- Brokerage commissions on commercial real estate transactions — buying, selling, and leasing commercial properties
- Property management fees on commercial and investment properties
- Strata management fees for commercial strata corporations
- Legal and professional services related to commercial real estate transactions
- Appraisal and valuation services for commercial properties
Residential real estate commissions are explicitly excluded from this PST expansion. The changes apply to commercial real estate only — office, retail, industrial, and mixed-use properties.
What This Means for BC Business Tenants
If you are a business searching for commercial space in BC after October 1, 2026, here is how the PST expansion affects you:
Tenant Representation — Still Free to You
Tenant representation in commercial leasing is paid by the landlord as part of the transaction — not by you as the tenant. The landlord pays the brokerage commission, and starting October 1, 2026, the landlord will also pay PST on that commission.
This means the direct cost to you as a tenant does not change — you still receive professional tenant representation at no cost. The PST on the commission is the landlord's cost, not yours.
What Could Be Passed to Tenants
In net leases (NNN leases) where tenants pay a share of building operating costs, there is potential for some PST-related costs to flow through to tenants over time — particularly property management fees, which are part of Additional Rent in many leases. Review your lease's Additional Rent provisions and discuss with your advisor how this may apply to your specific situation.
What This Means for BC Businesses Buying Commercial Property
If you are purchasing commercial real estate in BC, brokerage commissions on the transaction will be subject to 7% PST starting October 1, 2026. On a $2M commercial property transaction with a 4% brokerage commission, that is $80,000 in commissions — plus $5,600 in PST that was not previously applicable.
This is a meaningful increase in transaction costs for commercial property buyers in BC. Businesses considering commercial property purchases should be aware of this additional cost when budgeting for acquisitions after October 2026.
The Key Timing Question: Sign Before October 1
The BC government has indicated that whether PST applies depends on when services are performed, not necessarily when agreements are signed. This means:
- Lease agreements signed and services completed before October 1, 2026 should not be subject to the new PST
- Services performed after October 1, 2026 may be subject to PST even if agreements were signed earlier
- Businesses planning commercial real estate transactions should consult with their advisors on timing to understand when services are considered performed
If you are planning to lease or purchase commercial space in BC and the transaction will extend past October 1, 2026, discuss the PST timing implications with your advisor now. The rules on when PST applies are still being clarified through regulations.
What Has Not Changed
- The PST rate remains 7% — this is not a rate increase
- Residential real estate commissions remain PST-exempt
- Tenant representation for commercial leasing continues to be paid by landlords
- The fundamental economics of commercial leasing for tenants are largely unchanged
What to Do Now
- If you are planning a commercial real estate transaction, discuss the PST timing implications with your advisor
- Review your existing commercial leases for Additional Rent provisions that could be affected by property management PST
- Consult a BC tax professional for advice specific to your transaction and situation
- Budget for potential PST costs if purchasing commercial property after October 1, 2026
Finding Commercial Space in BC Before October 2026
At ZoningVerified.ca, we help businesses find and secure commercial space across the Lower Mainland. Tenant representation is provided at no cost to qualified tenants. For businesses planning a commercial lease or purchase, now is an excellent time to start your search and understand the full cost picture before October 2026 changes take effect. Contact Kamran Khan at 236-660-2594 or visit ZoningVerified.ca.