I am regularly asked about the property transfer tax, so I thought I would post here as an information source rather than continually pointing people to other resource pages. The tax, like all taxes, is a government money grab that, since 1994, has basically become an accepted part of buying real estate. It applies to all fair-market price purchases, except a one-time exemption to first-time home buyers who meet a particular set of criteria.
The rate of the PTT is 1% on the first $200,000 of a purchase, plus 2% on everything above $200K. That’s it – simple and easy, but to provide an example:
if fair market value of property is $550,000
tax payable is: 1% of $200,000 = $2,000
plus 2% of $50,000 = $7,000
for total tax payable of $9,000
An exemption to the tax can be applied for and is available to those buying their first home, with the following parameters:
- you are a Canadian Citizen, or a permanent resident as determined by Immigration Canada,
- you have lived in British Columbia for 12 consecutive months immediately before the date you register the property, or you have filed 2 income tax returns as a British Columbia resident during the 6 years before the date you register the property,
- you have never owned an interest in a principal residence anywhere in the world at anytime,
- you have never received a first time home buyers’ exemption or refund.
The property you purchase qualifies if:
- the fair market value of the property is not more than the current threshold of $425,000,
- the land is 0.5 hectares (1.24 acres) or smaller, and
- the property will only be used as your principal residence.
Though the threshold is right now $425,000, there has been suggestion that it might soon be increased to $500,000.
Information on applying for the exemption can be found here: http://www.sbr.gov.bc.ca/documents_library/brochures/FirstTimeHomeBuyer.pdf.
In addition to this common exemption, there are a number of other situations where the tax would not apply. These are all fairly uncommon or highly specific, so I will direct you here: http://www.sbr.gov.bc.ca/individuals/property_taxes/property_transfer_tax/exemptions