A Guide of Everything You Need To Know About Paying Property Transfer Tax In British Columbia
Closing costs can often catch a buyer by surprise and its important to understand them when purchasing a home so you aren’t hit with a big shock come closing date, potentially leaving you with less cash in the bank than budgeted for.
This blog is about property transfer tax in BC, how much it is, when you have to pay for it, and if you can potentially apply for an exemption.
What is Property Transfer Tax?
The Property Transfer Tax (PTT) is a land registration tax paid by the buyer of the property when your purchase is registered at the Land Title and Survey Authority. This tax is to be paid by the buyer of the home when you are getting title of the home transferred into your name (the completion date).
How Much Is Property Tax?
The amount that you’ll pay in PTT is based on the fair market value of the land and improvements (i.e the buildings) on the registration date, unless you purchase a pre sale strata unit.
If you are a Canadian citizen or permanent resident, this is how PTT is calculated
This one time tax, is paid upon registration, unless you qualify for an exemption. If you don’t qualify for an exemption, this is how the tax is structured.
1% on the first $200,000
2% on the balance up to and including $2,000,000
3% on the balance greater than $2,000,000
2% on the balance greater than $3,000,000
If considered a foreign buyer, foreign corporation, or taxable trustee, then you are subject to ADDITIONAL foreign buyers property transfer tax
On top of the PTT described above, you will also pay the tax amount of 20% of the fair market value of your proportionate share of the purchase property.
Property Transfer Tax Example
If you were to purchase a residential property for $872,000 you would pay $15,440
1% on the first $200,000 = $2,000
2% on the balance = $13,440
Total Property Transfer Tax: $2,000 + $13,440 = $15,440
Do you Apply for an exemption?
To make the purchase a little easier for a first time home buyer, some exemptions exist that will allow you to qualify for a full refund.
To qualify for a full refund you must:
Have never received a first time home buyers exemption/refund before
You have lived in BC for 12 consecutive months prior to the date of your purchase registration, or
As a BC Resident, have filed 2 income tax returns in the last 6 years
You are a Canadian citizen or permanent resident
You have never owned an interest in a principle resident before
Your property meets the a list of requirements
The fair market value of your purchase is less than $500,000
The land is equal to or less than 0.5 hectares
The property will be used as a principle resident
You may qualify for a partial refund if:
The property has a fair market value of between $500,001 and $524,999.
The land is greater than 0.5 hectares
A portion of the land is used for commercial purposes or there are other homes on your land
New Build Property Transfer Tax Exemption:
A newly property that has a fair market value of up to $750,000 has an exemption of PTT. The newly built property must be a newly built home, newly built condominium, a new manufactured home on vacant land, or other newly built homes (duplexes, townhomes). You can also get a partial refund if the fair market value of your newly build property is between $750,001 and $800,000.
Vacant Land Property Transfer Tax
If you registered a vacant lot and paid the tax, you may apply for a refund if you
Built a new home on the land that is worth less than $750,000
Meet the exemptions qualifications for a newly built home
Moved into the newly built home within one year of registration
Written By: Graeme MacPhail, REALTOR of Royal LePage Nanaimo Realty.
If you’re looking for a REALTOR to help you with through the purchasing process and want to have someone to make sure that you’re informed the entire way about the property, as well as closing costs then please give us a call or text at 250-667-3441 or email at graeme@macphail.net.