Property Transfer Tax in British Columbia
PROPERTY TRANSFER TAX
One of the major expenses associated with the purchase of real estate in British Columbia is the property transfer tax (“PTT”). PTT becomes payable when a change in title is registered at the land title office.
PTT is taxed on the fair market value of the land and improvements and is charged at a rate of: 1% on the first $200,000; 2% on the portion greater than $200,000 up to $2,000.000 and 3% on the remainder. An additional property transfer tax of 15% may also apply to foreign buyers in certain areas of British Columbia.
There are a number of exemptions to the PTT that may be available to a purchaser on a real property transaction. Some of the more common exemptions include:
FIRST TIME HOME BUYERS EXEMPTION:
PTT may be exempt when a qualified individual, who has never owned an interest in a principal residence anywhere in the world purchases a principal residence at a fair market value of $500,000 or less. A partial exemption may be available for homes at a fair market value up to $525,000.00
NEWLY BUILT HOME EXEMPTION:
PTT may be exempt when a qualified individual purchases a newly built home at a fair market value of $750,000.00 or less. A partial exemption may be available for newly built homes at a fair market value up to $800,000.00.
PTT may be exempt when “related individuals” transfer a principal residence or an interest in a principal residence.
There are additional conditions to qualify for each exemption which are not listed above. Additional information may be found by clicking on the link: http://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand/exemptions
Prudent potential buyers should canvass the applicability of the PTT and available exemptions with their real estate advisor before entering into a binding contract of purchase and sale.