BC Property Transfer Tax
What is the Property Transfer Tax?
The BC Property Transfer Tax (PTT) is a land transfer tax that buyers must pay when acquiring a house, condo or land in British Columbia. Based on Fair Market Value, the Property Transfer Tax ensures that a new home buyer becomes the new registered owner on title and that this new title gets officially registered at the land title office of BC. The Property Transfer Tax adds a significant amount to the already expensive housing prices and prudent buyers should always include this tax to their budget when searching for properties and applying for mortgages.
How is Property Transfer Tax calculated?
The Property Transfer Tax is based on the Fair Market Value of the property being purchased. Typically, fair market value equates to the actual purchase price paid for the property and is calculated as such:
- 1% on the first $200,000
- 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000
- 3% on the portion of the fair market value greater than $2,000,000.
Property Transfer Tax Exemptions
For full exemption, the purchase price on a 1st time home purchase must not exceed $475,000. Partial exemptions are available for properties purchased between $475,000 and $500,000.
Some property transfers that do not involve a cash transaction also may qualify for a PTT exemption, such as a transfer of a principal residence between family members, a transfer to a surviving joint tenant, bankruptcy, divorce, etc. For a full list of exemptions, give us a call.
If one or more of the purchasers do not qualify as a 1st time home buyer then only the percentage of interest that the first time home buyer(s) have in the property would be eligible.
In addition to being a 1st time home purchase the following criteria must be met in order for a FULL PTT exemption:
- You must be a Canadian citizen or permanent resident
- Resided in BC for 12 consecutive months immediately prior to the date or the property being registered or filed a minimum of 2 income tax returns as a BC resident within the last 6 years
- Have never had an interest in a principal residence anywhere in the world at any time
- Have not received a 1st time home buyers’ exemption or refund previously
In addition, the property must:
- Be located in BC
- Will be used only as your principal residence
- Have a fair market value of $475,000 or less
- Be 0.5 hectares (1.24 acres) or smaller
A PARTIAL relief from the PTT may be realized if the property:
- Has a fair market value less than $500,000
- Is larger than 0.5 hectares
- Has another building on the property other than the principal residence
Here are a few examples of how the PTT is calculated.
Mark and Julie purchase a family home for $1,220,000
1% on the first $200,000.00 (at 1%) = $2,000
2% on the remaining $1,020,000 @at 2%) = $20,400
Total PTT payable is = $22,400
Anne, a 1st time buyer purchases a loft in Chinatown for $470,000
Anna qualifies for a full PTT exemption on the basis that she is a 1st time home buyer and that the fair market value (purchase price) of the property is below $475,000.
*If this was not a 1st time home purchase then the PTT payable would be $7,400.
1% on the first $200,000.00 = $2,000
2% on the remaining $270,000 = $5,400
The Property Transfer Tax is a one-time tax payable to the Provincial Government and is payable each and every time a change in title registration is required. Do not confuse the PTT with the Property Tax which is an annual tax paid to the local Municipality which helps pay for schools, roads, garbage pickup, and other more localized expenses.
Include a rough estimate of the PTT into your budget when searching for real estate as this tax can significantly affect the amount of money you will need, or be able to borrow and is due at the time of adjustments and is handled by a notary or lawyer.
The BC Property Transfer Tax Act may change along with the exemptions. While we strive to keep our information as current as possible, please do not rely upon the information without talking to a qualified Realtor. Alternately, visit the BC Property Transfer Tax page here.
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