Transfer tax on homes in BC

Property Transfer Tax BC (PTT)

Calculate PTT with property transfer tax exemptions.


BC Property Transfer – Everything you need to know about tax and exemptions. | Meryl.REALTOR

Property Transfer Tax BC – Everything you need to know

This blog address the most commonly asked questions about Property Transfer tax and looks at how you as a purchaser can avoid paying property transfer tax as a First-time home buyer or someone who purchased a newly built home. It also introduces you to other property transfer tax exemptions that may available to you.

What is Property Transfer Tax?

Property Transfer Tax (PTT) is a one time tax paid to Province of BC by the purchaser whenever there is a change of ownership or change in shared % interest in a property. PTT is calculated based on the fair market value of the property at the time of transfer. The percentage of the tax that you owe is based on the % shared ownership or shared interest you have. For example, if a husband and wife are both registered on title with 50% ownership each, then each owes 50% of the tax.

Another important point to keep in mind is that Property Transfer Tax (PTT) is provincial and is NOT the same as the annual Property Tax which is paid to the local municipality every year. Often confused with PTT, annual property tax is paid to the local municipality by the registered owner(s) for ongoing use and maintenance of municipality services such as water supply, garbage collection, sewer services, road maintenance, park maintenance and more.

How do you calculate Property Transfer Tax BC?

Property transfer tax is calculated using a formula based on the fair market value (or agreed purchase price) of the property as follows:

1% on the first $200,000 of the fair market value,
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, and

If the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000.
If the property is classified as residential and farm, or is residential mixed class (such as residential and commercial), you pay the further 2% tax on only the residential portion of the property.

Calculation Examples

CALCULATION EXAMPLES – NO EXEMPTION
Assuming that you don’t qualify for any exemptions, the following are examples of how property transfer tax is calculated:

EXAMPLE 1 If the fair market value of a property is $450,000, then property transfer tax is $7,000 and is calculated as follows:
1% on the first $200,000 = $2,000
2% on the remaining portion of $250,000 (i.e. $450,000 – $200,000) = $5,000
$2,000 + $5,000 = $7,000


EXAMPLE 2 If the fair market value of a property is $650,000, then property transfer tax is $11,000 and is calculated as follows:
1% of the first $200,000 = $2000
2% on the remaining portion of $450,000 (i.e. $650,000 – $200,000) =$9000
$2000 + $9000 = $11,000


EXAMPLE 3 If the fair market value of a property classified entirely as residential is $3,500,000, the tax paid is $83,200.
1% on the first $200,000 = $2,000
2% on the portion greater than $200,000 and up to and including $2,000,000 = $36,000 (i.e. $2,000,000 – $200,000 = $1,800,000 X 2% = $36,000)
3% on the portion greater than $2,000,000 = $45,000 (i.e. $3,500,000 – $2,000,000 = $1,500,000 X 3% = $45,000)
A further 2% on the portion greater than $3,000,000 = $200 (i.e. $3,500,000 – $3,000,000 = $500,000 X 2% = $10,000)
$2,000 + $36,000 + $45,000 + $200 = $83,200

How is Property Transfer Tax paid?

Property Transfer Tax is paid through the purchaser`s lawyer or notary office upon completion of purchase. This amount is can be found on your Purchaser Statement of Adjustments.

Why doesn’t the seller pay Property Transfer Tax?

Sellers do not pay PTT because they have already paid at the time they purchased the property from the previous owner. The rule is that the new registered owner is responsible for paying the transfer tax.

Can I avoid or be exempt from paying property transfer tax (PTT)?

The short answer is yes! There are many PTT exemptions available to purchasers; however, for our first-time buyers and presale buyers, we will focus on the two common exemptions that purchasers may qualify for. There are full and partial exemptions available.

What is the First Time Home Buyer Exemption?

This property transfer tax exemption is available for purchasers who are buying their first home located in the province of British Columbia.

FULL EXEMPTION REQUIREMENTS
To qualify for a full exemption, the following requirements must be met:
1.     You must not own a principal residence anywhere in the world;
2.     You must not have previously received a BC FTHB exemption or refund;
3.     You are a Canadian citizen or a permanent resident;
4.     You have continuously resided in BC for at least one year immediately prior to the registration date; or have filed income tax returns as a BC resident during the six years before the completion date; and
5.     The property is located in B.C, is primarily used as principal residence, has a fair market value of $500,000 or less and be 0.5 hectares (1.24acres) or smaller.

PARTIAL EXEMPTION REQUIREMENTS
To qualify for partial exemption, you must meet all the following requirements:
1.         You must not own a principal residence anywhere in the world
2.         You must not have previously received a BC FTHB exemption or refund
3.         You are a Canadian citizen or a permanent resident
4.         You have continuously resided in BC for at least one year immediately prior to the registration date; or have filed income tax returns as a BC resident during the six years before the completion date; and
5.         the subject property is: located in B.C, primarily used as a principal residence, more than $500,000 or less than or equal to $525,000 in fair market value, is larger than 0.5 hectares and has another building on the same property other than the principal residence.   

Not sure if you qualify for First time home buyer exemption?

Call or text Meryl at 604-307-9506 or you can also email our team at [email protected]

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What is the Newly Built Exemption?

The newly built tax exemption is available for purchasers who are buying a pre-constructed or newly built home regardless of whether it is first, second or hundredth purchase.

 What is considered a newly built home?  
·       a house built on vacant land
·       a new apartment in a newly built condominium building
·       a manufactured home built on vacant land
·       an already constructed house that is removed from one piece of land to one that is considered as vacant land. The house must not have been occupied since it was placed on the vacant land
·       a house resulting from the division of an existing improvement on a piece of land that was also subdivided. The house must not have been occupied since the subdivision of the land.
·       a house converted from an existing improvement on the land. The previous improvement couldn’t have been used as residential (e.g. a warehouse converted into apartments).

FULL EXEMPTION REQUIREMENTS
In addition to meeting the definition of a newly built home, you must meet the following requirements:
1)     You are an individual (not a corporation or trustee)
2)     You are a Canadian citizen or permanent resident (you will be asked to provide your Social Insurance Number (SIN) or proof of permanent residency and your birthdate); and
3)     the subject property is i) located in B.C., ii) is used as your principal residence iii) have a fair market value of $750,000 or less; and iv) is 0.5 hectares or smaller.

PARTIAL EXEMPTION REQUIREMENTS
In addition to meeting the definition of a newly built home, you must meet the following requirements:
1)     You are an individual (not a corporation);
2)     You are a Canadian citizen or permanent resident (you will be asked to provide your Social Insurance Number (SIN) or proof of permanent residency and your birthdate);
3)     the subject property is i) located in B.C., ii) is used as your principal residence iii) have a fair market value greater than $750,000 and less than $800,000; and iv) is larger than 0.5 hectares; and
4)     There is another building on the property other than the principal residence
IMORTANT NOTE: If you are an individual who doesn’t qualify because you are not a Canadian citizen or permanent resident, but you become one within 12 months of when the property is registered, you may apply for a refund of the property transfer tax. You may also apply for refund if you paid tax on the purchase of vacant land and later have a newly built home on the same land.

Where can I get more information?

OTHER EXEMPTIONS
To see whether you qualify for other exemptions, click here.
Or try out our popular Property Transfer Tax Calculator!
PTT CALCULATOR | MERYL.REALTOR

Are you planning to buy and need a Realtor to guide you through the process?

We are always happy to help. Call 604-307-9506 or email [email protected]

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