Property Transfer Tax in BC
Buying Property in BC? How Much is The Property Transfer Tax?
Buying your first home can be very exciting, but there are a lot of important factors to consider before you get started. For example, every first-time home buyer should be aware of the applicable property transfer taxes. Keep reading to learn more about the property transfer tax in British Columbia, including how to calculate it and how you can qualify for a rebate or exemption.
What is a Property Transfer Tax?
PTT, which stands for property transfer tax, is a fee assessed by the province when you buy a home. This is a standard cost across Canada, although the amounts can vary depending on which part of the country you live in.
It is important to note that the property transfer tax is not the same as your annual property taxes. Instead, the property transfer tax is due when you close on your new home.
BC Land Transfer Taxes
So, how do you calculate the property transfer taxes?
The tax is based on the fair market value of the property. This value includes the land and improvements on the day you register it with the Land Title Office. In BC, transfer taxes are calculated the same way they are in Ontario, but there are fewer brackets. Likewise, there is a much higher marginal tax rate if you purchase a high-value residential home.
The amount of taxes owed at closing can be calculated using the following sliding scale:
Tax Percentage is based on the Home Value
1.0% on the first $200,000 2.0% on the amount in between $200,001 to $2,000,000 3.0% on the amount in between $2,000,000 to $2,999,999 +2.0% on the amount over $3,000,000
For example, let’s consider the home you are buying is valued at $600,000. The first $200,000 will be taxed at 1.0%, then the remaining $400,000 is taxed at 2.0%. This results in a total property transfer tax of $10,000:
$200,000 x 1.0% = $2,000 $400,000 x 2.0% = $8,000 Total $10,000
Who is Responsible for Paying Property Transfer Tax?
The person who is buying the home is always responsible for paying the transfer taxes. Whether you are purchasing a home or a condo, the property transfer taxes will be due at closing when the deed is transferred to your name.
As you prepare to buy your home, your lawyer or notary can help you prepare the applicable paperwork and pay the taxes. The seller is never required to pay this fee.
Property Transfer Tax Exemption
There are many property transfer tax exemptions available.
If you are buying a newly built home, you may be eligible for an exemption. A newly built home is one that was built and affixed on vacant land, a new apartment in a condo building that was just constructed, or a manufactured home placed on an empty parcel of land.
Real estate transactions between family members may also result in an exemption. If you are transferring a family farm or a recreational residence, you may be exempt from all or part of the property transfer tax. The same applies if the home purchase is a result of a marriage breakdown.
Additional exemptions include transfers to subdivide the property, transfers following bankruptcy, or those to a registered charity.
First-Time Home Buyer Property and Transfer Tax Rebate
British Columbia offers property transfer tax rebates to first-time homebuyers to encourage more individuals and families to purchase homes.
A first-time homebuyer can receive a refund on the entire amount of the property transfer tax for homes valued up to $500,000. If the value of the home that you purchase ranges from $500,000 to $525,000, you can qualify for a partial rebate.
To qualify, you must be a permanent resident or Canadian citizen. You must also have lived in B.C. for 12 months leading up to the date the property is registered or have filed at least two tax returns as a province resident within the last six years.
Rebates will only apply to homes used as your principal residence and parcels that are 0.5 hectares or smaller.
Similarly, this must be the first time you are owning a registered property – anywhere in the world. If only one of the purchasers qualifies for the first-time homebuyer tax rebate, then only the percentage of the interest that is eligible will receive it.
When you buy a home, you must pay the land transfer taxes at closing. You can calculate the amount you owe using the fair value of the property.
However, you may be eligible for an exemption or rebate only if you meet the criteria!
What Professionals Will I Need to Help Me Buy Property in Canada?
To buy a property in Canada, you’ll normally need a real estate agent, a real estate lawyer, a home inspector, an insurance agent, a property manager and a lender. If you buy with my help, I will connect you to the best in the industry.
I want to buy a property in Canada, but not in Victoria. Can you help?
I only sell real estate in the Victoria area, though I am happy to recommend an agent in Canada’s other big cities.
Are you thinking about purchasing or selling your home in the near future? If you’re looking for a realtor to work with you and guide you through the process, then give me a call/text at 250-858-0288.. or email firstname.lastname@example.org to start a conversation.
Patrick Novotny eXp Realty Victoria, BC 250-858-0288
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