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lorne goldman reviews bc property transfer tax

Lorne Goldman Reviews | BC Property Transfer Tax

You already know that buying a home in Vancouver is a great idea. The city keeps winning accolades from around the world. It offers awe-inspiring views and access to mountains and the ocean.

Buying property in Vancouver means you’ve got the first unofficial rule of the real estate covered. Location, location, location.

But location isn’t the whole story. You also need to do your financial homework so there are no surprises.

And, when buying real estate in Vancouver, that includes understanding the BC property transfer tax (PTT).

To help make purchasing your next home a positive, surprise-free experience, here’s our handy guide to the PTT.

What Is The BC Property Transfer Tax (PTT)?

The PTT is a one-time tax paid on the purchase or transfer of property in British Columbia, Canada.

How Much Is It?

The BC property transfer tax is calculated on the fair market value of the property involved. In most cases, that’s the sale price.

The tax uses a tiered formula:

  • 1% on the first $200,000
  • 2% on the portion between $200,001 and $2,000,000
  • 3% on portion over $2,000,000

If the property is transferred without the exchange of money (e.g. an inheritance), the PPT is paid on the value determined by an independent appraisal or BC Assessment.

If the purchaser is a foreign entity and the property is in the Greater Vancouver Regional District (sometimes called Metro Vancouver), there is an additional tax of 15%. The 15% tax doesn’t apply to the registration of mutual fund trusts, real estate investment trusts, or specified investment flow-through trusts.

Who Pays the PTT?

The PTT is paid by the purchaser.

When Is It Paid?

The PTT is calculated at the time of sale and added to the purchase price. Funds are delivered to the provincial government on the same day that the real estate transaction closes and the property deed is transferred to the purchaser.

Are There Any Exemptions?

There are a few exemptions to the BC property transfer tax. Eligibility criteria and exemption amounts can change so always speak to a real estate professional or check the BC government exemption list for the most current programs, criteria, and exemption amounts.

First Time Home Buyers’ Exemption

To ease the financial stress of buying a first home, there is BC property transfer tax exemption for first time home buyers. Eligibility criteria apply to the purchaser and the property.

In brief, to receive the full exemption, the purchaser must:

  • Be a Canadian citizen or permanent resident
  • Have lived in British Columbia for 12 consecutive months immediately before the date the property is registered into your name or filed at least 2 income tax returns as a BC resident in the last 6 years
  • Have never owned an interest in a principal residence anywhere in the world at any time
  • Have never received a first time home buyers’ exemption or refund

The property must:

  • Be in British Columbia
  • Be your principal residence
  • Have a fair market value (e.g. sale price) of $500,000 or less
  • Be 0.5 hectares (1.24 acres) or smaller

A partial exemption from the BC property transfer tax is also available if the property:

  • Has a fair market value or sale price less than $525,000
  • Is larger than 0.5 hectares
  • Includes another building on the property along with the principal residence

Newly Built Home Exemption

Criteria for this exemption from the BC property transfer tax is based on the purchaser and the property.

The purchaser must be an individual who is a Canadian citizen or permanent resident.

The property must be in BC and will be the purchaser’s primary residence. It must also have a sale price or fair market value of $750,000 or less and be 0.5 hectares (1.24 acres) or smaller.

Partial exemptions are available if the property has a fair market value less than $800,000, is larger than 0.5 hectares, or has another building on the property other than the principal residence,

Foreign entities and taxable trustees are not eligible for the Newly Built Home Exemption. But if you become a Canadian citizen or permanent resident within 12 months of property registration, you can apply for a refund of the BC property transfer tax.

BC Provincial Nominee Program Exemption

Are you a foreign national with a work permit gained through the BC Provincial Nominee Program? If so, you may be eligible for an exemption from the 15% foreign buyers tax portion of PTT.

Eligibility includes being a confirmed BC Provincial Nominee before the property transfer is registered. The property must also be the purchaser’s principal residence.

Foreign corporations and taxable trustees are not eligible for the exemption.

For full details and eligibility about this and other potential exemptions, speak to your real estate professional.

Can the PTT Be Financed?

The BC property transfer tax is a closing cost. By mortgage lending rules, closing costs can’t be financed.

But banks and other lenders may finance the PTT outside of a mortgage. Depending on the buyer’s financial situation, it’s not uncommon for a lender to extend a line of credit or personal loan to finance the PTT.

Is the PTT a New Tax?

The province of British Columbia has levied a property transfer tax since the late 1980s. But the rules for who it applies to and how much it is has changed many times over the decades.

In 2016, the government introduced the 15% additional levy for foreign buyers as a way to help temper the hot real estate market in Vancouver.

It worked to some degree. But make no mistake. Vancouver remains a sought-after place to live and its real estate market is active.

Next Steps

If you’re considering buying a home in Vancouver, the BC property transfer tax is only one aspect of this important decision to consider.

Next to understanding your budget, finding the right property, the one that will bring you satisfaction every day, is the most important next step.

If you’re unfamiliar with Vancouver neighbourhoods, unsure about upgrading or downsizing your home, or value having a knowledge and insightful real estate expert at your side, we’re ready to help.

Are you ready to work with a team of Vancouver real estates who truly have your best interests in mind? Don’t delay. Contact us today!

 

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