Property Transfer Tax – when it is payable and when you could be exempt?

Property Transfer Tax – when it is payable and when you could be exempt?

All buyers of real estate in BC must pay property transfer tax at the time of registration of the transfer, unless they have a valid exemption. The tax is based on the property’s fair market value and set at 1% of the first $200,000 and 2% of any amount above that. There are numerous exemptions from property transfer tax, with the most commonly used being the First Time Home Buyer’s exemption; the exemption for transfer of a principal residence to a related individual; and the recently created Newly Built Home exemption.

The BC government gives qualified first time home buyers a break by allowing them to avoid the tax on their first purchase. There are several requirements to meet before qualifying to use this exemption:

• The property must not have a fair market value of more than $475,000, though there is a sliding scale up to $500,000 to allow some of the exemption to be claimed up to that point. Beyond that, the buyer cannot claim the exemption.
• The buyer must be a BC resident for the 12 months immediately prior to filing the transfer or have filed 2 income tax returns in BC in the past 6 years;
• The buyer must never have owned an interest in land which was its principal residence;
• The property cannot be larger than 1.24 acres (or can be but the exemption applies only to the smaller portion); and
• The Buyer must be a Canadian citizen or permanent resident.
• There is very little grey area when looking at these exemptions, and the buyer is required to make a self declaration that these exemptions are met. if the buyer makes a false claim, the tax becomes payable and the government applies a penalty which is an amount equal to the tax payable.

  The BC government implemented an exemption from property transfer tax for buyers of newly built homes. There are certain criteria that must be met to qualify that mirror the first time home buyers criteria. The key difference is that the price can be up to $750,000.00 with a sliding scale up to $800,000.00.

For more information on the First Time Home Buyer exemption, click here

For more information on Property Transfer Tax, click here

For more possible exemptions from this tax, click here