When it comes to buying property in British Columbia, one of the costs you’ll need to factor in is the Property Transfer Tax (PTT). This tax is calculated based on the fair market value of the property, and applies to both residential and commercial properties. However, there are some exemptions that can help you avoid paying this tax.
The PTT is calculated as follows: 1% of the fair market value that does not exceed $200,000, 2% of the fair market value that exceeds $200,000 but does not exceed $2,000,000, and 3% of the fair market value that exceeds $2,000,000. If the property is residential, an additional 2% is added for the portion of the fair market value greater than $3,000,000.
First Time Homebuyer Exemption
The First Time Homebuyer Exemption is available to those who have never owned an interest in a principal residence anywhere in the world, have lived in B.C. for 12 consecutive months immediately before the date you register the property or filed at least 2 income tax returns as a B.C. resident in the last 6 years, and have never received a first time home buyers’ exemption or refund. The property must also be located in B.C., only be used as your principal residence, have a fair market value of $500,000 or less, and be 0.5 hectares or smaller. Note that there is a partial PTT exemption for qualifying properties with a fair market value over $500,000.
New Construction Exemption
The New Construction Exemption is available to those who are Canadian citizen or permanent resident, planning to use property as principle residence. The property must have a fair market value of $750,000 or less and be 0.5 hectares or smaller. Note that there is a partial PTT exemption for qualifying properties with a fair market value between $750,000 and $800,000.
Related Individual Exemption
The Related Individual Exemption is available to related individuals, defined as a spouse, child, grandchild, great-grandchild, parent, grandparent or great-grandparent, the spouse of your child, grandchild or great-grandchild, and the child, parent, grandparent or great-grandparent of your spouse. The property must be one of the parties must have used the property as a principal residence in the past six months, the building is designed to accommodate three families or less, the improvements on the land are classified as residential by BC Assessment, the land is 0.5 hectares or smaller. Note that a sister, brother, uncle, aunt, niece or nephew are not considered to be related individuals for the purposes of this exemption.
If you have any legal questions or concerns about the Property Transfer Tax exemptions or the buying process, you can contact me for a consultation using the form below.
