Buying a home can be overwhelming with all the expenses you need to consider, like the down payment, mortgage, home insurance, and property taxes. If you’re looking to purchase a home in British Columbia, you will want to be aware of the Property Transfer Tax (PTT). To help you out, I’ve put together a helpful overview of PTT, when it’s applicable and when you may be exempt from it.
What Is Property Transfer Tax (PTT)?
Property Transfer Tax (PTT) is a tax levied on the transfer of ownership of real property. PTT is calculated based on the market value of the property.
How is PTT Calculated in British Columbia?
In British Columbia, you’ll pay 1% of the purchase price up to $200,000, 2% of any portion between $200,000 and $2 million, and 3% of the portion greater than $2 million. If the fair market value of the property is more than $3 million, there’s an extra 2% levy on the amount above $3 million.
Example of How PTT is Calculated
To illustrate how PTT works, let’s examine the case of Sam who has recently bought a property in British Columbia at a fair market value of $3.2 million. In this case, Sam’s PTT is calculated using a tiered system. The amount of the tax is based on the purchase price of the property and includes four brackets:
- 1% of the first $200,000 = $2,000
- 2% of $1.8 million = $36,000 ($2 million – $200,000 = $1.8 million)
- 3% of $1.5 million = $45,000 ($3.5 million – $2 million = $1.5 million)
- 2% of $200,000 = $4,000 ($3.2 million – $3 million = $200,000)
By adding the taxes from each bracket, we can calculate Sam’s total PTT to be $87,000. It is crucial to consider Property Transfer Tax when purchasing a property. Knowing how to calculate the tax can help ensure that you are well-prepared and informed before making a property purchase.
When Does Property Transfer Tax Become Payable?
When transferring a property from one person to another in British Columbia, it is the responsibility of the real estate lawyer to file a PTT return and pay the Land Title Office at the time of registration. If this is not done, the Land Title Office is allowed to decline to register the property transfer.
Can You Apply For A Property Transfer Tax Exemption?
Buying a house in BC can be an expensive process, but the good news is that you may be eligible for some BC Property Transfer Tax (PTT) exemptions. If you’re a first-time home buyer, you could be eligible for a full exemption on homes valued at $500,000 or less. Even if your home is valued at up to $525,000 you may still qualify for a partial exemption. There are also exemptions available for certain types of properties, like newly built homes, family farms, and transfers to registered charities.
To find out more about which PTT exemptions you could be eligible for, be sure to visit our post “Navigating Property Transfer Tax Exemptions in British Columbia“. You can also review the Government of British Columbia’s website. Here you will find all the eligibility criteria you need to know to apply for a PTT exemption. Don’t miss out on this opportunity, review the BC PTT exemptions and start planning your dream home today!
If you need help navigating the legal process of a real estate purchase, reach out to me using the form below.
