Property Transfer Tax ("PTT") applies to most real estate purchases in British Columbia. Many buyers are surprised to learn that PTT can add thousands of dollars to closing costs.
There are also many questions about whether a purchaser qualifies for the First-Time Home Buyers' exemption or partial exemption.
This article provides general information about Property Transfer Tax in British Columbia, current tax rates, and basic eligibility requirements for exemptions.
What Is Property Transfer Tax?
Property Transfer Tax is a provincial tax paid when real estate is transferred in British Columbia. In most transactions, the tax must be paid at the time the transfer is registered in the Land Title Office.
Current BC Property Transfer Tax Rates
The general Property Transfer Tax rates in British Columbia are:
- 1% on the first $200,000 of the purchase price
- 2% on the portion between $200,000 and $2,000,000
- 3% on the portion above $2,000,000
- An additional 2% may apply to residential properties over $3,000,000
First-Time Home Buyers' Exemption
Some purchasers may qualify for a full or partial exemption from Property Transfer Tax under the First-Time Home Buyers' Program.
Who May Qualify?
To qualify for the exemption, at the time the property is registered, the purchaser must:
- Be a Canadian citizen or permanent resident
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Have either:
- Lived in British Columbia for at least one year immediately before the registration date, or
- Filed at least two income tax returns as a BC resident in the last six taxation years immediately before the registration date
- Have never owned a registered interest in a property that was their principal residence anywhere in the world
- Have never previously received a First-Time Home Buyers' exemption or refund
Property Requirements
The property must also:
- Only be used as the purchaser's principal residence
- Have a fair market value of $835,000 or less
- Be 0.5 hectares (1.24 acres) or smaller
- Contain only residential improvements
If all requirements are met, the purchaser may be exempt from Property Transfer Tax on the first $500,000 of the purchase price.
Partial Exemption
A purchaser may qualify for a partial exemption if the property:
- Has a fair market value greater than $835,000 but less than $860,000
- Is larger than 0.5 hectares, and/or
- Contains another building on the property besides the principal residence
Important Additional Information
Foreign entities and taxable trustees are generally not eligible for the exemption.
In some situations, an individual who does not initially qualify because they are not a Canadian citizen or permanent resident may later apply for a refund if they become a citizen or permanent resident on or before the first anniversary of the registration date.
Speak With a BC Real Estate Lawyer
Property Transfer Tax exemptions can be complicated, particularly where there are questions involving residency, ownership history, property size, or mixed-use properties.
If you are buying property in British Columbia and want assistance reviewing your transaction, our office would be pleased to assist.