Property Transfer Tax Exemption in BC: A Complete Guide
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by Richard Morrison
- May 21, 2022
- Trends
- 0
Buying property in British Columbia? Then you’ll need to pay close attention to the property transfer tax (PTT). This tax applies whenever property changes hands in the province. The good news is that BC has several property transfer tax exemptions that could save you thousands of dollars. This comprehensive guide will walk you through everything you need to know about PTT exemptions in BC.
Key Takeaways
- First-time homebuyers can qualify for full PTT exemption on homes under $500,000
- Newly built homes under $750,000 are eligible for PTT exemption
- Foreign buyers must pay an additional 20% PTT (Foreign Buyer Ban until end of 2024)
- Participants in the BC Provincial Nominee Program get a PTT exemption
- Family transfers of principal residences also qualify for exemption
What is Property Transfer Tax?
The property transfer tax is essentially a registration tax payable whenever property ownership changes in BC. It applies to both residential and commercial property transactions. PTT must be paid upfront when registering the property transfer at the Land Title Office.
The tax is calculated based on the property’s fair market value at the time of registration. PTT rates in BC are:
- 1% on the first $200,000
- 2% on the portion between $200,000 to $2 million
- 3% on the portion between $2 million to $3 million
- 5% on amounts above $3 million (2% for commercial properties)
Foreign buyers also pay an additional tax of 20% of the property’s value.
First-Time Homebuyer Exemption
The first-time homebuyer program provides PTT relief for those buying their first home in BC. To qualify, you must:
- Be a Canadian citizen or permanent resident
- Not currently own or have previously owned property
- Occupy the home as your primary residence
The property must:
- Be located in BC
- Have a fair market value under $500,000
- Be smaller than 1.24 acres
You’ll get full PTT exemption if you meet the criteria. There’s also a partial exemption for homes between $500,000 to $525,000.
You must move in within 92 days and live there for at least a year. If not, you may have to repay the exemption.
Newly Built Home Exemption
Are you buying a newly constructed home in BC? If so, you may qualify for PTT relief.
This exemption applies to:
- New houses built on vacant land
- New condo apartments
- Manufactured homes placed on empty lots
- Homes that were converted from non-residential use
To get full exemption, the home must:
- Be your primary residence
- Cost under $750,000
- Be smaller than 1.24 acres
There’s also partial exemption for homes priced $750,000 to $800,000.
As with the first-time homebuyer exemption, you’ll need to move in within 92 days and live there for at least one year.
Vacant Land Exemption
Did you know there’s also PTT relief for vacant land purchases? If you bought vacant land and paid PTT at the time, you can get a refund if:
- You build a new home on the land that qualifies for PTT exemption
- The total value is under $800,000
- You move in within 92 days and occupy the home for at least one year
You must apply for the refund within 18 months of registering your home.
Foreign Buyer Exemption
Normally foreign buyers pay an extra 20% PTT in BC. But participants in the BC Provincial Nominee Program are exempt.
So if you have a work permit through this program, you won’t pay the additional property transfer tax when buying a home.
Family Exemption
Transfers of a principal residence between qualifying family members are also exempt from PTT. This includes transfers between:
- Spouses
- Parents and children
- Grandparents and grandchildren
To qualify, the transferee must become the property’s primary resident. And at least one person must have lived there for 6+ months beforehand.
Claiming Exemption
Wondering how to claim PTT exemption when buying property in BC?
It’s straightforward. When submitting your property transfer forms, simply select the applicable exemption code. For the first-time homebuyer exemption, it’s code 48. The newly built home exemption code is 49.
Your lawyer or notary will handle claiming the exemption on your behalf. Make sure to provide them with the required documents to prove eligibility. This includes citizenship or permanent resident cards, past tax returns showing BC residency, etc.
Penalties
Providing false information to claim an invalid PTT exemption can lead to stiff penalties:
- Double the PTT amount owed
- Fines up to $200,000 for corporations or $100,000 for individuals
- Up to 2 years in prison
Property transfers can be audited for up to 6 years after registration. Don’t try gaming the system!
Key Takeaways
- First-time homebuyers and those buying newly constructed homes qualify for PTT exemptions in BC
- You must occupy the property as a primary residence for at least one year
- Foreign buyers pay an additional 20% PTT, except those in provincial nominee programs
- Transfers between qualifying family members are PTT exempt
- Claim exemptions through your lawyer/notary when registering property
Q: What is Property Transfer Tax Relief in BC?
A: Property Transfer Tax Relief in BC is a program that provides tax relief to home buyers by exempting them from paying the property transfer tax when buying their first home.
Q: Who qualifies for the Property Transfer Tax Exemption?
A: The property transfer tax exemption applies to first-time home buyers who are Canadian citizens or permanent residents, and who have not owned an interest in a principal residence anywhere in the world at any time during the last 10 years.
Q: How do I pay property transfer tax in BC?
A: You can pay property transfer tax in BC either by cash, cheque, credit card or money order. You will need to fill out Form PT149 (Application for Property Transfer Tax Refund) and submit it along with your payment.
Q: How do I calculate my property transfer tax?
A: The amount of property transfer tax you will be required to pay depends on the fair market value of the property being transferred. You can use the online Property Transfer Tax Calculator provided by Service Canada to calculate how much you owe.
Q: Are there any exemptions available for paying Property Transfer Tax?
A: Yes, there are several exemptions available that may allow you to avoid having to pay all or part of the Property Transfer Tax. These include exemptions for newly built homes, first-time homebuyers, and those purchasing through a foreign buyer’s tax.
Q: What is First Time Home Buyers’ Program?
A: The First Time Home Buyers’ Program (FTHP) is a provincial program designed to help eligible first-time home buyers offset some of the costs associated with purchasing their first home. Under this program, eligible applicants may receive up to $3750 towards their closing costs such as mortgage registration fees, legal fees and land transfer taxes.
Q: How do I qualify for an exemption from paying Property Transfer Tax?
A: To qualify for an exemption from paying Property Transfer Tax, you must meet certain criteria such as being a Canadian citizen or permanent resident who has never owned an interest in a principal residence anywhere in the world during the past 10 years. In addition, you may also qualify if you are purchasing your first home or if your purchase qualifies under one of several other exemptions available.
Q: How do I know how much property transfer tax I have paid?
A: After filing your income tax returns as a BC resident, check your Notice of Assessment which will show how much property transfer tax was paid when transferring ownership interest into your name.
Q: What is Land Transfer Tax?
A: Land Transfer Tax (LTT) is a type of provincial sales tax charged on transfers of real estate ownership. It’s calculated based on factors such as where you live and what type of residential property you’re buying.
Q: Are there any partial exemptions available?
A: Yes, some purchasers may qualify for a partial exemption if they meet certain criteria. For example, qualifying seniors may be eligible for an exemption up to 50% off their LTT liability.
Q: How do I know what fair market value is?
A: Fair market value is determined by taking into account current real estate prices, comparable sales data, local housing trends, and other relevant factors. Your real estate agent can provide guidance on estimating fair market value for any particular residential property.
Q: What documents are needed when transferring ownership interest in a property?
A: When transferring ownership interest in a residential property, documents typically needed include title documents, deed registration forms, mortgage documents, insurance policies, and notices regarding liens or encumbrances. It’s important that all relevant documents related to the transaction are properly signed and filed before ownership interest can be transferred legally.
Conclusion
Property Transfer Tax (PTT) is a Canadian provincial tax that is levied on the transfer of real estate in BC. The amount of tax you pay depends on the date you register the property, and whether the property is residential or commercial.
If you’re purchasing your first home, you may qualify for an exemption. To calculate how much property transfer tax must be paid at the time of registration, factors such as existing improvement on the land and any foreign buyer tax must be taken into consideration.
There are certain exemptions that may reduce the amount of tax paid; these include home property transfer tax exemption, first time home buyer exemption and guide to property transfer tax. You can apply for a full or partial exemption if your property is in Canada and used as your principal residence; if successful, you will receive a refund of the Property Transfer Tax paid.
Ready to Buy in BC?
Now you know all about property transfer tax exemptions in BC! This can save you thousands off the purchase price.
If you’re ready to buy, don’t forget to account for PTT in your budget. And determine if you qualify for any exemptions. A savvy real estate lawyer can advise you on maximizing tax savings when purchasing property in British Columbia.
Ready to turn your real estate dreams into reality? Contact Richard Morrison, Vancouver’s top realtor with 20+ years of experience. As a Medallion Club member and RE/MAX Hall of Fame award winning agent, he’s the expert you need on your side. Whether buying, selling, or investing, Richard’s personalized approach and deep market insights ensure a successful transaction. Reach out to Richard today at (778) 900-2235 and make your real estate journey seamless and rewarding.
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