Understanding BC’s Property Transfer Tax
Purchasing a home can be an incredibly stressful milestone in your life. Looking for and finding the right home can be difficult enough without the added stresses of understanding the relevant contracts you’ll need to enter into and property taxes you’ll need to pay. That’s where working with an experienced real estate lawyer and notary public can aid you in your buying or selling journey.
There can be a lot of confusion as to how the property transfer tax (PPT) works in British Columbia but the basics are actually quite simple.
The PTT is as follows:
- 1% on the first $200,000
- 2% on the portion between $200,000 up to and including $2,000,000
- 3% on the portion greater than $2,000,000
- On residential properties, a further 2% will be applied to homes greater than $3,000,000
- If the property is classified as mixed class (such as residential and commercial or residential and farm), you would pay the further 2% tax on only the residential portion of the property.
Here is an example of the PTT in action. Let’s assume you buy a residential property for $5,000,000. Your taxes would be calculated as follows:
1% on the first $200,000 = $2000
2% for the portion between $200,000 and $2,000,000 = ($2,000,000 – $200,000) X 2% = $36,000
3% for the portion greater than $2,000,000 = ($5,000,000-$2,000,000) X 3% = $90,000
Further 2% for the portion greater than $3,000,000 = ($5,000,000-$3,000,000) X 2% = $40,000
So your final PTT would come to $168,000.
There are a few types of exemptions from the PTT. You may qualify if you are a first time home buyer, or you are purchasing a newly built home.
First Time Home Buyer Exemption
If this is your first time buying a home, you could qualify for a full or partial exemption from the PTT. If this home is going to be your primary place of residence and it costs less than $500,000, you might be exempt from paying any PTT. If it costs between $500,000 and $525,000 you may qualify for a partial exemption. Any cost over $525,000 and you’ll be required to pay the full amount of PTT.
Newly Built Home Exemption
This exemption might also completely or partially remove the PTT you need to pay. If you’re moving into a newly built home and it costs less than $750,000 then you may not need to pay any PTT. A partial exemption might be given if your newly built home costs between $750,000 and $800,000. Any amount over $800,000 and you’ll be required to pay the full amount of PTT. (could you please send me some support for this? Are you talking about a GST exemption?
If you’re looking for some help during the conveyancing process, including understanding the PTT, our experienced professionals can ensure a smooth transaction. We act in your best interests to protect your assets and help you make informed decisions. Send us a message or call us at 778-819-8553 to book an appointment and to make sure your conveyance process is done right, the first time.