It’s important to know all of the ‘hidden costs’ associated when buying real estate. It’s also important to know the ins and outs on where you can save money. It could make a fairly large difference when negotiating. One cost associated with purchasing real estate in Greater Vancouver is property transfer tax also known as PTT. In this blog you will learn everything there is to know about property transfer tax.
How do I calculate Property Transfer Tax (PTT)
1% on the first $200,000
2% on the balance up to and including $2,000,000
3% on the balance greater than $2,000,000 if the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000
As you can see above the amount you pay is based on percentages. These percentages are based off the fair market value and or the purchase price. In cases with inheritance where no money is exchanged the fair market value is based off of a third party appraisal or in some cases the BC Assessment.
Property tax is due at completion. In some cases there are property transfer exemptions that are offered by the government for certain situations. Below are the most common reasons for property transfer exemptions:
- First Time Home Buyer Property Transfer Tax Exemption
- Newly Built Home Property Transfer Tax Exemption
- Family Property Transfer Tax Exemption
- Vacant Land Property Transfer Tax Refund
- First Time Home Buyer Property Transfer Tax Exemption
- Newly Built Home Property Transfer Tax Exemption
- Family Property Transfer Tax Exemption
- Vacant Land Property Transfer Tax Refund
Fairly new to British Columbia is the foreign buyer’s tax. If you are a foreign buyer then you have to pay an additional property transfer tax of 20% of the fair market value.
A simple way to calculate the property transfer tax is to use the BC Government calculator:
https://www.bcrea.bc.ca/tools-for-realtors/tax-calculator/
A simple way to calculate the property transfer tax is to use the BC Government calculator:
https://www.bcrea.bc.ca/tools-for-realtors/tax-calculator/
First Time Home Buyer – Property Transfer Tax Exemption
One of the more common PPT exemptions is for first time home buyers. This exemption is offered in an effort to help new buyers get into the market. The BC Government lays out the First Time Home Buyers Program:
https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/first-time-home-buyers
One of the more common PPT exemptions is for first time home buyers. This exemption is offered in an effort to help new buyers get into the market. The BC Government lays out the First Time Home Buyers Program:
https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/first-time-home-buyers
To qualify for a full refund:
-You are a Canadian citizen or permanent resident;
-You’ve lived in BC for 12 consecutive months before the date the property is registered; or
-You’ve filed 2 income tax returns as a BC resident in the last 6 years;
-You have never owned an interest in a principal residence anywhere, anytime; and
-You have never received a first time home buyers exemption or refund.
-Your property meets the exemption requirements as well.
-You are a Canadian citizen or permanent resident;
-You’ve lived in BC for 12 consecutive months before the date the property is registered; or
-You’ve filed 2 income tax returns as a BC resident in the last 6 years;
-You have never owned an interest in a principal residence anywhere, anytime; and
-You have never received a first time home buyers exemption or refund.
-Your property meets the exemption requirements as well.
In order for the property to qualify for the refund:
-The property has a fair market value that does not exceed $500,000
-The land is equal to or less than 0.5 hectares (1.24 acres)
-The property will be used as a principal residence.
-The property has a fair market value that does not exceed $500,000
-The land is equal to or less than 0.5 hectares (1.24 acres)
-The property will be used as a principal residence.
There is also a sliding scale for partial refunds with a purchase price up to $525,000. At $500,000 you save $8000 on PTT. To see a visual of the sliding scale up to $525,000 the following link is very helpful.
When you are negotiating the price of a property knowing the sliding scale will determine how much money you will save. If you are a first time home buyer with a budget of $525,000, you may want to aim for $500,000 to maximize your refund.
Newly Built Homes Property Transfer Tax Exemption
Newly built homes and more commonly presale condos are also up for a PTT exemption.
Since you are already paying GST on a new home wouldn’t it be nice to avoid PTT. Well you can if the purchase price is under the threshold of $750,000.
Newly built homes and more commonly presale condos are also up for a PTT exemption.
Since you are already paying GST on a new home wouldn’t it be nice to avoid PTT. Well you can if the purchase price is under the threshold of $750,000.
In order to qualify for the PTT exemption
-You have to be a Canadian citizen or permanent resident
-You have to be purchasing the property as your primary residence.
-You have to be a Canadian citizen or permanent resident
-You have to be purchasing the property as your primary residence.
There’s a partial exemption for new homes with fair market value of $750,000 – $800,000.
Family Property Transfer Tax Exemption
Family Property Transfer Tax Exemption
In order to qualify for the exemption
The family member/purchaser in which the property is being transferred to must be a Canadian citizen or permanent resident
The family member/purchaser in which the property is being transferred to must be a Canadian citizen or permanent resident
You must meet the definition of a related individual.
The definition of a related individual when it comes to qualifying for the exemption is:
-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
Interestingly enough if you read carefully you may notice that a sister, brother, uncle, aunt, niece or nephew would not qualify as a related individual for the exemption.
The definition of a related individual when it comes to qualifying for the exemption is:
-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
Interestingly enough if you read carefully you may notice that a sister, brother, uncle, aunt, niece or nephew would not qualify as a related individual for the exemption.
In order for the property to qualify it must:
-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
-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
Are you thinking about Buying a property in North Vancouver?
Our team is experienced at representing buyers in the Greater Vancouver Real Estate market.
Our team is experienced at representing buyers in the Greater Vancouver Real Estate market.
Please reach out at any time and we would be happy to help. We can provide you a clear picture of all the costs associated with a purchase.
Contact Carson Green by calling or texting 604-506-5364. If you prefer email carson@wallacegreen.ca We are looking forward to helping you with your next home purchase