Land Transfer Tax BC
Understanding property transfer tax in British Columbia
Written By: Mariko Baerg, REALTOR of Bridgewell Real Estate Group
If you’re looking for a realtor to help you purchase a property, call me today!
Land transfer tax in British Columbia, also known as property transfer tax locally, is a provincial tax that is charged upon completion when title on a property is transferred.
It is important that you are well aware of closing costs associated with purchasing, and this blog will help to explain the land transfer tax details and how much you’ll need to pay.
We go through how to calculate land transfer tax, exemptions, and examples.
For everything you need to know about land transfer tax BC, read below or check out the video!
Land Transfer Tax BC Calculation
Land transfer tax is a marginal rate calculated on the purchase price of a property.
Each portion of your home’s value is taxed at its own unique tax rate.
Land transfer tax BC is calculated as follows:
- First $200,000 of purchase price – tax rate 1%
- Balance up to and including $2,000,000 – tax rate 2%
- Balance greater than $2,000,000 – tax rate 3%
- Balance greater than $3,000,000 – additional tax rate of 2% (if residential property)
British Columbia Land Transfer Tax Calculation Example
Example One: Purchase price $750,000
If you are purchasing a residential property for $750,000, the tax paid is $13,000
- 1% on the first $200,000 = $2,000
- 2% on portion greater than $200,000 and up to and including $2,000,000 = $11,000 ($750,000 – $200,000 = $550,000 X 2% = $11,000)
- For a purchase price of $750,000 there is no portion above $3,000,000 – so this taxable rate does not apply
- TOTAL PROPERTY TRANSFER TAX DUE: $2,000 + $11,000 = $13,000
Example Two: Purchase price $4,500,000
If you are purchasing a residential property for $4,500,000, the tax paid is $143,000.
- 1% on the first $200,000 = $2,000
- 2% on portion greater than $200,000 and up to and including $2,000,000 = $36,000 ($2,000,000 – $200,000 = $1,800,000 X 2% = $36,000)
- 3% on portion greater than $2,000,000 = $75,000 ($4,500,000 – $2,000,000 = $2,500,000 X 3% = $75,000)
- A further 2% on the portion greater than $3,000,000 = $30,000 ($4,500,000 – $3,000,000 = $1,500,000 X 2% = $30,000)
- TOTAL PROPERTY TRANSFER TAX DUE: $2,000 + $36,000 + $75,000 + $30,000 = $143,000
Additional Property Transfer Tax for Foreign Buyers
In addition to the above property transfer tax, foreign buyers (those that are not Canadian citizens or permanent residents) are subject to an additional land transfer tax that is calculated as follows:
- The tax amount is 20% of the fair market value of your proportionate share of the purchased property.
*Important Note: As of February 4, 2024, the foreign buyer ban in effect has been extended for another TWO year period to January 1, 2027.
Land Transfer Tax BC First Time Home Buyer Exemption – Full Rebate Increased to $835,000
To help enter in to the market, the first time home buyer’s (FTHB) program gives an exemption to the property transfer tax in the case that you can qualify.
You qualify for a full refund if:
- 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.
- The property does not have a fair market value that exceeds $835,000
- The property will be used as a principal residence for a minimum of 1 year.
Partial land transfer tax rebate:
There are also partials exemptions for properties up to a value of $860,000. For properties above $860,000 there is no exemption even if you are a first time home-buyer, you will be subject to paying the entire property transfer tax amount.
Application for First Time Home-Buyers
Because there are very specific requirements to be eligible for the rebate, a first time home-buyer must apply for the First Time Home Buyer’s Program, select, or enter exemption code FTH on the property transfer tax return.
After you have applied you must meet additional requirements during the first year you own the property to keep the tax exemption.
First Time Home Buyer BC Land Transfer Tax Calculation Example
Example: Purchase price $450,000, eligible first time home buyer
If you are purchasing a residential property for $450,000, the tax would typically be calculated as follows:
- 1% on the first $200,000 = $2,000
- 2% on portion greater than $200,000 and up to and including $2,000,000 = $5,000 ($450,000 – $200,000 = $250,000 X 2% = $5,000)
- For a purchase price of $450,000 there is no portion above $3,000,000 – so this taxable rate does not apply
- TOTAL PROPERTY TRANSFER TAX DUE: $2,000 + $5,000 = $7,000
- TOTAL REBATE: $7,000 (Because the property is under $500,000, an eligible first time home buyer would receive the full rebate
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