Property Transfer Tax Exemption BC
How to Avoid B.C. Property Transfer Tax & Exemption Eligibility
Written By: Mariko Baerg, REALTOR of Bridgewell Real Estate Group
If you’re looking for a realtor to help you buy or sell, contact our team today!
Understanding closing costs you have to pay when buying a home is important, but another factor to buying is also knowing what exemptions you have available to you to save money.
In this blog you’ll find out the property transfer tax exemptions in BC that are available to you, as well as the PTT qualifications so you can find out if you’re eligible.
Keep reading for everything you need to know about property transfer tax exemptions in BC!
Property Transfer Tax Exemption BC
On the purchase of a property in BC, property transfer tax is a tax due at completion and registration of the property transfer that is the responsibility of the buyer. However, there are property transfer tax exemptions that are offered by the government for particular situations. In B.C., the most common property transfer tax exemptions used are:
- First Time Home Buyer Property Transfer Tax Exemption
- Newly Built Home Property Transfer Tax Exemption
- Vacant Land Property Transfer Tax Refund
- Family Property Transfer Tax Exemption
In order to understand the property transfer tax exemption in BC, it is first important to know how to calculate property transfer tax. If you are a Canadian citizen or Permanent resident, the general property transfer tax calculation is as follows:
- 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
The amount of tax you pay is based on the fair market value of the property, which is most cases is simply the purchase price. In some cases where there is no monetary exchange, such as an inheritance, the fair market value is usually based on a third party appraisal or possibly BC property assessment.
It is important to note that if you are considered a foreign buyer/entity, then you have to pay an additional property transfer tax of 20% of the fair market value of your proportionate share of the property.
First Time Home Buyer Property Transfer Tax Exemption
There are some principal residence exemption options for buyers that help to waive property transfer tax, most notably the first time home buyer PTT exemption.
To help enter in to the market, the first time home buyer 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.
Your property qualifies for a full refund if:
- The property has a fair market value that does not exceed $835,000
- The land is equal to or less than 0.5 hectares (1.24 acres)
- The property will be used as a principal residence.
There are also partial refunds available for properties with a fair market value of less than $860,000.
Ultimately, as a first time home buyer, it is very important that you are aware of the extra benefits and exemptions available to you. The property transfer tax savings on the full exemption is up to $8000!
In addition to the PTT exemption, you also have RRSP benefits and potential GST rebates. For more on tips for first time buyers, check out this blog: Tips for First Time Home Buyers
Newly Built Homes Property Transfer Tax Exemption
Newly built homes are most commonly referred to in the sense of being a presale condo or townhouse; however, this may also include a house constructed on vacant land, a substantially renovated home, a manufactured home on vacant land, and other newly built homes.
A lot of people wonder if they have to pay property transfer tax on the purchase of a new home. The answer is yes, but the threshold for the newly built homes PTT exemption is much higher than that of the FTHB exemption.
For buyers purchasing a newly built home, there is a property transfer tax BC exemption for properties that have a fair market value up to $1,100,000. These new home exemption is regardless of whether you are a first time home buyer or not.
For the newly built home exemption to apply, you have to be a Canadian citizen or permanent resident and be purchasing the property as your primary residence.
There’s a partial exemption for new homes with fair market value up to $1,150,000.
For a further definition of what qualifies as a newly built home, click the following link: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/newly-built-home-exemption
Vacant Land Property Transfer Tax Refund
If you purchased a vacant lot and were qualified for the Newly Built Home Exemption, but did not apply when you registered the home, you may be eligible for a refund. If you registered a vacant lot and paid the tax, you may apply for a refund if:
- built a new home on the land worth $1,100,000 or less (if you registered title after April 1, 2024);
- moved into the home and occupied as a principal residence for the first year; and
- meet the qualifications for the Newly Built Home Exemption.
There may also be other less common exemptions available. For more info information on property transfer tax and what may qualify for an exemption, you can also refer to the government’s guide for Property Transfer Tax Exemptions List in BC
Family Property Transfer Tax Exemption
In order to qualify for the exemption, the member/purchaser in which the property is being transferred to must be a Canadian citizen or permanent resident, as well as meet the definition of a related individual.
For the family property transfer tax exemption, a related individual is considered to be:
- 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
It is important to note that for the family property transfer tax exemption, a sister, brother, uncle, aunt, niece or nephew are not considered to be qualifying related individuals to avoid property transfer tax.
Furthermore, the property must meet the following requirements:
- 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
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