Who Pays Property Transfer Tax?
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!
I get asked questions about property transfer tax (PTT) and who pays it all the time!
It is important that you are well aware of closing costs associated with purchasing, and this blog will help to explain the property transfer tax details.
You’ll learn about how much property transfer tax is, when you need to pay it, who needs to pay it, and much more.
For everything you need to know about PTT, read below!
What is property transfer tax?
Property transfer tax is a provincial tax that is charged when you make changes to a property’s title. A property transfer tax will occur when a property is:
- Sold, and therefore the buying is acquiring a registered interest in the property
- gaining an additional registered interest in the property
- becoming the registered holder of a lease, life estate, or right to purchase for the property
Who pays property transfer tax?
The buyer pays the property transfer tax, unless they qualify for an exemption.
An example of such an exemption may be that th
ey are a first time home buyer (FTHB) qualified for the FTHB Program.
The seller does not pay the property transfer tax.
How much is property transfer tax?
The property transfer tax rate is:
- 1% on the first $200,000,
- 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000,
- 3% on the portion of the fair market value greater than $2,000,000, and
- if the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000.
If the purchase price is $300,000, you will have to pay $4000 of property transfer tax at the time of completion.
Is there a property transfer tax exemption for first time home buyers?
If you are an eligible first time home buyer then you may be exempt from the property transfer tax.
In order to be eligible for FULL EXEMPTION:
A buyer must meet the following requirements:
- be a Canadian citizen or permanent resident
- have lived in B.C. for 12 consecutive months immediately before the date you register the property or filed at least 2 income tax returns as a B.C. resident in the last 6 years
- have never owned an interest in a principal residence anywhere in the world at any time
- have never received a first time home buyers’ exemption or refund
and the property must:
- have a fair market value of $500,000 or less
- be located in B.C.
- only be used as your principal residence
- be 0.5 hectares (1.24 acres) or smaller
A first time home buyer may qualify for a partial exemption from the tax if the property:
- has a fair market value less than $525,000
- is larger than 0.5 hectares
- has another building on the property other than the principal residence
How much is property transfer tax if I am a foreign buyer?
For foreign buyers, there is an additional 20% tax of the fair market value of your proportionate share of the property. This is applicable if the purchase is within the following areas:
- Capital Regional District
- Fraser Valley Regional District
- Greater Vancouver Regional District
- Regional District of Central Okanagan
- Regional District of Nanaimo
The additional property transfer tax doesn’t apply to properties located on Tsawwassen First Nation lands.
When do you pay property transfer tax?
When you purchase or gain an interest in property that is registered at the Land Title Office, you’re responsible for paying property transfer tax.
The property transfer tax is paid at the time the property completes, when the title to the property is transferred to the Buyer.
This date is agreed upon by both the buyer and seller in the contract of purchase and sale.
If you’re just starting out in your home purchasing journey and are looking for a realtor to guide you through the process, then give us a call at 604-765-0376. Prefer text? 604-319-0200 or email [email protected] to start a conversation. We’re here to help.
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