PROPERTY TRANSFER TAX:
Whenever a property in B.C. is transferred by way of a sale, the new purchaser has to pay the Property Transfer Tax.
This tax is calculated as follows:
1% on the first $200,000, and
2% on any amount above $200,000
First time buyers are often exempt from this tax if they meet certain conditions. The conditions below MUST be met in order to qualify for the exemption:
The purchaser(s) must be a First Time Buyer: this is defined as anyone who has not owned their own principle residence anywhere in the world at any time in the past. (If you owned a rental home or recreation property that was never used as your principle residence, you would be able to apply for the exemption). When there are two purchasers and only one is a first time buyer, then 50% of the tax will be exempt.
Maximum purchase price of $275,000 (in the Lower Mainland) and $225,000 (outside the Lower Mainland).
As this is a provincial tax, the purchaser must have resided in B.C. for at least 1 year prior to the new purchase date to qualify for the exemption.
The purchaser must borrow at least 70% of the purchase price in the form of financing and take at least a 1-year term. (If you take a term less than 1 year, then the tax must be paid up-front and a refund can be applied for after 1 year).
A maximum of $10,000 can be paid down on the mortgage principle within the first year (for properties outside the Lower Mainland this maximum is $8,000). Note: the property purchase tax department will often ask you to show them a statement from your bank to ensure that your mortgage principle has not been reduced by more than the allowable amounts.
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