PROPERTY TRANSFER TAX:
Property Transfer Tax is a land registration tax. It must be paid when an application for a taxable transaction is made at any Land Title Office in British Columbia to register changes to a certificate of title. Property Transfer Tax is payable on the fair market value of the property being transferred.
Taxable transactions include, but are not limited to, registration of:
a transfer of legal title (for example, you buy a home and register it in your name)
a right to purchase (an agreement for sale)
a lease or lease modification agreement
a life estate
a foreclosure
a property transfer pursuant to a corporate reorganization
an escheat, forfeiture or quit claim
a Crown grant
Fair market value is the price that would be paid by a willing purchaser to a willing seller in the open market on the date of registration. An open market is where the property is offered for sale so that anyone likely to be interested in purchasing it may make an offer. For example, the seller lists the property with a realtor or advertises it for sale.
The tax rate is 1% on the first $200,000 of the fair market value of the property, plus 2% on the fair market value over $200,000.
For example, if the fair market value of the property is $150,000 the tax is 1% of $150,000 or $1,500.
If the property's fair market value is $250,000 the tax is 1% of $200,000 ($2,000) plus 2% of the remaining $50,000 ($1,000) for a total tax of $3,000.
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.
For registrations on, or after, February 20, 2008, the fair market value threshold for eligible residential property is $425,000.
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.
A proportional exemption is provided for eligible residences with a fair market value of up to $25,000 above the threshold (i.e. up to $450,000).
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