If you're planning on buying a property in British Columbia, Canada, it's important to know about the Property Transfer Tax. This tax is applied when you purchase or gain interest in a property that is registered at the Land Title Office. Unless you qualify for an exemption, you will be required to pay this tax.
The Property Transfer Tax is calculated based on the fair market value of the property on the completion date of the transfer, which is usually the selling price. The fair market value is defined as the price that a willing purchaser would pay to a willing seller in an open market. The tax rate is 1% of the fair market value up to $200,000, 2% on the portion of the fair market value greater than $200,000 up to $2 million, and 3% on the portion of the fair market value greater than $2 million. In addition, there is a further 2% tax on any portion of the fair market value greater than $3 million.
For example, if you purchase a home at the current benchmark price of around $1 million, your property transfer tax would be $18,000. This is calculated as 1% of the first $200,000, which is $2,000, plus 2% of the remaining $800,000, which is $16,000. Keep in mind that this tax is in addition to your down payment and any other fees you may incur, such as legal and moving fees.
The British Columbia Real Estate Association has a calculator on their website that can be used as a general guideline for calculating the Property Transfer Tax. However, it's important to note that this calculation should not be considered a substitute for professional accounting or legal advice.
If you're a first-time homebuyer, you may be eligible for a full or partial exemption from the Property Transfer Tax. If your property has a fair market value of $500,000 or less and is your principal residence, you may qualify for a full exemption. If the fair market value is between $500,000 and $525,000, you may qualify for a partial exemption.
Newly built homes may also qualify for a full or partial exemption up to a fair market value of $750,000.
Your legal professional who completes the legal land transfer will apply for these exemptions on the property transfer tax return form and advise you on how much of an exemption you qualify for.
The Property Transfer Tax is an important consideration when purchasing a property in British Columbia. Make sure to factor in this tax, along with any potential exemptions, when planning your budget for a new property.
The Property Transfer Tax is calculated based on the fair market value of the property on the completion date of the transfer, which is usually the selling price. The fair market value is defined as the price that a willing purchaser would pay to a willing seller in an open market. The tax rate is 1% of the fair market value up to $200,000, 2% on the portion of the fair market value greater than $200,000 up to $2 million, and 3% on the portion of the fair market value greater than $2 million. In addition, there is a further 2% tax on any portion of the fair market value greater than $3 million.
For example, if you purchase a home at the current benchmark price of around $1 million, your property transfer tax would be $18,000. This is calculated as 1% of the first $200,000, which is $2,000, plus 2% of the remaining $800,000, which is $16,000. Keep in mind that this tax is in addition to your down payment and any other fees you may incur, such as legal and moving fees.
The British Columbia Real Estate Association has a calculator on their website that can be used as a general guideline for calculating the Property Transfer Tax. However, it's important to note that this calculation should not be considered a substitute for professional accounting or legal advice.
If you're a first-time homebuyer, you may be eligible for a full or partial exemption from the Property Transfer Tax. If your property has a fair market value of $500,000 or less and is your principal residence, you may qualify for a full exemption. If the fair market value is between $500,000 and $525,000, you may qualify for a partial exemption.
Newly built homes may also qualify for a full or partial exemption up to a fair market value of $750,000.
Your legal professional who completes the legal land transfer will apply for these exemptions on the property transfer tax return form and advise you on how much of an exemption you qualify for.
The Property Transfer Tax is an important consideration when purchasing a property in British Columbia. Make sure to factor in this tax, along with any potential exemptions, when planning your budget for a new property.