23 Jan Property Transfer Tax Exemptions

Property Transfer Tax Exemptions

On the purchase of any property in British Columbia, the purchaser must pay Property Transfer Tax (PTT) on the transaction. The PTT is calculated as follows:

1. 1% of the taxable transaction’s fair market value that does not exceed $200,000
2. 2% of that fair market value that exceeds $200,000 but does not exceed $2,000,000.
3. 3% of that fair market value that exceeds $2,000,000
4. If the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000

Unless the purchaser and the property qualify for an exemption, the property transfer tax must be paid at the time of the conveyance.

There are some occasions when a purchaser will not have to pay the PTT. The three most common exemptions are:

First Time Homebuyer Exemption

To qualify for this exemption, both the purchaser and the property must meet the following criteria:

Purchaser:

• 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

Property:

• be located in B.C.
• only be used as your principal residence
• have a fair market value of $500,000 or less*
• be 0.5 hectares or smaller

*note: there is a partial PTT exemption for qualifying properties with a fair market value over $500,000.

New Construction Exemption

Purchaser:

• be a Canadian citizen or permanent resident
• must use property as principle residence

Property:

• have a fair market value of $750,000 or less*
• be 0.5 hectares or smaller

*note: there is a partial PTT exemption for qualifying properties with a fair market value between $750,000 and $800,000.

Related Individual Exemption

Purchaser:

• be a Canadian citizen or permanent resident
• meet the definition of related individual*:
  • 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.

Property:

• 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

*note: a sister, brother, uncle, aunt, niece or nephew are not considered to be related individuals for the purposes of this exemption.

There are certain other exemptions that arise less commonly. If you know someone who is in the process of purchasing or transferring property and would like more information, please feel free to contact our Real Estate lawyers today. Victoria BC Lawyers, Sitka Law Group is located in Victoria, B.C., near the border of Saanich and Oak Bay.