I always get a lot of questions about the property transfer tax in BC. Here is an explanation on how it works and what type of exception there is for first time home buyers!
Property transfer tax is a registration tax which is payable each time an application to register a transfer of land or an interest in land is made at the Land title office.
The tax is payable at a rate of one (1%) percent on the first $200,000.00 of the fair market value and two (2%) percent of the remaining fair market value.
There are exemptions however. One of the exemptions is the First Time Home Buyers Program (“FTHB”).
In order to qualify, a purchaser must be purchasing a principal residence for the first time. In addition to this basic requirement, there are many more qualifications. All of them must be met to qualify for the exemption.
For example, the purchaser must:
- be a Canadian citizen, or permanent resident. Where a purchaser is not entitled to an exemption at the registration date only because they are not a Canadian citizen or permanent resident, and the purchaser satisfies that requirement on or before the first anniversary of the registration date; they may apply for a refund of the tax paid. Applications for a refund must be made within 18 months of the registration date.
- have resided in British Columbia for a continuous period of at least one (1) year immediately prior to the transfer or, have filed income tax returns as a resident of British Columbia in at least two (2) of the six (6) taxation years immediately preceding the transfer;
- purchase a property under $425,000.00 for the full exemption but, where the fair market value exceeds $425,000.00 by up to $25,000.00, a proportional exemption is available;
- not have previously owned a principal residence anywhere.
- occupy the property, if it has a principal residence on it, within ninety-two (92) days of the date of the transfer and must occupy and use the property as their principal residence for one (1) year following the date of the transfer.
Different rules apply if the land is vacant.
If the property is not occupied for the one (1) year period following the date of the transfer, a purchaser may be eligible for a prorated amount of the exemption based on the date the purchaser moved off the property; A letter will be mailed to the purchaser, by the ministry, on the first anniversary of the purchase. This letter will ask the purchaser to confirm that the property is still their principal residence. It is the purchaser’s responsibility to ensure the ministry receives all the necessary information. If the ministry does not receive the information, the purchaser will be assessed for the property transfer tax due.
If a false, or misleading declaration is made, a penalty equal to the tax due on the transfer will be assessed (this is in addition to the tax due).
For more information please contact me or visit the links below.