Despite the fact that the Property Transfer Tax has been in force for a long time now, I am still consistently asked about how the First Time Home Buyers’ exemption works. These questions are not only coming from first time buyers but realtors as well.
Therefore, I thought this would be a great topic to write about.
The British Columbia Property Transfer Tax charges 1% on the first $200,000 and 2% on the remainder of the purchase price. Example, if you bought a home for $400,000 then the tax would be $6000 (1% of the first $200,000=$2000 plus 2% of the remainder = $4000).
However, First Time Home Buyers’ may qualify for an exemption from this tax.
- you are a Canadian citizen, or a permanent resident as determined by Immigration Canada,
- you have lived in British Columbia for 12 consecutive months immediately before the date you register the property, or you have filed 2 income tax returns as a British Columbia resident during the 6 years before the date you register the property,
- you have NEVER owned an interest in a principal residence ANYWHERE IN THE WORLD AT ANYTIME, and
- you have never received a first time home buyers’ exemption or refund.
The property must also qualify as follows:
- the fair market value of the property is not more than the current threshold of $425,000,
- the land is 0.5 hectares (1.24 acres) or smaller, and
- the property will only be used as your principal residence.
A few other items not commonly known but is required to keep your exemption:
- You need to occupy the property within 92 days of the date you register the property and continue to use the property as your principal residence for at least 1 year after you register the property.
- If the land is vacant when you purchase the property, a principal residence needs to be built on the property within 1 year of the registration date, and you need to reside on the property for the remainder of that year. The fair market value of the land, plus the cost of building any improvements on the land cannot exceed the current threshold of $425,000.
- The ministry will send you a letter asking for information to confirm the above at the end of the first year you own the property.
If your purchase is between $425,000 and $450,000 you may qualify for a partial exemption. I suggest speaking with your Mortgage Planner or realtor to calculate the exemption amount.
There are some additional details that can be accessed here and was the main source of this post.
Should you have any questions or comments I would love to hear them.