Property Transfer Tax for First-Time Home Buyers
Property transfer tax (“PTT”) 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.
Property Transfer tax is 1% of the first $200,000.00 of the purchase price, 2% up to $2,000,000.00 of the purchase price, and 3% on the balance of the purchase price above $2,000,000.00.
First Time Home Buyers Exemption
Although PTT applies on each and every transfer, sometimes there is an exemption that may apply. One of the exemptions is the First Time Home Buyers Program (“FTHB”).
In order to qualify for the FTHB, 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. Application 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 with a purchase price of $500,000 or less for the full exemption.
Have never owned a registered interest in a property that was your principal residence anywhere in the world at any time.
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 from 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 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 received 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).
If you have any questions about the FTHB exemption or others, please feel free to give our office a call at 604-583-7917.