Buying a House or Condo – Have you considered the Property Transfer Tax (PTT)?
When thinking of purchasing a house or condo, many purchasers forget that in addition to the purchase price, there are other costs associated with acquiring their new home. One of these extra amounts is the Property Transfer Tax (PTT).
Property Transfer Tax is a land registration tax, and must be paid when transfer documentation is filed at the Land Titles Office. The PTT is calculated and payable based on the fair market value of the property being transferred.
Fair market value is the price that would be paid by a willing purchaser to a willing seller in the open market for the home that they are acquiring and the PTT is payable on the fair market value of the land and all improvements on the land at the time of the purchase, not the sale price.
There are some exemptions to the PTT, including under the First Time Home Buyer’s Program. The current threshold for a PTT exemption under this program is for a residential purchase no greater than $475,000.00.
In order to qualify for this exemption as a first time homebuyer, you must satisfy certain criteria, including (a) you are a Canadian citizen, or a permanent resident (b) you have lived in British Columbia for 12 consecutive months immediately before the date you register the property, or you have filed two income tax returns as a British Columbia resident during the 6 years before the date you register the property (c) you have never owned an interest in a principal residence anywhere in the world at any time (a principal residence is defined as the usual place where an individual lives), and (d) you have never received a first time home buyers’ exemption or refund.
The PTT tax rate is 1% on the first $200,000 of the fair market value of the property, plus 2% on the fair market value over $200,000.
For example, if the fair market value of the property is $450,000, the PTT that is payable is $7,000 (the PTT is 1% of $200,000 ($2,000) plus 2% of the remaining $250,000 ($5,000) for a total tax of $7,000.)
Conor Zokol is a solicitor practicing in our Business Law Practice Area. He assists clients with real estate conveyances and other real estate matters.
Contact Conor Zokol of DuMoulin Boskovich LLP for your legal needs.