Property transfer tax is different from property tax. You pay property transfer tax when you purchase or acquire an interest in a property. You pay property tax on an annual basis for services you receive from your local government.
What is the Tax Rate?
The amount of tax due depends on the fair market value of the property. If the fair market value is $200,000, or less, the tax is 1% of the fair market value. If the fair market value is greater than $200,000, the tax is 1% of the fair market value up to $200,000, plus 2% on the portion of the fair market value that is greater than $200,000.
The First Time Home Buyer’s Program
If you are purchasing your first home, you may qualify for an exemption from property transfer tax, if you meet the stipulated requirements.
What are the Requirements?
You qualify for the requirements if:
► you are a Canadian citizen or permanent resident;
► you have lived in British Columbia for 12 months consecutive months immediately before the date you register the property, or you have filed 2 income tax returns as a BC resident during the past 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;
► you have never received a first time homebuyers’ exemption or refund.
The property you purchase qualifies if:
► the fair market value of the property is not more than $425,000;
► the land is .5 hectares (1.24 acres) or smaller; and
► the property will only be used as your principal residence.
If the property does not meet all of these requirements, you still may qualify for a partial exemption.
How to Apply for the Exemption
You apply for the exemption when you register the property at the land titles office.
Your lawyer or notary public register the property and applies for the exemption on your behalf.
The land titles office sends your application to the Ministry of Small Business and Revenue to verify your eligibility.
Requirements to Keep the Exemption
► you need to occupy the property within 92 days of registration and continue to use the property as your principal residence for at least 1 year from that date;
► if the land is vacant, a principal residence needs to be built on the property within one year of the registration date, and you need to reside in the property for the remainder of that year; fair market value of the land plus the building improvements cannot exceed $425,000;
► at the end of the first year, the ministry of finance will send you a letter requesting details of the financial accounts that you have registered against the property for that year;
► it is your responsibility to ensure that the ministry receives the necessary information; and
► you may still qualify for a partial exemption if you do not meet all of the above requirements.
If you wish to learn more information, or wish to verify this information, I encourage you to visit the Government of British Columbia’s website: www.gov.bc.ca or http://www.sbr.gov.bc.ca