Property Transfer Tax…what’s all the fuss about?

April 18, 2012 | By

Recently the media has been making quite a ruckus about “Transfer Property Tax” so I wanted to make mention of this and address this warranted concern. While this is definitely a tax on some, know that there are a number of exemptions available to purchasers so that the tax is not payable.

The Basics

The Property Transfer Tax is a tax payable to the Provincial Government by purchasers of real estate. The tax applies to all types of real estate, whether residential, commercial or industrial. The amount of the Property Transfer Tax is 1% on the first $200,000.00 of the property’s fair market value and 2% on the remaining fair market value.

“Fair Market Value” is best described as the price that would be paid for a property on the open market (which is usually the actual purchase price paid for the property). If the transfer of property is taking place without the exchange of money, the fair market value must be the fair value of the property if this same such property had been sold on the open market. Although some would argue that “fair” when it comes to matters of taxes – is not fair at all. That’s where knowing the ins and outs of this tax is important.

The big Transfer Property Tax winners… First Time Home Buyers!

The best news is for “First Time Home Buyers”. Keep in mind to qualify for an exemption to the Property Purchase Tax as a First Time Home Buyer, the following criteria must be met:

• Purchaser must never have owned an interest in a principal residence anywhere in the world at any time;

• Purchaser must be a citizen of or a permanent resident of Canada;

• Purchaser must have resided in B.C. for 12 consecutive months immediately before the date they become the registered owner, or the Purchaser has filed two income tax returns as a British Columbia resident within the prior 6 years of becoming the owner;

• To obtain full exemption, the purchase price must not exceed $425,000.00. A partial exemption is available for homes between $425,000.00 and $450,000.00 (see formula below);

• Purchaser must move into the property within ninety-two days after registration of the purchase of the property and reside in the property for at least one year;

• Pro rata exemption where property exceeds .5 hectares or a portion of the property is not residential (i.e. commercial lofts) – purchase price of entire property must not exceed the price limitations.

Non-first timer’s beware!

If you are not a first time home buyer, be aware of some additional costs that you may run into with upgrades. As the media is buzzing about – they can come as a shock to those who set out to merely make a few home renovations. Some of the concerns being raised are for additions and renovations such as coach home add-ons after the home have been built or even the paving of a driveway (and other similar activities that increase a home’s value).

A knowledgeable real estate agent can address these concerns and turn an anxious home buyer into a calm decision maker.

 

 

Filed in: Buying and Selling Real Estate, Home Owner Tips | Tags: ,

About the Author (Author Profile)

Andrew is a West Coast enthusiast through and through. He is a native of the area that you will often find adventuring on one of the many sea to sky activities that abound in the Fraser Valley. Along with being in love with the place he calls home, Andrew is a well known and respected Realtor focusing on helping others to find their own perfect home in Langley, Surrey, White Rock and beyond! Visit www.yourperfecthomebc.ca to find your perfect home.

Comments (1)

  1. Andrew Szalontai

    Thanks for the comments, I see your site has valuable information as well for Americans. Keep up the great work.