Property Transfer Tax and Real Estate
When you buy a home (aka transfer title from Seller to Buyer), you have to pay a tax based on the sale price of the home. This is called the Property Transfer Tax (PTT). It’s percentage based, and can amount to a significant addition to the cost of buying a home. Realtors have to inform you of this tax prior to you writing an offer, as the tax amount is a sum most people don’t consider when they add up the costs associated with buying a home. Luckily, your Lawyer or Notary handles this, as well as ensures you receive any exemptions you’re entitled too.
The tax is calculated as follows:
- $200,000 or less: 1%
- for example: a $200,000 property amounts to $2,000 in PTT
- $200,000 or more: 1% on the first $200,000 and 2% on the amount over $200,000
- for example:
1% on $200,000 + 2% on $350,000 = $2,000 + $7,000 = $9,000 PTT
1% on $200,000 + 2% on $550,500 = $2,000 + $11,010 = $13,010 PTT
1% on $200,000 + 2% on $800,000 = $2,000 + $16,000 = $18,000 PTT
History of the Property Transfer Tax (PTT)
Introduced in 1987, when most homes where no where near as expensive as they are today, the revenue generated from this tax funds public services. It generates approximately $780 million for the Government every year, so that it quite a bit of money going towards Public Services (and hopefully ones that improve the life of said homeowners). Both homeowners and the Real Estate Board are pushing to have this tax lessened, in order to ease the burden on home buyers and this encourage more home sales. Visit Help Reduce the Property Transfer Tax for more information on that campaign.
Property Transfer Tax Breaks
Luckily, the Government offers a break for First Time Home Buyers and others.
First Time Home Buyers and PTT
You can qualify for an exemption if you meet the following critera:
- you’re a Canadian or a permanent resident of Canada
- you’ve lived in BC for at least 1 year
- Property has never been in your name, anywhere in the world
- the property is $425,000 or less (if it’s more you can still get an exemption, but not as much)
- and you will live in the property
Take a look at the Property Transfer Tax exemption amounts based on price of the home.
Other Property Transfer Tax Exemptions
- title transfers due to Bankruptcy
- title transfers to a spouse due to a divorce
- title transfer involving joint tenants and tenants in common
- title transfers between family members
See the Government’ of BC’s website for a list and description of all the Property Transfer Tax exemptions.