Please Note: Property Transfer Tax discussed in this page is a provincial Law and only applies to Province of British Columbia (BC). For details in your province please consult your lawyer.
What is Property Transfer Tax (PTT)?
How the Property Transfer Tax is calculated?
Who is eligible for exemption?
Purchase price & Full Exemption of PTT.
How Partial PTT is calculated?
What is Property Transfer Tax (PTT)?
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. This tax is not added to the mortgage and as of part of the closing cost is payable at lawyer office.
How the Property Transfer Tax is calculated?
1% of the first 200,000 of purchase price + 2% of the rest. An easier formula is 2% of purchase price minus $2000.
1% x $200,000 + 2% (Purchase Price – 200,000)
or
(2% x Purchase Price) – $2000
Example:
Purchase price: $500,000
1st Method:
PTT: = 1% x 200,000 + 2% (500,000 – 200,000)
= $8,000
2nd Method
PTT: = 2% x 500,000 – 2000
= $8,000
Who is eligible for exemption?
- Basically if you are First Time Home Buyer.
- Canadian Citizen or Landed Immigrant.
- A person who has resided in British Columbia for 12 consecutive months immediately prior to the date of registration of the transfer, or who has filed two income tax returns as a British Columbia resident within the last six years.
- A person who has never, at any time, held a registered interest in a principal residence anywhere in the world (a principal residence is defined as the usual place where an individual resides), and
- A person who has not previously received a First Time Home Buyer exemption or refund.
- 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;
- Partial exemption where property exceeds .5 hectares or a portion of the property is not residential (i.e. commercial lofts), only the residential is eligible for exemption.
Purchase price & Full Exemption of PTT
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.
To calculate the partial exemption you can use the following formula:
- Calculate “the amount of Full PTT”
- (Amount of Full PTT x ($450,000 – Purchase Price)) / $25,000
Example:
Purchase price: $445,000
Full PTT: $6,900 (= 2% x 445,000 – $2000)
Partial exemption $1,380 (= ($6900 x (450,000 – 445,000)) / 25,000)
Partial PTT $5,520 ($6900 – $1380)
Partial PTT is the amount of Property Tax Transfer owing.
