THE PROPERTY TRANSFER TAX

In British Columbia the government charges a tax on all property transfers. The tax is payable by the purchaser of that property. The tax is simply 1% of the first $200,000 of value and 2% on the balance. This is payable to the Provincial Government on completion date.

There are few exemptions to this tax. For instance there is an exemption when transferring property from a parent to a child, as long as it remains a principal residence. The most common exemption is for the first time buyer. In the Lower Mainland if the pruchase price is below $350,000 then the first time buyer can be exempt from some or all of the tax providing certain criteria are met.

FIRST TIME BUYER EXEMPTION DETAILS:

• To be eligible for the full exemption the purchase price must not exceed $325,000 (in the Lower Mainland). Between $325,001 and $350,000 the amount of the exemption declines on a sliding scale to where it is zero at the $350,000 value.
• Each purchaser applying for the exemption must not have previously owned an interest in real estate anywhere in the world.
• If there are two purchasers, each owning 50% of the property and one has owned property previously, then 50% of the P.T.Tax is exempt as long as other criteria are met. Between $325,001 and $350,000 then the full tax is payable and then a rebate for half the exemption is refunded later.
• The property must be a principal residence and owner occupied within 92 days of purchase.
• The amount borrowed to purchase the property must meet or exceed 70% of the value of the property and principal reduction in the first year of the mortgage cannot exceed $13,000 including bonus payments on the mortgage.
• The mortgage must have a term of at least 1 year closed. If it's an open mortgage then the tax must be paid and then after the first year but not more 18 months after purchase the buyer can apply ofr the partial refund.
• The purchaser must be a Canadian citizen or permanent resident of Canada and must have resided in the PRovince of BC for at least 12 months immediately prior to the purchase transfer date.

This list is not exhaustive and is presented as a guide for the situations met by most buyers. This list does not replace the need to read the actual legislation or consult your lawyer pertaining to your particular situation. If there is a conflict between the information presented here and the legislation, the legislation prvails.