all you need to know about bc's property transfer tax

(July 25, 2016 , posted in Tips)

The Property Transfer Tax (PTT) is a land registration tax paid by a property buyer or owner when a property title is registered at the Land Title and Survey Authority (LTSA).

How much is the PTT?

The PTT is charged on the fair market value of a property at a rate of:

1% on the first $200,000
2% on the balance up to and including $2,000,000
3% on the balance greater than $2,000,000

If the property is transferred without money changing hands – for example, an inheritance, (known as an arm’s length transaction) – the value is determined by an independent appraisal or BC Assessment.

Pre-sales

Buyers of pre-sold strata units will typically pay the PTT on the total consideration paid for the unit, not the fair market value on the date the title is registered. There are PTT exemptions for new homes (see below.)

The total consideration is the entire amount paid to acquire the property, including the price of the unit plus fees for upgrades or additions, or any premiums for the assignment of a written agreement.

Once a developer files a strata plan at the LTSA, whoever registers the transfer pays the PTT.

Foreign entities

Effective August 2, 2016, an additional PTT charged at a rate of 15% of the fair market value applies to residential property transfers to foreign entites in Metro Vancouver.

Foreign entities are transferees that are foreign nationals, corporations or taxable trustees.

The additional tax applies on the foreign entity's proportionate share of any applicable residential property transfer, even when the transaction may normally be exempt from the PTT. This includes transactions between related individuals, a transfer resulting from an amalgamation, a transfer to a surviving joint tenant, and a transfer where the transferee is or becomes a trustee in relation to the property, even if the trust does not change. The 15% PTT does not apply to trusts that are mutual fund trusts, real estate investment trusts or specified investment flow-through trusts.

Exemptions

First Time Home Buyers’ Program
The First Time Home Buyers’ (FTHB) Program gives a PTT exemption to eligible first time home buyers.
To qualify for a full exemption, first time buyers must:

be a Canadian citizen or permanent resident;
have lived in BC for 12 consecutive months before the date the property is registered; or
have filed 2 income tax returns as a BC resident in the last 6 years;
have never owned an interest in a principal residence anywhere, anytime; and
have never received a first time home buyers' exemption or refund.

The property must be used as a principal residence and have a fair market value of $475,000 or less and be 0.5 hectares (1.24 acres) or smaller. There is a partial exemption for properties $475,000 - $500,000. Here are details.

Newly built homes
There’s a PTT exemption for newly built homes with a fair market value of up to $750,000, including a house constructed on vacant land, a new apartment in a newly built condominium building, a manufactured home on vacant land, and other newly built homes. There are also occupancy requirements.

There’s a partial exemption for property with fair market value of $750,000 - $800,000.

To apply for the Newly Built Home Exemption, enter exemption code 49 on the Special Property Transfer Tax Return when the property is registered at a land title office.

Vacant land
If you registered a vacant lot and paid the tax, you may apply for a refund if you have:

built a new home on the land worth $750,000 or less;
moved into the home as a principal residence within one year of registering the property; and
meet the qualifications for the Newly Built Home Exemption.

Apply for a refund by completing Newly Built Home Application for Refund.

If you need help, phone 250-387-0604 or toll-free phone Inquiry BC at 604-660-2421 and ask to be transferred to 250-387-0604.

Other exemptions
There are many PTT exemptions, including family exemptions, for example:

transfer of a principal residence (PDF)
transfer of a recreational residence (PDF)
transfer resulting from a marriage breakdown (PDF)
transfer of a family farm involving individuals (PDF)
transfer of a family farm to or from a family farm corporation

There are also exemptions for title transfers involving joint tenants and tenants in common, an agreement for sale, a bankruptcy, and transfers to registered charities. Bulletin PTT 003 has details about the range of exemptions.

Penalties
If buyers don’t comply there are penalties that can be levied.

PTT history
In 1987, the PTT was brought in as a luxury tax. Just 5% of homes were taxed the 2% portion (over $200,000). Today, more than 95% of homes pay the 2% portion.

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