BC Property Transfer Tax Calculator
What is the BC Property Transfer Tax?
Did you know that there’s a substantial, one-time tax buyers have to pay when they acquire a property? It’s called the property transfer tax—also commonly known as the land transfer tax in BC.
While many of us scoff at the thought of more taxes, the property transfer tax exists for a reason, and there are rebates that first-time home buyers can take advantage of.
In this post, we will discuss:
- Why does the property transfer tax exist?
- How much the property transfer tax will cost you
- Tax rates for first-time home buyers
- Tax rates for foreigners
- Exemptions for newly built or vacant homes
- How to file
Let’s get started…
Why Does the Property Transfer Tax Exist?
In 1987, the property purchase tax (which was later renamed the property transfer tax) was written into law as a wealth tax meant to discourage speculation. Speculation occurs when someone buys a real estate property as an investment, rather than a residence. Speculative investors are usually more driven by predicted changes in a local market, instead of rents or physical improvements, and these properties are bought and sold for quick returns.
The property purchase tax was for 1% on the first $200,000, and 2% on anything after. In other words, if you bought a home in 1988 for $300,000, your property purchase tax would be:
($200,000 x .01, or 1%) + ($100,000 x .02, or 2%) = $4,000
Back then, the fair market value of around 95% of homes was below $200,000, so this didn’t impact too many people. However, the average home purchase price increased by 375% nationwide in the last 25 years, so the tax needed an update. While the original tax structure hasn’t changed too much, if you’re a Canadian citizen or permanent resident, you may qualify for an exemption or partial or full rebate.
How Much Will the Property Transfer Tax Cost You?
Here’s the current BC Property Transfer Tax Rate Structure:
Home Purchase Price
$200,000 – $2,000,000
$2,000,001 – $3,000,000
If your home costs $300,000, you’re paying the same property transfer tax you would’ve paid in 1987. However, if your home costs $3,000,000, you’re paying an additional percentage point on that extra million.
How much will you have to pay before any rebates or exemptions? Use our property transfer tax calculator to find out:
Tax Rates for First-Time Home Buyers
In 1994, the federal government introduced the First-Time Home Buyers’ Program, which reduces or eliminates how much of the property transfer tax you’ll have to pay when buying your first home.
To qualify for an exemption, you must meet the following qualifications when the property is registered:
- You’re a Canadian citizen or permanent resident
- You’ve never received a first-time home buyers’ refund or exemption
- Either you’ve lived in BC for a year or more immediately before the date you registered your property, or have filed at least two income tax returns as a BC resident in the last six years.
- You’ve never previously owned a principal residence
The amount of the exemption you may qualify for depends on the property’s fair market value and size:
Has a fair market value of or below $500,000
Has a fair market value less than $525,000
Is 0.5 hectares or smaller
Is larger than 0.5 hectares
Is your principal residence
If the property has another building other than your principal residence
You must also meet several additional requirements to keep the tax exemption. The property must be your primary residence for one full year, and you must move into your home within 92 days after registering your property. More on that later.
If you move out before the end of your first year, you can keep part of the exemption. Also, if the primary homeowner passes away or the property is transferred because you and your partner decide to separate, you can still keep the exemption.
Tax Rates for Foreigners
While land transfer taxes have been amended to assist first-time home buyers, foreign property owners must pay an additional property transfer tax if the property is in the following areas:
- Metro Vancouver Regional District
- Fraser Valley Regional District
- Capital Regional District
- Regional District of Center Okanagan
- Regional District of Nanaimo
Foreign nationals, foreign corporations, and taxable trustees in the above areas must pay an additional 20% of your property’s fair market value. This percentage is proportional to the amount of interest they own in the property, if it’s about 70%.
For example, let’s say a foreign national owns 75% of a corporation and buys a $2,000,000 property in the Metro Vancouver Regional District. Their property transfer tax is will:
($200,000 x .01, or 1%) + (1,800,000 x .02, or 2%) +
(($2,000,000 x .75, their ownership) x .20, or 20%) = $338,000
That’s a lot of money—especially when you consider that Canadian citizens and permanent residents only owe $38,000 for the same property. However, not all foreigners will be required to pay the additional property transfer tax. You can get an exemption if you:
- Are a confirmed BC Provincial Nominee
- Acquire a property on behalf of a Canadian-controlled limited partnership
- Are already exempt from the land transfer tax
Exemptions for Newly Built or Vacant Homes
If you buy a new home with a purchase price of $750,000 or less, you can qualify for a full exemption. If the price is between $750,000 and $800,000, you may qualify for a partial exemption. However, you must meet the general requirements of moving into the property within 92 days and using it as your principal residence for one full year.
If the lot is currently vacant, it’s probably not going to be move-in ready in 92 days, so you’ll qualify for the vacant home exemption instead.
In total, there are over 20 exemptions to the property transfer tax. Here are a few of the most common ones
- Registered charities
- Marriage breakdowns
- Veterans’ Land Act
- Transfer following bankruptcy
- Family farm involving individuals
- Recreational residence
For a complete list of exemptions, visit BC.gov’s property transfer tax exemptions page.
How to File and Pay the Property Transfer Tax
Luckily, most of us don’t have to worry about filing and paying the property transfer tax ourselves. The amount is usually included in the closing costs when you acquire the property, and a legal professional completes these documents to register an interest in your property with the Land Title Office on your behalf.
If you’re filing it yourself, BC’s property transfer tax return guide provides step by step instructions on how to file accurately based on your situation.
Once you or your legal representative registers a title change with the Land Title Office, you enter into an assessment period, where it may be subject to an audit at any point within six years of registration. In other words, keep any property transfer tax return documentation for at least six years. If you are audited, the more information you have ready to go, the faster the process will be.
If you disagree with the results, you can file an appeal within 90 days of the date you listed on the Notice of Assessment letter. You’ll need to provide your name, address, contact information, the reason for your objective, and any evidence you have that supports your appeal. You can also file additional appeals, but if you do, we recommend getting the help of a lawyer.
Final Thoughts on the Property Transfer Tax
No one likes paying taxes. However, many first-time home buyers are exempt from this tax, or can at least qualify for a rebate.
As a first-time home buyer, you also have access to other assistance programs, including the Home Buyers’ Plan (HBP), the Home Buyers’ Amount Tax Credit (HBA), and the First-Time Home Buyers’ Incentive (FTHBI).
If you’re looking to purchase your first (or second or third) home, or if you’re curious about what else you may qualify for, reach out to your Vancouver realtor Kim Lee or send us a message!