British Columbia has a tax on the transfer of real property, called Property Transfer Tax. The tax is based on the fair market value of the real property. The rate of tax is 1% of the first $200,000, and 2% on the balance over $200,000.
However, first-time home buyers who qualify for the First Time Home Buyers’ Program are exempt from payment of the Property Transfer Tax. Typically, to qualify for the exemption, ALL the following conditions must be met:
- You must have lived in BC for 1 full year prior to the purchase date, or have filed 2 income tax returns as a BC resident within the last 6 taxation years.
- You must be a Canadian Citizen or Permanent Resident. (If you obtain this status within one year after the purchase date, you can apply for a refund).
- You must have never owned a registered interest in real property anywhere in the world that was your principal residence.
- You must occupy the real property as your principal residence within 92 days of the purchase date.
- You must continue to reside in the real property for 1 full year after the purchase date. (If you move out sooner, you may have to pay some of the tax).
- You must have never received a first time home buyers’ exemption or refund.
- It must have a fair market value of no more than $500,000. If it is vacant land, the value of the land plus total construction costs must be less than $500,000).
- It must be classified as residential.
- It must not exceed 0.5 hectares (1.24 acres) in size.
If the buyer fully qualifies but property does not fully meet all of these conditions, a partial exemption from the tax may still be available.
If you have questions about the First Time Home Buyers’ Program, or about buying or selling real property in BC generally, please contact us.