In this blog, we will be talking about what makes a suite legal or not. There are many illegal (or unauthorized) suites in the Greater Vancouver due to the high rent and cost of owning a home. It is
What is Property Transfer Tax in Vancouver, British Columbia, Canada?
What is Property Transfer Tax BC?
The Property Transfer Tax (PTT) in British Columbia is a land registration tax paid by a property buyer when a property title is registered at the Land Title and Survey Authority (LTSA). Sellers do not pay the property transfer tax, but buyers of the home have to pay as they are gaining an interest in the property upon title registration.
When Do I Have to Pay the Property Transfer Tax?
The Property Transfer Tax is to be paid as soon as you take possession of the property. Your lawyer will arrange for the payment to be made when the deed is transferred in your name, on closing day. Note that this tax is a one-time payment. You will only pay it once, unlike property taxes which are paid annually.
How much is property transfer tax in BC?
The amount of tax you pay depends on the fair market value of the land and improvements (e.g. building) on the date of registration unless you purchase a pre-sold strata unit.
For Canadian Citizens or Permanent Residents:
The buyer pays the tax one-time at the time of registration, unless the buyer qualifies for an exemption.
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 residential, a further 2% on the portion of the fair market value greater than $3,000,000
Foreign buyers are subject to an additional foreign buyer property transfer tax:
The tax amount is 20% of the fair market value of your proportionate share of the purchased property.
Calculation Examples – How do I calculate property transfer tax?:
Example One: Purchase price $800,000
If you are purchasing a residential property for $800,000, the tax paid is $14,000
1% on the first $200,000 = $2,000
2% on portion greater than $200,000 and up to and including $2,000,000 = $12,000 ($800,000 – $200,000 = $600,000 X 2% = $12,000)
TOTAL PROPERTY TRANSFER TAX DUE: $2,000 + $12,000 = $14,000
Example Two: Purchase price $2,500,000
If you are purchasing a residential property for $2,500,000, the tax paid is $143,000.
1% on the first $200,000 = $2,000
2% on portion greater than $200,000 and up to and including $2,000,000 = $36,000 ($2,000,000 – $200,000 = $1,800,000 X 2% = $36,000)
3% on portion greater than $2,000,000 = $15,000 ($2,500,000 – $2,000,000 = $500,000 X 3% = $15,000)
TOTAL PROPERTY TRANSFER TAX DUE: $2,000 + $36,000 + $15,000 = $53,000
First Time Home Buyers Property Transfer Tax Exemption
You qualify for a full refund if:
You are a Canadian citizen or permanent resident;
You’ve lived in BC for 12 consecutive months before the date the property is registered; or
You’ve filed 2 income tax returns as a BC resident in the last 6 years;
You have never owned an interest in a principal residence anywhere, anytime; and
You have never received a first time home buyers’ exemption or refund.
Your property meets the exemption requirements as well.
The Property Transfer Tax is NOT a Sales Tax
Note that the Property Transfer Tax is not the same as the sales tax on a new build. If you buy a brand new property, both taxes must be paid.
In other words, expect to pay the Property Transfer Tax when closing your transaction. Your lawyer will add it to the closing costs.
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What is Property Transfer Tax BC?The Property Transfer Tax (PTT) in British Columbia is a land registration tax paid by a property buyer when a property title is registered at the Land Title and