Property Transfer Tax in British Columbia 2023: Calculate, Exemptions, and Key Buying Costs

A Comprehensive Guide to Property Transfer Tax (PTT) in BC, including PTT Calculator and Exemption Details

Property Transfer Tax BC

Property transfer tax, also referred to as land transfer tax, is an essential consideration for homebuyers in British Columbia. It is crucial to understand this closing cost before finalizing your real estate purchase. This blog provides valuable information on how to calculate property transfer tax, who is responsible for paying it, and when it applies to your property transaction.

In this comprehensive blog post, we will also explore methods to potentially avoid BC property transfer tax and identify applicable PTT exemptions.

Whether you're a first-time homebuyer or a seasoned property owner, this guide will make property transfer tax in BC crystal clear, ensuring you're well-prepared for your real estate journey.

Property Transfer Tax BC

Property Transfer Tax (PTT) in British Columbia is a provincial tax paid by buyers when they acquire a property. This tax is charged at the time of completion when the property's title is registered and transferred to the new owner.

PTT applies to various taxable transactions, including the transfer of fee simple, right to purchase or agreement for sale, lease agreements, life estates, inheritances, foreclosures, and more. It is important to note that PTT is distinct from your annual property tax, which is a recurring city tax due yearly.

Who Pays Property Transfer Tax (PTT)?

Property transfer tax is incurred by the buyer during the completion of a real estate purchase. Sellers are not responsible for paying property transfer tax. The PTT is calculated and organized by the lawyer or notary at the time of preparing the statement of adjustments.

How Much Is Property Transfer Tax (PTT)?

The calculation of the 2023 property transfer tax in BC is based on the property's fair market value. For Canadian citizens and permanent residents, the PTT is calculated as follows:

• 1% on the first $200,000

• 2% on the portion exceeding $200,000 up to $2,000,000

• 3% on the portion exceeding $2,000,000

• If the property is residential, an additional 2% applies to the portion exceeding $3,000,000.

For foreign buyers or entities, an additional property transfer tax of 20% is levied on the fair market value of their share of the purchased property. This tax is based on the proportionate share, meaning buyers purchasing together may only pay on their share of the property.

*Note: As of January 1st, 2023, a foreign buyer ban is in effect for a period of two years.

Property Transfer Tax Exemptions

Two significant exemptions allow property buyers to avoid property transfer tax:

1. First Time Home Buyer Property Transfer Tax Exemption:

• Eligible for full exemption if a first-time homebuyer is a Canadian citizen or permanent resident purchasing a resale property under $500,000.

• A partial exemption applies for properties less than $525,000.

2. Newly Built Home PTT Exemption:

• Applies to newly built homes with a fair market value of up to $750,000, including various property types.

• Occupancy requirements may apply, and a partial exemption is available for homes valued between $750,000 and $800,000.

Additional property transfer tax exemptions may be available, including family exemptions and a vacant land PTT refund for new homes. For more information on these exemptions, refer to the government's Property Transfer Tax Exemptions List in BC.

Calculating PTT

To calculate property transfer tax, you can use the following examples:

Example One (PTT in BC): Purchase price $750,000

• Tax paid: $13,000

• 1% on the first $200,000 = $2,000

• 2% on the portion exceeding $200,000 and up to $2,000,000 = $11,000

• No further tax applies as the property's value is not above $3,000,000

Example Two (PTT in Vancouver): Purchase price $4,500,000

• Tax paid: $143,000

• 1% on the first $200,000 = $2,000

• 2% on the portion exceeding $200,000 and up to $2,000,000 = $36,000

• 3% on the portion exceeding $2,000,000 = $75,000

• An additional 2% applies to the portion exceeding $3,000,000 = $30,000

Property Transfer Tax Exemptions

The two most notable ways to avoid property transfer tax through exemptions are:

1. First Time Home Buyer Property Transfer Tax Exemption

• Allows Canadian citizens or permanent residents who are first-time homebuyers to qualify for a full exemption when purchasing a resale property under $500,000.

2. Newly Built Homes Property Transfer Tax Exemption

• Offers an exemption for newly built homes with a fair market value of up to $750,000, including various property types.

• Occupancy requirements may apply, and a partial exemption is available for homes valued between $750,000 and $800,000.

Hiring a realtor to guide you through the property buying process is a valuable and free service. Realtors provide expertise on property transfer tax, GST, closing costs, and more, ensuring you make an informed and cost-effective home purchase.

If you're seeking a realtor to assist you with property transfer tax and other aspects of home buying in Lower Mainland, contact me today at 778-233-8366 or email divamangal@royallepage.ca to start a conversation!