One of the most confusing things about obtaining a mortgage are understanding closing costs. Among these closing costs is the Property Transfer Tax. The Property Transfer Tax is a land registration tax that is paid by the buyer when a property title is registered at the Land Title and Survey Authority. The buyer of the property pays this tax as they are the party gaining interest in the property upon registration.
The amount of transfer tax that you will pay is generally based on the fair market value (Purchase price)
HOW MUCH IS IT?
The fee structure for property transfer tax is as follows:
1% on the first $200,000
25 on the balance up to and including $2,000,000
3% on the balance greater than $2,000,000
If the property is a residential property there is another 2% on the portion of the fair market value greater than $3,000,000.
EXAMPLE: A $600,000.00 purchase would have property transfer tax of $10,000 (this is collected by the lawyer at closing)
If you are a foreign buyer you will be subject an additional foreign buyer property transfer tax in the amount of 20% of the fair market value of your share of the purchased property.
Here is a quick calculator: https://www.bcrealestatelawyers.com/ptt-calculator/
WHO IS EXEMPT?
Potentially First time homebuyers, transfer or title to a family member, and purchase of a newly built property can all be exempt from property transfer tax.
First time buyers: As a way to help first time home buyers enter the market you may qualify for an exemption on the property tax transfer. This exemption is on properties up to $500,000.00. Here are the details: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/first-time-home-buyers
There is also exemption for newly built homes with a fair market value up to $750,000 which include houses constructed on vacant land, new apartments in a newly built condo complex, and other newly built homes. Details found here: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/newly-built-home-exemption
We always suggest you check with your lawyer to confirm how much property tax you will have to pay. There are often strategies to minimize the amount of transfer tax payable (for example if one of the buyers is a first time buyer and one isn’t the lawyer may be able to adjust ownership on the title to minimize the tax). Please check with your lawyer about these options.