Posts Tagged ‘home purchase costs’

If you are buying real estate in British Columbia, Property Transfer Tax is a cost that often catches buyers by surprise. By understanding how it works, how much you may owe, and whether exemptions apply, you can plan more confidently and avoid last-minute issues. What Is Property Transfer Tax in BC? Property transfer tax in BC is a provincial tax you pay when you register a property purchase at the Land Title Office. You pay this tax at closing, and it is based on the property’s fair market value on the registration date, unless you qualify for an exemption. How Property Transfer Tax Is Calculated In most situations, the tax follows a tiered structure: 1% on the first $200,000 of the property value 2% on the portion between $200,000 and $2,000,000 3% on the portion above $2,000,000 An additional 2% on the residential portion over $3,000,000 Importantly, the province bases the tax on fair market value. This may differ from the purchase price if the sale did not occur on the open market. Example:If a home is valued at $650,000, the property transfer tax totals $11,000. This includes $2,000 on the first $200,000 and $9,000 on the remaining $450,000. Exemptions That May Reduce Your Tax In some cases, exemptions can reduce or eliminate property transfer tax. However, eligibility depends on specific criteria. First-Time Home Buyers’ Program If you qualify as a first-time buyer, you may receive a full or partial exemption. Currently, buyers can receive a full exemption on the first $500,000 of a property’s value and a reduced exemption on homes priced up to $860,000. To qualify, you must meet residency requirements, hold Canadian citizenship or permanent residency, and have never owned a principal residence. In addition, you must intend to live in the home as your primary residence. Newly Built Home Exemption Buyers purchasing a newly built home may also qualify for a property transfer tax exemption. Recent changes increased the price threshold to approximately $1.1 million. As a result, this exemption can significantly reduce closing costs for eligible buyers. Other Exemptions Additional exemptions may apply in specific situations. These include certain transfers between spouses or common-law partners, family transfers, and transactions related to estate planning or court orders. Because these rules vary, you should always confirm eligibility with a legal professional. Why Property Transfer Tax Matters Property transfer tax often represents a significant portion of closing costs. This is especially true in higher-priced markets like Greater Victoria. Therefore, knowing the amount owed and confirming exemptions early can affect affordability and overall purchasing decisions. Should You Seek Professional Advice? Property transfer tax rules can change, and eligibility criteria are often detailed. For that reason, speaking with both a real estate professional and a legal advisor can help ensure accuracy and avoid costly mistakes. If you plan to buy property in British Columbia, understanding how property transfer tax applies to your purchase can make the process smoother and more predictable from the start.   Noel A., 5-Star Review, via Google “My partner and I had a great experience with Scott and the Fabers with our first home purchase. Scott answered all questions we had and helped guide us to make the right purchase that fit our lifestyle. Would highly recommend the Fabers!” Faber Real Estate Group Royal LePage Coast Capital Realty 📞 250-244-3430 📧[email protected] ℹ️ Scott Faber Personal Real Estate Corporation ℹ️ Cal Faber Personal Real Estate Corporation Vanessa Wood, Zachary Parsons, and Sophie Taylor “Building Lasting Relationships, One Home at a Time.”