When you decide to buy a home, your REALTOR® will talk to you about “closing costs,” the extra charges and taxes you’ll pay in addition to the purchase price of your home.
The heftiest of these is the Property Transfer Tax, or PTT. The good news is most first-time buyers are exempt from the tax. The PTT is paid to the BC government and is calculated at 1% of the first $200,000 of the purchase price, plus 2% of any remainder. For example, on a $400,000 home, the PTT totals $4,000. You will need to complete a PTT Return, with the assistance of your lawyer or notary public. The tax is payable on the date the property is transferred at the Land Title Office.
First-time buyers are exempt from the PTT, but only if all the following conditions apply:
- The home was bought for less than $425,000. There is a partial exemption for homes priced up to $450,000.
- The amount borrowed to finance the home must equal 70% or more of the purchase price, and cannot include amounts borrowed from relatives or friends.
- Each buyer must be a Canadian citizen or permanent resident and must have resided in BC for 12 months before the purchase.
- Each buyer must not have owned an interest in any principal residence at any time in the past.
- If the property bought is vacant land, construction of a residence must be completed within the year following registration of the purchase.
- The mortgage must have a term of at least one year following the completion date of the purchase;
- The purchased property must be classified as residential by the British Columbia Assessment Authority and the land portion must not exceed 0.5 hectares (1.24 acres) in area.
- During the first year of ownership, the buyer cannot reduce his/her mortgage balance by any more than $11,000 ($9,000 if property is outside the CRD or the lower mainland).
- The buyers must occupy the property as a principal residence within 92 days of the completion date, and for a minimum of one year afterward.
The BC Real Estate Association, the Real Estate Board of Greater Vancouver and other industry groups have advocated for the government to eliminate the PTT. A recent study determined that eliminating the PTT would, over a ten year period, allow 9,623 more households to buy a resale home and 4,403 more households to purchase a new home.
Here is information about the Property Transfer Tax.