PROPERTY TRANSFER TAX AND EXEMPTIONS

WHAT YOU NEED TO KNOW ABOUT PROPERTY TRANSFER TAX  First off, what is property transfer tax?  Property transfer tax (PTT) was introduced in 1987, when the average price of a Vancouver home was about $150,000, in order to tax speculation on high-end properties. It is levied anytime changes are made to a property’s title, beginning at a rate of 1% of the first $200,000 of a property, 2% on the amount between $200,000 and $2M, and 3% on the portion greater than $2M.  There is exemptions from having to pay to property transfer tax, here are the two most common: 1. FIRST TIME HOME BUYERS’ PROGRAM To qualify for a full exemption, at the time the property is registered you must: be a Canadian citizen or permanent resident have lived in B.C. for 12 consecutive months immediately before the date you register the property or filed at least 2 income tax returns as a B.C. resident in the last 6 years have never owned an interest in a principal residence anywhere in the world at any time  have never received a first time home buyers’ exemption or refund and the property must: be located in B.C. only be used as your principal residence be 0.5 hectares (1.24 acres) or smaller For a full exemption, homes that are purchased with a fair market value of $500,000 or less, For a partial exemption for properties with a fair market value of $500,000 to $525,000.  More info and specifics: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/first-time-home-buyers   2. Newly Built Homes Exemption To qualify you must be, an individual (not a corporation)  a Canadian citizen or permanent resident  and the property must: be located in B.C. only be used as your principal residence have a fair market value of $750,000 or less be 0.5 hectares (1.24 acres) or smaller  New homes with a fair market value of $750,000 for a full exemption and partial exemption for new homes under between $750,000 and $800,000. Get all the details and specifics here: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/newly-built-home-exemption

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GST TAX ON NEW HOMES

If your thinking about purchasing a brand new home, (or one that is substantially renovated click here for more info on renovated homes ) You are also going to want to think about GST!   WHAT IS GST? The goods and services tax (GST)  is a value added tax introduced in Canada on January 1, 1991, by the government of Prime Minister Brian Mulroney. The GST replaced a previous hidden 13.5% manufacturers’ sales tax (MST);   WHAT YOU NEED TO KNOW ABOUT GST The GST tax rate for real estate in B.C. is 5% and due at the time of completion. Usually GST can be built in with mortgage, so you won’t necessarily need the cash at completion. The GST only applies to the sale of brand new properties but even then, there are some rebates. GST REBATE If your new home is going to be your permanent residence (for other qualifing info click here) and the home is under $350,000, the rebate is 36% of the GST (5%) with a maximum rebate of $6,300. Homes between $350,00 and $450,000 receive partial rebates in a significantly lower amount and homes over $450,000 receive no GST New Home Rebate. If you are planning to rent out your new home, you may be eligible for the GST New Residential Rental Rebate. Just like the above rebates, the GST NRR Rebate only applies to new homes up to $350,000. For more details on the GST NRR Rebate, click here. HOW DO I FIGURE OUT MY GST? As you now understand, the potential amount of tax to be paid on new property purchased in BC can vary greatly. Fortunately, the British Columbia Real Estate Association created a straightforward and easy to use tax calculator. It will help determine all relevant payable taxes on your property. Please note that this calculator should not be considered a substitute for professional accounting or legal advice. CLICK HERE FOR THE BCREA TAX CALCULATOR.  

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