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Changes to Property Transfer Tax

Blog by First Choice Realty | February 22nd, 2016

There has been so much in the news lately about the changes to BC’s Property Transfer Tax. It can be confusing and hard to keep up with so I’ve summarized the most important things to know here:

- Prior to the changes on February 17, 2016 Property Transfer tax was calculated at 1% of the purchase price up to $200,000 and 2% on the balance above. This tax applies to newly constructed homes as well as existing homes. There is an exemption for first time home buyers and a partial exemption if one or the purchasers is a first time home buyer.

- The provincial government announces changes to the Property Transfer Tax in their 2016 budget which was announced on February 17, 2016.

- Now, the purchase of a newly built home valued up to $750,000 will now be exempt from the Property Transfer Tax. This can save the buyer up to $13,000. However there is some fine print you should be aware of:

(a) You must be a permanent Canadian resident

(b) The home must be your principal residence for 1 year

(c) The land must be under 0.5 hectares (1.24 acres) in size

(d) This is for all buyers, not just first time home buyers.

(e) The home must be newly built within 1 year

(f) If the newly built home costs up to $800,000 you can apply for a partial PTT exemption

(g) If you purchase a lot that meets the size and price requirements, and then hire a builder to help build your principal residence on the lot, the land you purchased for your principal home plus the improvements must be under $750,000 when applying for the refund, providing you also meet the other requirements. The owner must show the costs of the house plus the costs of the land when applying for the refund.

Now you may be asking yourself how the Province plans to pay for these tax breaks? They have added a third tax tier to make up for the break in the low-moderately priced homes. Home purchased for over 2 million will now be subject to a 3% property transfer tax.

For more information visit the Government of British Columbia website by clicking here.