BC Property Transfer Tax Changes

Some BIG NEWS Regarding the Property Transfer Tax!

Please be advised that there is a Property Transfer Tax charged in B.C. for all transfers of property.

The Property Transfer Tax on your purchase will be based on the contract purchase price and any additional upgrades charged in the Contract on top of the original purchase price and will be payable to our offices along with the balance to complete.

On February 16, 2016, the B.C. government made some significant changes to the Property Transfer Tax.

Tax Rate Changes

After February 16, 2016, the property transfer tax is charged at a rate of:

  1. 1% on the first $200,000,
  2. 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000, and
  3. 3% on the portion of the fair market value greater than $2,000,000.

On or before February 16, 2016, the property transfer tax was charged at a rate of 1% on the first $200,000, and 2% on the portion of the fair market value greater than $200,000.

This rate change will affect homebuyers who purchase homes above $2,000,000.00. This will not affect any homebuyers who purchase a home below $2,000,000.00

Newly Built Home Exemption

The Newly Built Home Exemption reduces or eliminates the amount of property transfer tax you pay when you purchase a newly built home.

IMPORTANT POINT: THIS EXEMPTION DOES NOT APPLY TO USED PROPERTIES.

A newly built home includes:

  1. a house constructed and affixed on a parcel of vacant land
  2. a new apartment in a newly built condominium building
  3. a manufactured home that is placed and affixed on a parcel of vacant land
  4. an already constructed house that is removed from one parcel of land and affixed to another parcel of vacant land, as long as the house hasn’t been occupied since it was placed on the new parcel of vacant land
  5. a house resulting from the division of an existing improvement affixed to a parcel of land that was also subdivided, as long as this house hasn’t been occupied since the subdivision of the parcel
  6. a house converted from an existing improvement on the land. The previous improvement couldn’t have been used as residential (e.g. a warehouse converted into apartments).

To qualify, the property (land and improvement) must be registered at the land title office after February 16, 2016 and you must be:

  1. an individual;
  2. a Canadian citizen or permanent resident;

and the property must:

  1. be located in B.C.;
  2. only be used as your principal residence;
  3. have a fair market value of $750,000 or less;
  4. be 0.5 hectares (1.24 acres) or smaller;

You may qualify for a partial exemption, if the property:

  1. has a fair market value greater than $750,000 and less than $800,000
  2. is larger than 0.5 hectares
  3. has another building on the property other than the principal residence

If you don’t qualify because you are not a Canadian citizen or permanent resident, but you become one within 12 months of when the property is registered, you may apply for a refund of the tax.

After you have registered the property, you must meet occupancy requirements during the first year you own the property. To keep the tax exemption you must:

  1. move into your home within 92 days of the date the property was registered at the land title office, and
  2. continue to occupy the property as your principal residence for the remainder of the first year.

If you have any questions about these changes, please email Lewis Nguyen at (lewis@dbmlaw.ca) lewis (at) dbmlaw (dot) ca.

- February 16th, 2016 | Uncategorized