Whenever a property exchanges hands in BC, the provincial government charges Property Transfer Tax (PTT). This tax, paid by the buyer, is often overlooked, and many people forget that they need to pay PTT in addition to a down payment!
This tax can also apply when you make changes to a property title, even if you aren’t moving. For example, if you add someone’s name to a title, you may need to pay PTT. There are, however, some exemptions, like family tranfers or other special cases.
If a buyer is not a Canadian citzen or permanent resident, they are required to pay a larger transfer tax—20% larger, in fact. If the foreign buyer is an immigrant who has applied to the Provincial Nominee Program (PNP) and already has a PNP number, they are eligible for a one-time exemption of the 20% add-on.
Calculating Property Transfer Tax in BC
In British Columbia, the math for calculating PTT is not difficult, and this post includes the formula below. However, we have on our website, for your convenience, an online Property Transfer Tax Calculator that you can use to make short work of the calculations.
Here is how Property Transfer Tax is calculated:
~You pay 1% of the first $200,000 of the property’s fair market value.
~Add 2% of the portion of the fair market value between $200,000 up to and including $2,000,000.
~Add 3% of the portion of the fair market value above $2,000,000.
~Plus—if applicable—add an additional 2% of any portion above $3,000,000 for residential homes.
Please note that this calculation may be different if the property is mixed-use (residential and commercial) or a farm with an on-site residence.
PTT and Closing Costs
Property transfer tax is a one-time tax, paid around the time of closing on the purchase of real estate. It’s one of several expenses that in combination are referred to as closing costs.
Property Transfer Tax is not the same thing as property tax, which all homeowners pay and continue to pay on a yearly basis.
While closing costs exist across Canada, each province labels and calculates them in different ways. Likewise, exemptions also differ from province to province.
Real Estate Legal Services in BC
At Zancope Notary Public, we offer real estate services for clients in Langley and throughout Greater Vancouver and the Fraser Valley. We can help you with buying, selling, and refinancing real estate, and also provide family property transfers and independent legal advice. We are a full-service firm that is well acquainted with real estate law.
If you have any questions about this article or Property Transfer Tax in general, or if you want to make an appointment with Zancope Notary Public, please contact us at (604) 260-6783. Zancope Notary Public offers professional legal services, real estate services, and document notary services in Langley, BC.
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