Working with a mortgage broker is a different experience than working with a bank specialist. It’s also a different part of the home buying process compared to working with your Realtor. Some people may have never worked with a mortgage broker before and don’t know what to expect. Because of that, there are some questions…Read Article
Everything You Need to Know About Property Transfer Tax
If you’re buying a home, you should be aware of property transfer tax. It’s a tax that you may be required to pay depending on the property and the province you live in. In this article, I will share everything you need to know.
I’ll discuss the property transfer tax BC exemption, whether or not land transfer tax can be added to a mortgage and how much property transfer tax is in BC.
What is property transfer tax?
In this article I will be speaking about transfer tax in British Columbia because that is where I live. If you live in another province and have questions about whether or not your province has this tax, please reach out to me.
When you purchase a property that is registered at the Land Title Office, you (or your legal professional) will have to file a property transfer tax return and you must pay this tax unless you’re exempt.
This tax is based on the fair market value of the property on the day that it was registered to the land office. In a purchase transaction, this is the purchase price.
Land transfer tax BC vs property transfer tax BC.
Property transfer tax and land transfer tax are the same thing. While different lenders and governments use different terminology, the tax is the same. I wanted to share that because I often have people question whether these are different and if there are more taxes to pay.
Property transfer tax vs property taxes.
Property transfer tax should not be confused with property taxes. Property transfer tax is a one time payment when you purchase a home. Property taxes are annual taxes that are paid to your municipality or rural tax office. Property taxes are used to fund services in your area. Property transfer tax is the tax paid when transferring a property into your name.
How much is property transfer tax in BC?
The general property transfer tax is:
- 1% of the fair market value up to and including $200,000.
- 2% of the fair market value greater than $200,000 and up to and including $2,000,000.
- 3% of the fair market value greater than $2,000,000.
- If the property has residential property worth over $3,000,000, a further 2% tax will be applied to the residential property value greater than $3,000,000.
Additional tax for foreign buyers.
If you are a foreign national, you will also have to pay an additional property transfer tax if the property is within a specific area of BC. To get all of the information on this additional tax, you can visit the Government of British Columbia’s website.
Property transfer tax BC exemption.
Now that you know all about the property transfer tax, you’re probably wondering how you can be exempt from it.
If you are a first-time home buyer, buying a property that is $500,000 or less, you will be exempt from paying the property transfer tax in B.C. If you are purchasing a newly built home, you may also qualify for a tax exemption.
Reach out to me for more information.
And there you have it, everything you need to know about the property transfer tax in British Columbia. If you still have questions, do not hesitate to call me at 250-826-3111. You can also fill out this form and I will get back to you shortly.