We have recently
had a number of clients confused about payment of the Property Transfer Tax. We
have been advised by the clients that they were told by their realtor or broker
that they were eligible for the First Time Home Buyer Rebate Program. Obviously
they were quite upset when they found they were not eligible and were required
to pay the tax.
The biggest source of confusion seems to be over the
issue of owning a home in the past. The Property Transfer Tax Act states that
a person must never have owned an interest in a home as a principal residence
anywhere in the world at any time. If a person has previously owned a home as
a principal residence, anywhere in the world, they are not considered first time
home buyers and are required to pay the tax. This is different from the rules
regarding financing, which allows a person to be considered a first time home
owner again after a period of 5 years of not owning a home.
There are a number of exemptions available to purchasers
so that the tax is not payable. The most common is the exemption for "First
Time Home Buyers." To qualify for an exemption to the Property Purchase
Tax as a First Time Home Buyer, the following criteria must be met:
- Purchaser must never have owned an interest in a principal
residence anywhere in the world at any time;
- Purchaser must be a citizen of or a permanent resident
of Canada and have resided in
- B.C. for at least one year prior to the purchase or
have filed two income tax returns as a British Columbia resident within the last
6 years;
- To obtain full exemption, the purchase price must
not exceed $275,000.00 in the Greater Vancouver, Fraser Valley and Capital Region
Districts ($225,000.00 in Whistler and elsewhere). A partial exemption is available
for homes between $275,000.00 and $300,000.00 (formula available from your Notary)
- Mortgage Financing must be at least 70% of the fair
market value of the property, and must have a term of at least one year (special
rules apply for mortgages that have a term of less than one year and demand mortgages);
- Purchaser must move into the property within ninety-two
days after registration of the purchase of the property and reside in the property
for at least one year;
- Pro rata exemption where property exceeds .5 hectares
or a portion of the property is not residential (i.e. commercial lofts) - purchase
price of entire property must not exceed the price limitations.
The threshold for the First Time Home Buyer's program
-- which exempts those buying their first home from paying the property transfer
tax -- was increased to $425,000 from $375,000. In addition, buyers will no longer
be required to have a mortgage of at least 70 per cent of the purchase price to
qualify. As an added bonus, owners who leave home for up to two taxation years
for travel, work or schooling will still be eligible for the home-owner grant
or low-income grant supplement.
Property Transfer
Tax - Additional Information
