When you purchase a property that is registered at the Land Title Office, you are responsible for paying property transfer tax. This is a one time tax that’s payable whenever buying a property and is not to be confused with the annual property tax.
On completion, your notary lawyer will calculate the property transfer tax amount and file the property transfer tax return for you.
The property transfer tax rate is:
- 1% on the first $200,000,
- 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000,
- 3% on the portion of the fair market value greater than $2,000,000, and
- If the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000.
If you are a foreigner, the tax amount is 20% of the fair market value of the property.
If you purchase a newly built home in B.C., such as a unit in a pre-sale development project, you may qualify for a property transfer tax exemption if you are a Canadian citizen or permanent resident, occupy the home as principal residence for the first year and the property must have a fair market value of $750,000 or less. Partial exemptions may apply for properties with market value up to $800,000.
If you transfer the right to purchase the property to someone who isn’t a related individual, property transfer tax is paid on the final purchase price of the unit, which includes all assignment amounts. Any profits made from an assignment of a pre-sale condo or strata unit must be reported on your income tax or capital gains.
Please get in touch with us if you have any questions pertaining to your situation.