Changes to BC’s Property Transfer Tax
BC’s Property Transfer Tax is a tax that is paid when real property is transferred in our province as a percentage of the fair market value of the property unless an exemption applies. The tax was introduced in 1987 when the average price of a greater Vancouver home was around $148,000.00. For the last 29 years, buyers have paid this tax on the fair market value of the property as at the date of registration as follows: 1% on the first $200,000 of value, and 2% on the remainder, unless you qualified for certain exemptions.
In light of rising property values, the BC Liberals have decided that the tax regime needed to change.
On February 16, 2016 the BC government presented its 2016 budget which included changes to this tax: (1) an exemption for newly built home exemption; (2) a rate increase after certain value; and (3) disclosure requirements.
Newly Built Home Exemption
This new exemption applies to newly built, never occupied, detached homes or condominium/apartment buildings. It is not limited to first time home buyers; all buyers, whether first time or not, may apply for the exemption on purchases of new homes up to $750,000.00 in value. To qualify, certain criteria must be met:
- The buyer must be an individual and either a Canadian citizen or permanent resident.
- The property must be occupied by the buyer as a principal residence for a 1 year period after purchase.
It is important to note that the First Time Home Buyer exemption is still a valid option, however, a buyer can only choose to apply one exemption.
Subject to any exemptions, a buyer will pay property transfer tax on the fair market value of the property at the following rates:
- 1% on the first $200,000;
- 2% on the portion of the fair market value greater than $200,000 but up to and including $2,000,000; and
- 3% on the portion of the fair market value greater than $2,000,000.
There are now new disclosure requirements requiring the disclosure of citizenship on registration of a taxable transaction. To this end, if a buyer is not a Canadian citizen or permanent resident he or she must disclose the foreign state or country of citizenship. Corporations are also required to disclose the citizenship of any director who is not a Canadian citizen or permanent resident of Canada. It has been indicated that this information gathering initiative is the first step, and that additional disclosure requirements will come into effect in the spring of 2016.
To find out how these changes may affect you as a home buyer please contact Kim Karras at Brawn Karras & Sanderson call us at 604-259-1620 or toll free at 877-470-7535 or by email at [email protected]