Property transfer tax (“PTT”) was introduced in the 1980s at a time when property values in BC generally came in under $200,000. It was then and continues to be based on a property’s fair market value at the time the transfer is registered with the Land Title Office. With the value of real estate skyrocketing in the 30+ years from the introduction of the tax, PTT has become a substantial expense tied to the acquisition of real property in BC.
PTT is collected on the registration of a taxable transfer. The rates of tax are:
• 1% of the first $200,000 of the fair market value;
• 2% on the portion of a property’s fair market value between $200,000 and $2 million;
• 3% on the portion of the property’s fair market value above $2 million; and
• if the property is “residential”, a further 2% on the portion of the fair market value greater than $3 million.
• For foreign nationals, foreign corporations or taxable trustees, additional PTT may be payable on the fair market value of certain properties.
This calculator provides an easy way to obtain an estimate of the PTT payable: https://forms2.gov.bc.ca/forms/content?id=EEE44ACAC0DB4212BB616D7BD233F2A6
The Property Transfer Tax Act does offer a number of potential exemptions to the tax. For example, first time home buyers may qualify for an exemption of PTT, but only on a property with a value not exceeding $500,000 (fully exempt) or $525,000 (partially exempt). The transfer of a recreational property to a related individual could also be exempt, but only if the property has a fair market value of $275,000 or less. Because real property values in BC tend to greatly exceed these limits set back in the 80s, the reality is that these exemptions rarely apply today.
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This article is intended for information purposes only and should not be taken as the provision of legal advice. Grace C. Cleveland is a lawyer with the law firm of Cleveland Doan LLP and can be reached at (604)536-5002 or email@example.com.