Purchasing a new home can be quite costly. For properties purchased in BC, the government has levied a tax payable called the Property Transfer Tax (PTT). The tax is 1% on the first $200,000 of the property value and 2% on the remaining balance. However, first-time home buyers may be qualified for $7,500 in tax savings (Effective as of February 19, 2014). Follow along to see if you satisfy the requirements necessary to qualify for the tax savings!
INDIVIDUAL REQUIREMENTS
[1] You have never owned an interest in a principal residence anywhere in the world at any time.
*Principal Residence - Place of residence where an individual normally resides or occupies the property.
[2] You must be a Canadian citizen or permanent resident. Also, you must have lived in BC for 12 consecutive months immediately before the date you register the property.
However, if you have not lived in BC for at least 12 consecutive months, you may still be eligible given you satisfy the requirement of having filed at least 2 income tax returns as a BC resident in the last 6 years.
Note: If you are not currently a Canadian citizen or a permanent resident but you become one within 12 months of when the property is registered, you may apply for a refund of the tax.
PROPERTY REQUIREMENTS
[1] The fair market value must be less than $475,000 if registered on or after February 19, 2014.
Under the PTT First-Time Home Buyers' Exemption program, qualifying first-time buyers can buy a home worth up to $475,000. The previous market value threshold was $425,000. With the threshold being increased, home buyers can now save up to $7,500. For partial exemption, the government has laid out tax savings applicable to properties valued from $475,000 to $500,000. A breakdown of the tax savings on the partial exemption properties can be found here: Proportional Exemptions
[2] The property must be 0.5 hectares (or 1.24 acres) or smaller.
[3] The property must only be used as your principal residence.
You must have moved into your residence within 92 days of transfer of title and must have occupied the property for the remainder of the first year. If you did not move in within 92 days, you will be charged the tax. If you moved out within the first year, you will be charged for a prorated portion of the tax.
Please note, all exemption claims submitted will be audited by the government. Any false claims submitted will be subject to a penalty equal to twice the amount of tax you would have saved. If you are uncertain about your eligibility status, consult with a legal advisor.
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