British Columbia Property Transfer Tax Facts
Homebuyers in BC are sometimes surprised by the amount the BC Government charges for Property Transfer Tax. In Western Canada, BC’s property transfer tax is higher than Alberta or Saskatchewan.
This monetary surprise, among others, have spawned a new label for Beautiful BC…Bring Cash. It’s a straight up cash grab by the BC provincial government that was introduced in 1987 by the Bill Vander Zalm Social Credit Party and now raises approximately $2 Billion annually.
Back in 1987, the same year Guns ‘N Roses debuted their timeless “Appetite for Destruction” album, 95% of BC homes cost under $200,000. Now with homes in Greater Van clocking in at well over $1,000,000, many people complain, especially real estate boards and trickle down pro-rentier tax federations, that the tax should go.
My predication is…that ain’t gonna happen. There have been 8 BC Premiers since Vander Zalm (from Social Credit, NDP and Liberal) and no one has moved to change or scrap it. Even the right-wing Liberal government during its long 16 year reign in power wouldn’t touch it. It brings in too much revenue.
Since introduction, the BC Property Transfer Tax has brought in over $12 Billion to provincial government coffers.
What I don’t like about Property Transfer Tax policy is that governments use this volatile tax to finance general government operations. It’s great when the land/property tax is bringing in lots of money during strong real estate and building sector markets. Unfortunately, when markets shift, the government is short of funds, runs a larger deficit and implements an austerity program. This happens in Alberta when resource revenues dry up and the budget falls into heavy deficit. Alberta has the same type of reliance on their volatile revenue.
A volatile resource or housing market revenue should be treated as a bonus to government revenues. A portion should be invested in a Sovereign Wealth Fund (see Government Pension Fund of Norway) providing savings for future economic transitions away from current status quo revenue generation.
Alas…
Home buyers in BC pay a Provincial Property Transfer Tax (PTT) when they buy a home.
The Property Transfer Tax is:
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1% on the first $200,000 of the purchase price
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2% up to and including $2 million
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3% on amounts greater than $2 million.
Who has to pay PTT? All Buyers, EXCEPT First time home buyers or those purchasing a newly built home.
First Time Home Buyers (FTHB) can reduce or eliminate the PTT on their first principal residence purchase. They must be:
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Canadian Citizen / Permanent Resident
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Resident in BC for twelve consecutive months immediately before date registration of property, or have filed 2 income tax returns as BC resident during the 6 years before the date the property is registered
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Never owned property or interest in a principal residence anywhere in the world at anytime
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Never received FTHBI exemption or refund
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Lot is 0.5 hectares or smaller
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Property must be principal residence
Property Transfer Tax on Resale Property for FTHB
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On purchases of $500,000 or less, First Time Home Buyers pay no PTT.
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On purchases between $500,001 and $525,000, PTT is calculated on a sliding scale
Property Transfer Tax Exemption on New Build Homes for all including FTHB
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On newly built home purchases of $750,000 or less, buyers pay no PTT
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On a newly built home purchase between $750,000 and $800,000, PTT is calculated on a sliding scale.
The Property Transfer Tax is an upfront cost and CANNOT be included in your mortgage. This tax is collected by your lawyer or notary when you sign mortgage documentation.
Visit the BC Provincial Government PTT Website for further details.
One of my hobbies is blogging about mortgages, debt and government policy. During the day I’m a MORTGAGE BROKER!
Check out the Huber Mortgage Home Buyers Guide HERE
Sincerely,
Michael
