PROPERTY TRANSFER TAX - FIRST TIME HOME BUYERS'
PROGRAM
(March 2003)
by Del Elgersma
Property Transfer Tax is a provincial tax
on the transfer of real estate. It is 1%
of the first $200,000 of value, and 2% on
the amount over $200,000. The 2003 provincial
budget included changes to the First Time
Home Buyers' Program, which provides a tax
exemption from Property Transfer Tax for
individuals buying their first home. Buyers
who meet the following conditions will be
eligible for the exemption.
The Buyer:
- must be a Canadian citizen or permanent resident
who has never owned a home anywhere
in the
world, and has
- lived in BC for one full year prior to the
purchase, or
- filed two income tax returns as a BC resident
within the last six years.
If the buyer is not a Canadian citizen or
permanent resident at closing, but becomes
one within one year of closing, the buyer
can apply for a refund of the tax.
- must occupy the property as their principal
residence for the first year of ownership,
or the buyer may have to pay back some or
all of the tax. If the property is vacant
land, the house must be constructed within
one year of closing, and the buyer must live
in the house for the balance of the year.
The Property:
- must not exceed $275,000 if located within
the Capital Regional District or the Greater
Vancouver and Fraser Valley Regional Districts,
or $225,000 if located elsewhere in BC. A
proportional exemption is now available for
properties that have a value of up to $25,000
above these thresholds.
- in the case of vacant land, the value of
the land plus the total construction costs
must not exceed the amounts stated above.
- must be classified as residential. If some
of the buildings on the property are not
classified as residential, or if the property
exceeds 0.5 hectares (1.24 acres) in area,
only a partial exemption is available.
The Financing:
- must be for at least 70% of the value of
the property (not including amounts borrowed
from related individuals, corporations or
trusts). Assumed financing may be included.
- must have a term of at least one year. If
not, the buyer must pay the tax, but may
apply for a refund.
- must not be paid down during the first year
after closing by more than the greater
of:
- the amount that would reduce the financing
to 70% of the property's value
at closing,
and
- $11,000 if the property is located within
the Capital, Greater Vancouver
or Fraser
Valley Regional Districts, or
- $9,000 if located elsewhere in BC.
If you have any questions about the First
Time Home Buyers' Program, please call us.
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