2021 PTT Calculator, Exemptions & Buying Costs
Property transfer tax, also known as land transfer tax, is a closing cost that you should be aware of as a home buyer in BC. We provide you with important information on how to calculate property transfer tax, who pays it, and when it applies to you.
In this blog we also go over how to avoid bc property transfer tax and what PTT exemptions may be applicable to you. Whether you’re buying your first home or your fifth, this blog post is everything you need to know to make property transfer tax in BC crystal clear.
Property Transfer Tax BC
The Property Transfer Tax (PTT) in British Columbia is a type of land transfer tax paid by a buyer when they purchase a home, that is charged at the time of completion when title is registered and transferred. Property transfer tax is a one-time provincial tax that is only paid when a property changes hands (ie title is transferred). Taxable transactions include:
- transfer of fee simple
- right to purchase or agreement for sale
- lease or lease modification agreements
- life estate
- inheritance
- foreclosure
- crown grant
- escheat, forfeiture or quit claim
- transfer as a result of corporate reorganization
It is important to note that this is NOT the same thing as your annual property tax, which is a city tax that is due on a yearly basis.
Who pays property transfer tax (PTT)?
The buyer incurs the property transfer tax at the time of completion of a real estate purchase, and sellers do not pay the property transfer tax. The PTT is calculated by the lawyer or notary at the time the statement of adjustments is done, and they are the ones that will apply and organize the documentation for the payment of monies.
How much is property transfer tax (PTT)?
2021 property transfer tax BC calculation is based on fair market value.
If you are a Canadian citizen or permanent resident then the PTT on fair market value is calculated as follows:
- 1% on the first $200,000
- 2% on the balance up to and including $2,000,000
- 3% on the balance greater than $2,000,000
- if the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000
If you are considered a foreign buyer/entity, then you are subject to an additional property transfer tax of 20% of the fair market value of your proportionate share of the purchased property. Because this is based on proportionate share, for buyers that are purchasing together where only one buyer is a foreign buyer, the additional property transfer tax will only be calculated on their proportionate interest in the property. (ie. 50-50)
Property transfer tax exemptions may apply to first time home buyers purchasing a primary residence that qualifies under $500,000, and for newly built homes under $750,000.
For buyers purchasing together as separate entities, or for those where there is a difference in citizenship or eligibility for an exemption, the property transfer tax paid or exempt is based on the proportion of interest in title of each individual.
What is fair market value on PTT?
In most cases, fair market value is considered to be the purchase price. Therefore, most property transfer tax calculations will be based off of the purchase price stipulated in the contract of purchase and sale.
In some cases where there is no monetary exchange, such as an inheritance, the fair market value is usually based off an appraisal report obtained by a third party appraiser or sometimes BC assessment.
How much is property transfer tax (PTT)?
2021 property transfer tax BC calculation is based on fair market value.
If you are a Canadian citizen or permanent resident then the PTT on fair market value is calculated as follows:
- 1% on the first $200,000
- 2% on the balance up to and including $2,000,000
- 3% on the balance greater than $2,000,000
- if the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000
If you are considered a foreign buyer/entity, then you are subject to an additional property transfer tax of 20% of the fair market value of your proportionate share of the purchased property. Because this is based on proportionate share, for buyers that are purchasing together where only one buyer is a foreign buyer, the additional property transfer tax will only be calculated on their proportionate interest in the property. (ie. 50-50)
Property transfer tax exemptions may apply to first time home buyers purchasing a primary residence that qualifies under $500,000, and for newly built homes under $750,000.
For buyers purchasing together as separate entities, or for those where there is a difference in citizenship or eligibility for an exemption, the property transfer tax paid or exempt is based on the proportion of interest in title of each individual.
What is fair market value on PTT?
In most cases, fair market value is considered to be the purchase price. Therefore, most property transfer tax calculations will be based off of the purchase price stipulated in the contract of purchase and sale.
In some cases where there is no monetary exchange, such as an inheritance, the fair market value is usually based off an appraisal report obtained by a third party appraiser or sometimes BC assessment.
How do I calculate PTT?
PTT in BC Example One: Purchase price $750,000
If you are purchasing a residential property for $750,000, the tax paid is $13,000
- 1% on the first $200,000 = $2,000
- 2% on portion greater than $200,000 and up to and including $2,000,000 = $11,000 ($750,000 – $200,000 = $550,000 X 2% = $11,000)
- For a purchase price of $750,000 there is no portion above $3,000,000 – so this taxable rate does not apply
- TOTAL PROPERTY TRANSFER TAX DUE: $2,000 + $11,000 = $13,000
PTT in Vancouver Example Two: Purchase price $4,500,000
If you are purchasing a residential property for $4,500,000, the tax paid is $143,000.
- 1% on the first $200,000 = $2,000
- 2% on portion greater than $200,000 and up to and including $2,000,000 = $36,000 ($2,000,000 – $200,000 = $1,800,000 X 2% = $36,000)
- 3% on portion greater than $2,000,000 = $75,000 ($4,500,000 – $2,000,000 = $2,500,000 X 3% = $75,000)
- A further 2% on the portion greater than $3,000,000 = $30,000 ($4,500,000 – $3,000,000 = $1,500,000 X 2% = $30,000)
- TOTAL PROPERTY TRANSFER TAX DUE: $2,000 + $36,000 + $75,000 + $30,000 = $143,000
Property Transfer Tax Exemptions
The two most notable ways to avoid property transfer tax by form of an exemption are:
- First Time Home Buyer Property Transfer Tax Exemption
- Newly Built Home PTT Exemption
There are many other less common property transfer tax BC exemptions, including family exemptions, as well as a vacant land PTT refund for new homes.
First Time Home Buyers Property Transfer Tax Exemption
To help enter in to the market, the first time home buyer’s (FTHB) program gives an exemption to the property transfer tax in the case that you can qualify.
If you are a first time home buyer and Canadian citizen/permanent resident that is purchasing a resale property to live in as your primary residence under $500,000, then you may be eligible for a full property transfer tax exemption of up to $8000.
There is also a partial first time home buyer PTT exemption for properties less than $525,000.
Newly Built Homes Property Transfer Tax Exemption
There’s a PTT exemption for newly built homes with a fair market value of up to $750,000, including a house constructed on vacant land, a new apartment in a newly built condominium building, a manufactured home on vacant land, and other newly built homes.
There are also occupancy requirements, and you may be eligible for a partial exemption for newly built home with fair market value of $750,000 – $800,000.
