Property Transfer Tax is collected when you purchase or acquire an interest in a property, unless you qualify for the First Time Home Buyer or a family transfer exemption. Property Transfer Tax is different from property tax. Property tax is collected on an annual basis for services you receive from your local government.
The amount of tax due depends on the fair market value of the property being transferred:
3% on the portion of the fair market value greater than $2,000,000.
For example, if fair market value of property is $500,000 tax payable is: 1% of $200,000 = $2,000 plus 2% of $300,000 = $6,000: total tax payable of $8,000
Property Transfer Tax is paid when an application for a taxable transaction is made at a Land Title Office in British Columbia. Taxable transactions include, but are not limited to, registration of:
Sections 14, 15, and 16 of the Property Transfer Tax Act describe the exemptions and partial exemptions available. There are over 40 possible exemptions and only the most common exemptions are briefly described below.
The transfer of a principal residence, recreational residence, or family farm qualifies for at least a partial exemption if the transferor and transferee are related individuals. For the purposes of determining if an exemption applies, the transferee must not only fall under the definition of “related individual” (includes only the following individuals: a spouse, parent, child, grandparent, grandchild, great-grandparent, great-grandchild, mother-in-law, father-in-law, grandmother-in-law, grandfather-in-law, great-grandmother-in-law, great-grandfather-in-law, daughter-in-law, son-in-law, granddaughter-in-law, grandson-in-law, great-granddaughter-in-law, and great-grandson-in-law; note that brothers, sisters, aunts, uncles, nieces, or nephews would not be included as related individuals), but must also be a citizen or permanent resident of Canada as defined in the Immigration and Refugee Protection Act. In addition, the transfer from a trust to a beneficiary qualifies for exemption if the settlor of the trust and the beneficiary are related individuals. The transfer of an estate of a decedent to a beneficiary also qualifies for exemption if the beneficiary and the decedent were related individuals.
An exemption from Property Transfer Tax is allowed if (1) the transfer is between related individuals, and (2) the property being transferred qualifies as the principal residence of the transferor or the transferee. The requirements for the principal residence exemptions under the Property Transfer Tax differs from those under the Income Tax (capital gains considerations) and should not be confused. Following are the qualifications for a principal residence under the Property Transfer Tax:
An exemption is allowed if (1) the transfer is between related individuals, and (2) the property qualifies as the recreational residence of the transferor.
Following are the qualifications for the recreational residence exemption.
An exemption is allowed if (1) the transfer is between related individuals as described previously or between a family farm corporation and an individual who is either the sole shareholder of the corporation or who is a related individual to every shareholder, and (2) the property being transferred qualifies as a family farm. A family farm corporation is a corporation whose principal activity is farming farmland and whose shareholders are related individuals.
Following are the qualifications for the family farm exemption:
An exemption is allowed if:
An exemption is allowed if:
The property passing to a surviving joint tenant by right of survivorship qualifies for exemption regardless of its use as a residence, revenue property, or vacant land.