What is Property Transfer Tax (PTT)?
Property Transfer Tax is a one-time tax paid to the Province of British Columbia when real estate changes ownership. It’s due at closing when the property title is officially transferred to the buyer’s name.
How Is It Calculated?
The amount is based on the fair market value of the property at the time of registration, which is typically the purchase price listed in your contract of sale. The general calculation is:
- 1% on the first $200,000
- 2% on the portion between $200,001 and $2 million
- 3% on the portion between $2 million and $3 million
- 5% on any amount above $3 million for residential properties
Example:
For example, if the purchase price is $750,000:
- 1% on the first $200,000 = $2,000
- 2% on the next $550,000 = $11,000
Estimated total Property Transfer Tax = $13,000
It’s important to know that in certain situations, such as transfers between family members or sales below market value, the province may assess the tax based on the property’s fair market value rather than the purchase price. A lawyer or notary can help determine if this applies to your transaction.
Exemptions
Some buyers may qualify for a full or partial exemption, depending on their situation and the provincial program rules. A few examples include:
- First Time Home Buyer Program: Possible exemption or partial exemption if the home meets certain price and residency requirements.
- Newly Built Home Exemption: May apply if purchasing a newly built home intended as a principal residence, within the price limits.
- Other Exemptions: Some transfers between related individuals, family farm transfers, or changes related to marriage breakdowns may qualify.
Since requirements vary, reviewing the details early can help clarify if you might qualify.
When Is the Tax Paid?
Property Transfer Tax is paid at closing when the title is registered in your name. Your lawyer or notary will calculate the amount and submit the payment on your behalf.
Tip: Property Transfer Tax can’t be rolled into your mortgage, so you’ll need to have those funds ready as part of your closing costs.
Not to be Confused with Property Taxes
Property Transfer Tax is often mistaken for annual property taxes, but they are two very different costs. Property Transfer Tax is a one-time payment due at closing when you purchase a property. Annual property taxes, on the other hand, are paid every year and help fund local services like schools, parks, and road maintenance.
Both are important to plan for, but it’s good to know they serve different purposes and are paid at different times.
Before You Go
Costs like Property Transfer Tax are important to plan for early, so there are no surprises down the road. Your legal professional can confirm the exact amount and check if any exemptions apply.
If you’re starting to think about your next move and want help navigating the process, feel free to reach out.
Disclaimer: This blog post is for general informational purposes only and does not constitute legal or financial advice.
