When buying a property in Metro Vancouver, and British Columbia, it’s important to know about the taxes you’ll be expected to pay. These taxes are typically due at the time of completion, and they include the Property Transfer Tax, the Foreign Buyer’s Tax, and GST. The good news, there are possible exemptions. Keep in mind, these are one time purchase taxes, you can find more about other yearly taxes HERE
The Property Transfer Tax is a significant transaction-based tax due at completion. Here’s how it’s calculated:
• 1% on the first $200,000
• 2% on the portion between $200,001 and $2,000,000
• 3% on the portion above $2,000,000
• If the property’s value exceeds $3,000,000 and is residential, an additional 2% is applied to that portion.
For example, if you’re buying a home worth $1,500,000, you would pay 1% on the first $200,000 and 2% on the remaining $1,300,000.
Its very important to note that the property transfer tax is NOT mortgageable. Meaning it you will need to pay this with "cash on hand". When calculating down payment its good to think, downpayment in one hand, and property transfer tax in the other.
First-Time Home Buyer Exemption
If this is your first home, you may qualify for a full exemption from the PTT if you meet these criteria:
• You’re a Canadian citizen or permanent resident.
• You’ve either lived in BC for 12 months prior to the registration date or filed at least two BC income tax returns in the last six years.
The property must also meet requirements such as:
• Being located in BC.
• Used as your principal residence.
• Having a fair market value of $835,000 or less.
• Being 0.5 hectares (1.24 acres) or smaller.
For example, if you’re a first-time buyer purchasing a resale condo in Vancouver for $800,000, you might qualify for the full exemption.
Newly Built Home Exemption
Even if you’re not a first-time buyer, you could still qualify for the Newly Built Home exemption if the property is a newly constructed home. The requirements include:
• The home must be your principal residence.
• The property value must be $1,100,000 or less.
• The lot must be 0.5 hectares or smaller.
This exemption can apply to presale condos or newly built detached homes. If you’re purchasing a presale unit in a new high-rise development for $900,000, you may qualify for this exemption, even if it’s your fifth home purchase.
NOTE: As of February 4, 2024, the foreign buyer ban has been extended for another two years until January 1, 2027.
If you’re a foreign buyer or foreign national purchasing property in designated areas (Metro Vancouver, Fraser Valley, etc.), you’ll need to pay an additional 20% tax on the fair market value. This applies on top of the regular PTT.
For example, if you’re a foreign buyer purchasing a $1,000,000 home in Vancouver, you’ll need to pay the standard PTT plus an additional $200,000 in foreign buyer tax.
Refund for New Permanent Residents
If you become a permanent resident or Canadian citizen within one year of registering the property, you may be eligible for a refund of the foreign buyer’s tax.
BC Nominee Program If you’re part of the BC Nominee Program, you could be exempt from the foreign buyer tax. This exemption only applies if the property is your principal residence.
GST is a federal tax that applies to newly constructed properties, including presale condos or newly built homes. The rate is 5% of the purchase price and is paid at completion. For example, if you buy a brand new townhome for $800,000, you’ll pay an additional $40,000 in GST.
GST New Home Rebate
If you’re purchasing a new home that costs less than $350,000 and plan to live there, you might qualify for a partial rebate, up to 36% of the GST. Homes between $350,000 and $450,000 may receive a smaller rebate, and homes over $450,000 do not qualify.
For instance, if you’re buying a $400,000 condo, you could still receive a partial rebate, reducing the overall tax burden.
Unlike the property transfer tax, the GST IS mortgageable, meaning, it can be applied to your total mortgageable purchase price.