On February 16th, the BC Government announced the 2016 Budget for the province, which introduced several changes to theProperty Transfer Tax Act. These changes affect any real estate transaction that is completing February 17th onwards, regardless of the date the contract of purchase and sale was executed.
1. Changes to the Property Transfer Tax Rate
One of the changes to the Property Transfer Tax Act is a new tax rate of 3% for properties with a fair market value greater than $2,000,000. The Property Transfer Tax (PTT) is now calculated as follows:
1. 1% of the taxable transaction’s fair market value that does not exceed $200,000.
2. 2% of that fair market value that exceeds $200,000 but does not exceed $2,000,000.
3. 3% of that fair market value that exceeds $2,000,000.
2. Property Transfer Tax – Newly Built Home Exemption
Another change to the Property Transfer Tax Act is the addition of a new exemption – the Newly Built Home Exemption. Below are some key points to consider:
1. The exemption applies only to newly built homes.
2. There is a full exemption for qualifying properties with a fair market value of $750,000 or less and a partial exemption for qualifying properties with a fair market value between $750,000 and $800,000.
3. The party claiming the exemption:
a. must be a Canadian citizen or permanent resident.
b. must use the property as a principal residence.
c. does not have to be a first time home buyer.
3. Further Information
Below are some links with further information regarding the qualifications criteria:
1. Frequently Asked Questions about the changes to the Property Transfer Tax Act: http://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand/exemptions/newly-built-home-exemption#qualify
2. A Guide to the Property Transfer Tax – Newly Built Home Exemption: http://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand/exemptions/newly-built-home-exemption#qualify
3. A Table of Property Transfer Tax – Newly Built Home Exemption amounts: http://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand/exemptions/newly-built-home-exemption/exemption-amounts
This email is only a summary of some of the changes and is not exhaustive. See the above links and the Property Transfer Tax Act for more information, and feel free to send us an email or give us a call at the office if you or your clients have any questions regarding this or any other real estate matter.