In this article, we’ll be going over Property Transfer Taxes (PTT) in BC, how it applies when you buy a home in Metro Vancouver, and other important details that all home buyers should know before buying.
By the end, you’ll have the knowledge to navigate this tax confidently and avoid costly mistakes.
Table of Contents
What is Property Transfer Tax (PTT) in BC?
In short, Property Transfer Tax (PTT) is a provincial tax in BC that home buyers pay when during the change of ownership of a property.
Whether you’re purchasing a condo, house, or bare land, PTT is part of the closing costs.
The tax is payable at the time of property registration with the BC Land Title Office. So, this is usually finalized in your Statement of Adjustments with your notary or real estate lawyer when finalizing the home purchase.
How is it used?
The PTT was introduced in 1987 by the provincial government to help fund provincial public services, infrastructure throughout the province, and other funding needs. It’s now a major source of revenue for the government, and others have voiced their concerns about this.
Who pays PTT in bc
As a home buyer, you are responsible for paying the PTT in BC. Sellers are not required to pay this tax.
Whether you’re a first-time buyer, upgrading to a larger home, or investing in real estate, this tax applies unless you qualify for an exemption.
How to Calculate Property Transfer Tax
The PTT is calculated in BC based on the fair market value of the property. If you’re buying a property, this is typically the final purchase price amount, taken as the fair market value.
Depending on the property values, the tax rates are as follows:
- 1% on the first $200,000;
- 2% on the portion from $200,000 to $2,000,000;
- 3% on the portion from $2,000,000 to $3,000,000;
- 5% on the portion above $3,000,000 (for residential properties).
Calculation for Average Home in Metro Vancouver
The average home price in Greater Vancouver was $1,276,716, as of November 2024. Let’s calculate the PTT for this price:
Let’s calculate the Property Transfer Tax (PTT) for this price:
On the first $200,000:
- 1% of $200,000 = $2,000
On the next $1,076,716 ($1,276,716 – $200,000):
- 2% of $1,076,716 = $21,534.32
Total PTT: $2,000 + $21,534.32 = $23,534.32
Final Property Transfer Tax: $23,534.32
So, when budgeting for a home, this additional $23,534.32 will need to be paid for on top of the mortgage amount you’ve agreed to, and any other related fees.
Specific Property Types
It’s worth noting that the average prices vary by property type:
- Detached homes: $1,997,400
- Townhouses: $1,117,600
- Apartments: $752,800
The PTT calculation method remains the same, but the total amount will differ based on these prices. So, if you’re planning to purchase a condo or apartment, you can budget for a smaller proportion of PTT.
Property Transfer Tax Exemptions & Rebates
While PTT can be a frustrating additional expense you have to pay as a home buyer, there are luckily some exemptions and rebates that First-Time Home Buyers can receive.
These were updated in 2024 to provide benefits particularly for first-time home buyers. Here is how it works:
Full Exemption
Property Values of $835,000 or less: You qualify for the full exemption on the first $500,000 fair market value of the home.
Let’s say you purchase a property for $835,000, the highest end of the full exemption. Without the exemption, you’d owe $14,700 if PTT.
However, if you met all criteria for the PTT exemption, you’d receive the full $8,000 exemption, and be responsible for the remaining $6,700.
Partial Exemption
There is a partial exemption available for properties valued between $835,000 and $860,000. Or, if it’s larger than 0.5 hectares, and/or has another building on the property separate from the principal residence.
Once the price exceeds $860,000, there are now First-Time Home Buyer exemptions provided.
Maximum Savings
Eligible first-time buyers can save up to a maximum of $8,000 in PTT.
Eligibility Criteria
To qualify for this exemption, first-time home buyers must:
- Be a Canadian citizen or permanent resident.
- Have lived in BC for at least 12 months before the registration date or filed at least 2 income tax returns as a BC resident in the last 6 years.
- Never owned an interest in a principal residence anywhere in the world.
- Never received a first-time home buyers’ exemption or refund.
Property Requirements
The property or home you’re purchasing must:
- Be used as the buyer’s principal residence.
- Have a fair market value of $835,000 or less.
- Be 0.5 hectares (1.24 acres) or smaller.
Example: Purchasing a Condo in Richmond
Let’s recalculate the Property Transfer Tax (PTT) for the condo in Richmond, BC, with an estimated value of $805,000, taking into account the First Time Home Buyers Program exemption.
For this $805,000 property:
- Exempt on first $500,000: $0 PTT
- 2% on remaining $305,000: $6,100
Total PTT owed by the First-Time Buyer: $6,100
Tax Savings: $14,100 – $6,100 = $8,000
Steps to Pay Property Transfer Taxes when Buying a Home
Typically, the payment of the PTT will be coordinated with the notary or real estate lawyer you’re working with. Before you meet to finalize your down-payment and hand over the bank draft, the professional you’re working with will provide you with the amount of PTT you’ll be required to pay.
Then, when it comes to finalizing the documents and statement of adjustments with your notary or lawyer, they will reconcile the amount owed for the PTT. Facilitating the transfer of funds to each appropriate party, including the Land Title and Survey Authority of British Columbia.
How much does it impact closing costs?
PTT can be one of the largest costs when it comes to the total closing costs on a home across Metro Vancouver.
For an average home in British Columbia, closing costs typically range from 3-5% of the purchase price.
PTT alone can account for a significant portion of this. For example, on a $1,249,890 property (the average home price in Greater Vancouver as of August 2024), the PTT would be approximately $22,997.80.
For the sake of simplicity, let’s say you’re a First-Time Home Buyer who will receive the full exemption of PTT on a purchase price of $842,000. This means, you’ll be paying about $9,000 in PTT. Taking into account some of the other closing cost amounts, PTT makes up a major portion of the total closing costs.
Final Thoughts
By understanding these calculations, you can estimate the PTT for different types of property you may be looking at buying across Metro Vancouver. Remember, it’s based on the fair market value, and there are potentially some savings to be had, depending on your specific situation.
And if you need help with your home buying journey, we’re here to help you at Metro Vancouver Life!
