Changes to Property Transfer Tax Rules

There has been some good news for some Kelowna Buyers with the release of the new BC Budget. Effective February 19, 2014, the First Time Home Buyers Property Transfer Tax (PTT) Exemption increased to $475,000 (up from $425,000), with partial exemptions applying to homes sold between $475,000 and $500,000.

Property Transfer Tax is payable by Home Buyers on the sale price of their new home. It is calculated at a rate of one per cent on the first $200,000 and two per cent on the remaining value of the purchase price. The Exemptions means First Time Home Buyers do not have to pay the tax on any property up to $475,000, or they will have to pay a portion of the PTT if the sale price is between $475,000 and $500,000 (See PTT Partial Exemptions).

Property Transfer Tax Calculations:

$400,000 Sale Price = 1% on $200,000 + 2% on $200,000 = $6,000 PTT
100% Exemption = $0 PTT if you're eligible

$450,000 Sale Price = 1% on $200,000 + 2% on $250,000 = $7,000 PTT
100% Exemption = $0 PTT if you're eligible

$475,000 Sale Price = 1% on $200,000 + 2% on $275,000 = $7,500 PTT
50% Exemption = $3,750 PTT if you're eligible

The government estimates 1,700 additional first-time buyers will annually be eligible to save up to $7,500 in PTT when they buy their home in BC, which is a significant amount for anyone, especially a First Time Home Buyer who can use the money towards paying down their mortgage or furnishing their new home.

Unfortunately for those who do not meet the First Time Home Buyer’s Criteria (which includes being a Canadian Citizen, having never owned property anywhere in the world, and more), the Property Transfer Tax has not changed.

There has been much fanfare over the high cost of the PTT, and a campaign by the Real Estate Board of Greater Vancouver & BC Real Estate Association called Help Reduce The PTT was launched to help Home Buyers during the purchase of a new home by lowering this burdening tax. Proceeds from the tax go to city services, maintenance, etc.

Let me know if you have any questions in regards to the Property Transfer Tax. There are quite a few small rules that you need to know and I would be happy to help.

Jared Franczak - Your West Kelowna Real Estate Specialist

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