British Columbia (PTT) Property Transfer Tax
What U need to know about our beloved Provincial Property Transfer tax is that when you purchase a home for a second time or beyond expect to pay to the Provincial Government 1% on the first $200,000 and 2% on the remainder of assessed market value. Notice I said market value not sale price or true cost to build. First time home buyers may be exempt to this tax so please I ask of you to seek advice from an accountant or lawyer. The reason why I wanted to write this article about PTT is because of the times I sit in front of Buyers who our purchasing and I explain to them the extra costs that they will accrue.
So what does this really mean? The PTT on the average priced home in BC during the 1st quarter of 2012 was $9,056. Let’s me say it again, $9,056 already tax paid dollars on average came out of a buyers jeans and paid to the BC Provincial Government coffers just to purchase a property, your home. Let me remind you that when a home is new HST (12%) or GST depending on when you read this, is payable PLUS PTT on determined market value. So that means it’s taxed once originally by HST/GST, then if the home is built by an individual that does not qualify to the exemption PTT will also be paid. A 2nd buyer comes along and purchases it which then PTT kicks in again and it’s taxed for a third time, so forth and so on. Let me ask you this, how many times have you sold and bought? Probably a few, life changes, unexpected circumstances, more room needed, downsizing, and job transfers are a few examples. In Fort St John it’s not uncommon for a property to change hands numerous times. It seems that a typical home in FSJ sells every 3 to 5 years. From now on every time you drive by a sold sticker on a for sale sign you can imagine that PTT is being calculated, collected and paid to the Province.
Property transfer tax is a big deal so big that it is estimated to near a remarkable $1 Billion worth of tax revenue to the Province by 2014/2015 or near a total of 4.26% of the Provinces total tax revenue. BC population has approximately 4,632,259 people. Not much population really compared to $1,000,000,000.00 tax collected. How about this, the PTT payable on the average priced home costs more than 14% of the annual median family income in BC. The highest in the country, and is actually double the second highest which is Nova Scotia at about 6%.
I guess a good question to ask ourselves is how Provinces like Alberta and Saskatchewan that have relatively no PTT or (Land transfer tax) survive without this huge tax revenue? It’s definitely not because of their Provincial sale tax revenue, cause Alberta has relatively none and Saskatchewan is 2nd lowest in the country. Maybe it’s time for our beloved province to look a bit closer of how our neighbours are doing it. Or even better is for the Government to approach the PTT a bit differently like making it straight 1% or even 1% on the first $400,000 and 2% on the remainder. If that’s not feasible at least allow the non exempted home Buyers to use the PTT amount paid as a tax deduction. This may actually help Home buyers and could also been seen as motivation tool to keep the Provinces Real Estate market moving along.
In conclusion I’d like to say it’s just as easy for me to accept things as they are like the fact I have paid thousands and thousands to PTT over the years purchasing homes but at least from this day forth I’m more aware and a tad bit more educated. I hope you feel the same. I would be thrilled if you readers have comments which you can post on my blog at www.whatuneed.ca.
Information collected from British Columbia Real Estate Association discussion paper “ Tax Competiveness and Labour Scarcity
Two-income family of four earning $90,000