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Every time a property is bought , a land transfer tax is payable. The tax is based upon 1% of the first $200,000 of the purchase price and 2% of the balance. The BC Government has allowed 1st time home buyers to be exempt from paying this tax if they meet the following criteria:
- Purchasers must have not previously held title to a principal residence anywhere in the world.
- Purchasers must be Canadian Citizens or permanent residents of Canada at the time of transfer and must have been a resident of British Columbia for at least one year prior to the application to the register of the purchase.
- Where two or more purchasers are involved, each eligible purchaser may claim the exemption on the percentage interest they are acquiring the property. For example, if one member of a couple has owned previously he or she can choose to remain off title and qualify for the whole grant OR if the couple wish both to be on title then you may choose to register the title as “tenants in common” where the party who owned previously is said to own 1% of the property while the other party owns 99% of the property making the purchases 99% tax exempt.
- The purchase price must not exceed $325,000 for full exemption within Greater Vancouver, Capital Regional District, Central Fraser Valley, Dewdney- Allouette and Fraser-Cheam Regional Districts and $265,000 on properties located elsewhere in BC. There is partial exemption available for prices between $325,000 and $350,000. Please see the property purchase tax link.
- The amount borrowed and registered must be 70% or greater and cannot come from related individuals. Existing financing assumed on a purchase is acceptable. Only financing that is being applied toward the purchase price of the principal residence will qualify for exemption.
- The amount borrowed must have a term of at least 1 year following the
date of the transfer. Where the mortgage does not have a term of one year, or the mortgage is a demand mortgage which does not state the term on the face of the document, the purchaser must pay the transfer tax at the time of the purchase and then apply for the refund after one year.
- During the year after the registration, the mortgage principal cannot be reduced by more than $13,000 on properties located within the Capital Regional District, Greater Vancouver, Central Fraser Valley, Dewdney -Allouette or Fraser-Cheam or $10,600 on properties located elsewhere in BC.
The BC Government will send you a form to be completed by your mortgage lender one year after the purchase. You will have to confirm that your mortgage balance has not been decreased by more than this allowable amount. They will then release the lien that they place upon the title.
- Purchasers must commence residing in the subject property 92 days after registration.
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