Property Transfer Tax
Similar to Land Transfer Taxes in other provinces, BC government requires its home buyers to pay a Property Transfer Tax (PTT) when purchasing a new home. The tax is valued at:
• First $200,000 at 1.0%
• $200,000 to $2,000,000 at 2.0%
• $2,000,000 to $3,000,000 at 3.0%
• Over 3,000,000 at 5.0%
There are several conditions that would allow you to be exempt from this tax. Foreign buyers have to pay an additional 20% tax in BC. If you are a first-time home buyer, British Columbia offers a land transfer tax refund of up to $8,000 for properties worth below $525,000. The refund covers the full tax amount if your asking price is $500,000 or below. Otherwise, the refund is partial.
- Canadian citizen or permanent resident
- Lived in BC for at least 1 year before the date you become registered owner of property
- Filed at least 2 income tax returns as BC resident in last 6 taxation years
- Have never owned property that was your principal residence anywhere in the world
- Have never received first time buyer exemption or refund
- Property must be used as principal residence
- Be Located in B.C.
- Only be used as your principal residence
- Have a fair market value of
- $475,000 or less if registered on or before February 21, 2017 or
- $500,000 or less if registered on or after February 22, 2017 - Be 0.5 hectares (1.24 acres) or smaller
- Cost less than
-$500,000 if registered on or before February 21, 2017, or
-$525,000 if registered on or after February 22, 2017 - Is larger than 0.5 hectares (1.24 acres)
- Has another building on the property other than the principal residence
- The Newly Built Homes Exemption qualifies for buyers of new homes and provides a full exemption for property priced up to $750,000 or a partial exemption if priced between $750,000 and $800,000. There are occupancy requirements for this exemption including a move-in date of within 92 days of registration and using the property as principal residence for at least the rest of the year.
The Buying Guide
Finding the perfect home starts with finding the right realtor. Joanna has years of experience and is a dedicated specialist in Vancouver real estate to help you navigate the complex and competitive marketplace.
At this step, a customized plan will be created between you and your chosen realtor to ensure that your search criteria and budget are aligned.
A mortgage pre-approval lets you know of your financial capabilities in affording your dream home. If you have not yet been pre-approved, it is advised that you meet with a mortgage specialist at this step.
Finding the right neighbourhood is often as essential as finding the right home. When choosing a neighbourhood, it’s important to decide which local amenities are most important to you.
A directed effort in choosing a home can help ensure you are comfortable with your decision every step of the way. Price, size, neighbourhood, amenities, parking and furnishings are all factors in helping you decide what is the most important to your situation.
After finding your dream property, it’s time to negotiate with the seller! Your realtor will determine the market value and negotiation strategy that will help prepare a formal written offer. At this stage documents and conditions including purchase price, deposit amounts, set dates and other preparatory terms or clauses of the offer are defined. Once your offer is submitted, the seller may choose to accept, reject or counter your offer.
Almost there! Having your realtor and lawyer to help you during this process ensures a smooth transfer process of your new home, as it is the most crucial point in the process of buying a home. Your realtor will help you fulfil any remaining conditions in the offer, while your lawyer will sign off on all final documents with you.
The Selling Guide
Taking your decision to sell your property to a realtor ensures that you can strategize for the best possible outcome. Deciding on which season to sell, or which market to cater the most to, having a realtor ensures a seamless process and to help you in every step of the way.
Finding the right marketing and pricing strategy for your home is dependent on the skill and knowledge of your realtor. Market evaluation and selling strategy ensures you get the top price and best exposure to qualified buyers.
To get the best possible price for your home, it is critical to consider how it will be presented to potential buyers. Ask your realtor in creating a customised marketing & exposure strategy for your house!
Once all home renovations, staging and planning are completed, your realtor will help you list your home onto the necessary platforms to help with exposure.
Just as your home gets listed, your realtor will have finalized all of your terms and conditions for potential buyers, and are ready to review and negotiate all incoming offers. When you receive an offer, you can accept, deny or make a counter offer.
The final step or “Closing Day” is when the buyer officially takes ownership of the home. All obligations, final conditions and fees are fulfilled and paid by or on the closing day.
FAQs
Answers to common questions.
Taxes
The property transfer tax rate in BC is: 1% on the first $200,000, 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000,3% on the portion of the fair market value greater than $2,000,000, and if the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000 (effective February 21, 2018).
When you sell your home, you may realize a capital gain. If the property was solely your principal residence for every year you owned it, you do not have to pay tax on the gain.
If at any time during the period you owned the property, it was not your principal residence, or solely your principal residence, you might not be able to benefit from the principal residence exemption on all or part of the capital gain that you have to report. Our recommendation would be to speak with your accountant to ensure you’re reporting correctly given your situation.
A new 20% tax was added to the Property Transfer Tax when a purchaser, who is not a Canadian citizen or permanent resident, purchases residential real estate property. For example, if your purchase price was $1.5M you would pay an additional $300,000 at the time of closing.
Finance
Knowing your monthly budget, having a down payment you are comfortable in and as well as knowing all the hidden costs of buying a home are crucial factors in determining what you can afford. Be sure to speak to mortgage broker and use a mortgage calculator to get an idea of a mortgage payment amount that best suits your needs. Contact us and we will point you to the right mortgage brokers in Vancouver.
A minimum down payment of 5% of the purchase price is typically required for homes under $1,000,000. A down payment of 20% is required otherwise. The maximum amortization period is 25 years for down payments under 20% and 35 years otherwise. Mortgage default insurance or CMHC insurance must be purchased for down payments between 5% and less than 20%.
Different cases can have a variety of hidden costs. Before making any purchases, it’s always important to seek legal advice from your realtor , lawyers and accountants.
• Mortgage Loan Insurance
• Appraisal Fee
• Property Insurance
• Legal Fee
• Property Transfer Tax
• Adjustments of the Services (Utilities, taxes, etc)
• GST
• Mortgage Broker Fee
Realtor
There's no doubt about the importance of finding a good real estate agent. They are crucial to your success in buying or selling property, as they will help you through every step with knowledge and expertise that only an expert can provide! A top-notch professional should also be able negotiate on behalf of their client while communicating clearly at all times so there aren't any hidden surprises later down the line - which means knowing people who work within this industry too is invaluable when conducting business transactions smoothly (and quickly!).
The typical formula for realtor commission is 7% on the first $100,000 and 2.5%. There are no set rates in Canada’s Competition Act so it can vary from brokerage to brokerage! Around half of the total commission of 7% on the first $100,000 and 2.5% on the balance is shared with a buyers agent who brings a buyer and offer that completes at the Land Title office.
The process of selling a home can take weeks or months. It depends on different factors like the buyer and seller’s agreement for completion date as well any possible inspections that need to happen before it's finalized!
With our no-stress approach, we make sure to answer any questions or concerns you may have. We will prep a buyer/seller guide specific for your needs so that the whole process is clear in mind before starting! Give us a call, send an email or arrange to meet up for coffee - we are here whenever you need us!