Last week the BC Government announced the 2016 Budget for our province, which included several changes to the Property Transfer Tax Act. These changes will affect the property transfer tax Buyers pay when they are looking at purchasing new homes or homes above $2,000,000. See this link for more information on the newly built home exemption and below for some important things to know about the changes:
1. Changes to the Property Transfer Tax Rate
One of the changes to the Property Transfer Tax Act is a new tax rate of 3% for properties with a fair market value greater than $2,000,000. The Property Transfer Tax (PTT) is now calculated as follows:
1. 1% of the taxable transaction’s fair market value that does not exceed $200,000.
2. 2% of that fair market value that exceeds $200,000 but does not exceed $2,000,000.
3. 3% of that fair market value that exceeds $2,000,000.
2. Property Transfer Tax – Newly Built Home Exemption
Another change to the Property Transfer Tax Act is the addition of a new exemption – the Newly Built Home Exemption. Below are some key points to consider:
1. The exemption applies only to newly built homes.
2. There is a full exemption for qualifying properties with a fair market value of $750,000 or less and a partial exemption for qualifying properties with a fair market value between $750,000 and $800,000.
3. The party claiming the exemption:
a. must be a Canadian citizen or permanent resident.
b. must use the property as a principal residence.
c. does not have to be a first time home buyer.