Land Transfer Taxes (LTT) are provincial taxes levied on the exchange of real estate, and are the responsibility of the purchaser. Usually the LTT is a percentage of the property value. All provinces have a land transfer tax except Alberta and Saskatchewan (who instead levy a much smaller fee). Note that Ontario, Toronto, B.C. and PEI there are LTT rebates for first time homeowners. Also, keep in mind that Toronto is an exception as it charges an additional municipal tax (see Toronto section for additional information).
In British Columbia the land transfer tax, or property transfer rates, are levied on the fair market value (FMV) of the property. If the FMV is less than $200,000 the tax is 1%. If the FMV is over $200,000, the tax will be 1% of the first $200 000, plus 2% of the portion that is greater than $200,000.
For example, if Julie buys a condo for $540,000 (and that is the FMV), the land transfer tax will be calculated as follows:
1% of $200,000 = $2,000
2% of $340,000 = $6,800
for a total of $8,800
First time homebuyers are eligible to receive a full LTT refund. To be eligible the home must be purchased for $425,000 or less. Moreover, if a first time homebuyer purchases a home between $426 000 and $450 000, he or she is eligible for a partial refund equal to [($450K – fair market value) / 25K] * LTT amount.
To be eligible to receive the LTT refund you must meet the following criteria:
- You are a Canadian citizen or permanent residents as determined by Immigration Canada
- You have lived in British Columbia for 12 consecutive months prior to the date the property is registered or have filed 2 income taxes in British Columbia in the 6 years before the property is registered
- You have never owned an interest in a principal residence anywhere in the world at anytime
- You have never received a first time home buyers’ exemption or refund
Your property qualifies for the first-time home buyers land transfer tax rebate if:
- The fair market value of the property is not more than $425,000
- The land is 0.5 hectares or smaller
- The property will only be used as your primary residence