On February 16, 2016, Finance Minister Michael De Jong announced
the 2016 Provincial Budget. A portion of the Budget calls for
amendments to British Columbia's current property transfer tax
Property transfer tax is a Provincial tax that is imposed on the
transfer of legal title to real property. The tax payable is based
on the fair market value of the property transferred as of the date
of registration, unless the transferee and transferor qualify for
one of the limited number of exemptions. The tax is charged at a
rate of: 1% on the first $200,000 and 2% on the portion of the fair
market value greater than $200,000.
The Budget provides the following changes to this tax regime,
effective February 17, 2016:
1) Buyers of newly constructed
homes (including condominiums) priced up to $750,000, will be
exempt from paying property transfer tax. The exemption will
provide up to $13,000 in tax relief to qualified individuals. To
qualify, the property must be registered at the Land Title Office
and the property owner must be:
an individual (not a corporation);
a Canadian citizen or permanent resident of Canada (if the
property owner is not a Canadian citizen or permanent resident, but
becomes one within 12 months of when the property is registered,
the owner may apply for a refund of the tax)
and the property must:
be located in British Columbia;
only be used as a principal residence;
have a fair market value of $750,000 or less; and
be 1.24 acres or smaller.
Property owners are required to pay the full amount of property
transfer tax should the newly constructed property exceed the
$750,000 threshold. Property owners may receive a partial exemption
for properties valued $750,000 and $800,000, provided that the
property is larger than 1.24 acres and has another building on the
property other than the principal residence.
2) The rate of property transfer
tax has been increased to 3% from 2% on the fair market value of
all properties, residential or otherwise, above $2 million.
Previously, the Property Transfer Tax Act required tax
payable at 2% of the fair market value exceeding $200,000.
For example, if on the purchase a home worth $3 million, the
property owner will pay: 1% on the first $200,000; 2% on the next
$1.8 million; and 3% on the last $1 million.
3) Proposed amendments to the
Property Transfer Tax Act will allow the Provincial
Government to collect new information from property owners
regarding whether or not they are citizens or permanent residents
of Canada. Foreign investors will be required to disclose their
citizenship and country of residence. The reporting requirement
will apply to those purchasing newly constructed homes and continue
to apply to first time home buyers. The reporting requirements will
not affect buyers of commercial properties. The proposed changes
are set to take effect beginning this summer.
4) Finally, the threshold to
receive a home owner grant has been raised. The home owner
grant reduces the amount of property tax paid on the property
owner's principal residence. The grant threshold has been
increased from $1.1 million to $1.2 million for the 2016 tax
year. Homes that exceed the threshold may still be eligible
for a partial grant. For properties assessed above the threshold,
the grant is reduced by $5 for every $1,000 of assessed value in
excess of the threshold.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The CRA provides new housing rebates for individuals who have purchased or built a new house or have substantially renovated a house or made a major addition to a house who plan on living in it personally or letting a relative live there.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).