When you buy one of the townhouses for sale in East Vancouver or any such property in British Columbia, the province levies you a property transfer tax on the transaction. This is integral to the closing costs you’ll need to play to seal the deal, so it’s important for you to understand how these costs are calculated and plan accordingly. By doing so, you prevent coming up short at the closing table.
How is property transfer tax charged?
The province of British Columbia charges property transfer tax at 1 percent for the first $200,000 of the fair market value and 2 percent on the portion that exceeds $200,000 and up to and including $2,000,000. In addition, B.C. charge 3 percent on the portion of the fair market value greater than $2,000,000.
To give you a picture of how B.C. computes for property transfer tax, say you were buying a $300,000 home, then you’ll have to pay $2,000 (1 percent) for the first $200,000 and another $2,000 (2 percent) for the remaining $100,000. Adding it all up, your total property transfer tax would be $4,000.
What is the newly built home B.C. property transfer tax exemption?
Buyers of newly constructed homes can qualify for an exemption of the property transfer tax if the property costs $750,000 or less. Likewise, a partial exemption is available to buyers whose property costs more than $750,000 but less than$800,000.
What is first-time homebuyers’ tax exemption?
First-time homebuyers in B.C. may qualify for a reduction or exemption of property transfer taxes. To be eligible, one must first be a Canadian citizen or permanent resident who has never owned any property anywhere in the world at any time. Applicants must also have lived in B.C. for one full year before the date that the property is registered, or filed a minimum of two income tax returns as a resident of B.C. in the last six years.
The partial exemption applies to properties costing less than $450,000 if registered on or before February 18, 2014, or$500,000 if registered on or after February 19, 2014. Full exemption applies to properties costing $425,000 or less if registered on or before February 18, 2014, or $475,000 or less if registered on or after February 19, 2014.
If you’re unsure of how to calculate property transfer tax or whether it applies to your situation, talk to an East Vancouver townhouses for sale agent.
Understand Your Taxes, WWW2.gov.bc.ca
First Time Home Buyers’ Program, WWW2.gov.bc.ca