Property Transfer Tax (“PTT”) and Harmonized Sales Tax (“HST”)

Taxes can be a very large part of the costs associated with buying real estate, especially with newly built or substantially renovated homes. The two most significant taxes are Property Transfer Tax and Goods and Services Tax. The other tax is Municipal Property Tax which will be discussed under the Closing Adjustment section.

PTT is a provincial tax applied against purchases of real estate in the province at the rate of 1% on the first $200,000 of the purchase price and 2% on the balance. The tax is submitted at the time of registration of the transfer in the land title office and the amount required must be provided to your lawyer or notary.

There is a full or partial exemption for “first time buyers”. There are number of criteria to qualify for the exemption and the purchase price determines whether or not it is a full or partial exemption. The main criteria are that buyers must be Canadian citizens or permanent residents of Canada; have resided in B.C. for a least 12 months or filed income tax returns as a resident of B.C. for 2 of the 6 taxation years immediately prior to registration of the transfer; and never previously owned a principal residence anywhere in the world. The full exemption is available for properties with a purchase price of $425,000 or less and a proportionate exemption is available for properties with a purchase price between $425,000 and $450,000. There is no exemption on properties with a purchase price greater than these thresholds. (For a comprehensive discussion see First Time Buyers’ Guide.)

HST is now payable on all new or substantially renovated homes. HST is charged at the rate of 12% and may be included in the purchase price or added to it depending on the language of the contract of purchase and sale. Buyers should review the language carefully with their realtor as HST is a significant cost. If your contract was entered into before November 18, 2009 HST may not be applicable.

New home buyers may be eligible for the federal GST new housing rebates (the GST new housing rebate and the GST new residential rental property rebate), which generally equal 36% of the (GST) tax paid on the homes worth $350,000 or less. The amount of this GST rebate is phased out on a straight-line basis for homes priced between $350,000 and less than $450,000.

For more info on HST please consult our HST Guide.