When buying a home, purchasers need to budget for various expenses in addition to the purchase price, including taxes. You are most likely exempt from paying GST when you are buying a used residential home in an arms-length transaction. However, you will have to pay the one-time property transfer tax (“PTT”) unless you qualify for the first-time home-buyer’s exemption. At this time, PTT is calculated on the fair market value of the property as 1% of the first $200,000.00, plus 2% of any portion between $200,000.00 and $2,000,000.00, plus 3% on any portion higher than $2,000,000.00 (note that additional tax applies to foreign nationals and corporations).
Newly built homes and substantially renovated homes are subject to GST, in addition to any PTT payable. However, earlier this year, the Government of BC enacted a PTT exemption aimed to assist buyers of newly built homes and apartments by decreasing the amount of tax they have to pay.
In order to qualify for the newly built home exemption from PTT, the buyers have to meet the following requirements:
- Buyers must be either Canadian Citizens or permanent residents;
- The home must be located in BC and must be used as the buyers’ principal residence;
- The fair market value of the home must be less than $750,000.00 (for full exemption) or between $750,000.00 and $800,000.00 (for partial exemption); and
- The size of the property must be less than 0.5 hectares (for full exemption).
If you are buying a home and have questions about the taxes you will have to pay on completion, or about any contractual matters, please feel free to contact us and book a consultation. We will be happy to assist you with your purchase!