New Changes for Property Transfer Tax
The British Columbia government announced a raft of measures Tuesday that aim to tackle the issue of housing affordability in the province. A tax break for buyers of newly built homes. Canadian residents who buy a newly built home for up to $750,000 will save up to $13,000 on transfer tax but they must live in the property for at least one year. The break will be offset by an increase in the tax for homes over $2 million, from 2 per cent to 3 per cent.
Canadian residents who buy a newly built home for up to $750,000 will save up to $13,000 on transfer tax but they must live in the property for at least one year.
The BC Real Estate Association welcomed the measures saying “The PTT exemption for new homes up to $750,000 will help stimulate supply of new housing and provide more opportunities for home ownership across the province. This exemption is commendable, however with many new housing projects taking years to complete, it may not have the immediate impact desired by the government.” The association says it will continue to call for the province to raise the thresholds on PTT with the 1 per cent rate not applying before $525,000 and annual increases linked to the MLS Home Price Index. Other experts were not impressed by the government’s action: “Reducing or giving exemption of property transfer tax doesn’t help home buyers,” SFU professor Andrey Pavlov told Global News. “People frame it that way but that’s not how it works. All it’s going to do is raise prices.”
Tax Rate Changes
After February 16, 2016, the property transfer tax is charged at a rate of:
1. 1% on the first $200,000,
2. 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000, and
3. 3% on the portion of the fair market value greater than $2,000,000.
On or before February 16, 2016, the property transfer tax was 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.
This rate change will affect homebuyers who purchase homes above $2,000,000.00. This will not affect any homebuyers who purchase a home below $2,000,000.00
Newly Built Home Exemption
The Newly Built Home Exemption reduces or eliminates the amount of property transfer tax you pay when you purchase a newly built home.
A newly built home includes:
a house constructed and affixed on a parcel of vacant land
a new apartment in a newly built condominium building
a manufactured home that is placed and affixed on a parcel of vacant land
an already constructed house that is removed from one parcel of land and affixed to another parcel of vacant land, as long as the house hasn’t been occupied since it was placed on the new parcel of vacant land
a house resulting from the division of an existing improvement affixed to a parcel of land that was also subdivided, as long as this house hasn’t been occupied since the subdivision of the parcel
a house converted from an existing improvement on the land. The previous improvement couldn’t have been used as residential (e.g. a warehouse converted into apartments).
If you qualify for the exemption, you may be eligible for either a full or partial exemption from the tax.
If you paid property transfer tax when you purchased vacant land and you now have a newly built home on the land, you may be eligible for a refund of the property transfer tax you paid.
Do I Qualify?
To qualify, the property (land and improvement) must be registered at the land title office after February 16, 2016 and you must be:
an individual
a Canadian citizen or permanent resident (you will be asked to provide your Social Insurance Number (SIN) and your birthdate)
and the property must:
be located in B.C.
only be used as your principal residence
have a fair market value of $750,000 or less
be 0.5 hectares (1.24 acres) or smaller
You may qualify for a partial exemption, if the property:
has a fair market value greater than $750,000 and less than $800,000
is larger than 0.5 hectares
has another building on the property other than the principal residence
Find out the amount of your exemption if you qualify.
If you don’t qualify because you are not a Canadian citizen or permanent resident, but you become one within 12 months of when the property is registered, you may apply for a refundof the tax.
Apply
To apply for the Newly Built Home Exemption, enter exemption code 49 on the Special Property Transfer Tax Return when the property is registered at a land title office.
Occupancy Requirements
After you have registered the property, you must meet occupancy requirements during the first year you own the property. To keep the tax exemption you must:
move into your home within 92 days of the date the property was registered at the land title office, and
continue to occupy the property as your principal residence for the remainder of the first year.
You will receive a letter at the end of the first year to confirm you meet these requirements.
You may keep part of the exemption if you moved out before the end of the first year.
If the owner passed away, or the property is transferred because of a separation agreement or a court order under the Family Law Act before the end of the first year, the exemption may still apply.
Refund
If you qualify for the exemption, but didn't apply when you registered your home, you mayapply for a refund.
Vacant Land
If you registered a vacant lot and paid the tax, you may apply for a refund if:
you have a newly built home on the land,
you meet the qualifications for the Newly Built Home Exemption,
the fair market value of the land plus the cost of the newly built home is:
$750,000 or less for a full exemption
$800,000 or less for a partial exemption
you moved into your home and continued to occupy the property as your principal residence for the remainder of the first year.
If you move out before the end of the first year, you may be eligible for a partial refund of the tax you paid.
If the owner passed away, or the property is transferred because of a separation agreement or a court order under the Family Law Act before the end of the first year, you may still be eligible for a refund.
Apply for a refund
To apply for a refund, complete the Newly Built Home Application for Refund (PDF).
You must apply for a refund after the first anniversary of the registration date and within 18 months from the date you registered the property at the Land Title Office
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Source | http://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand/exemptions/newly-built-home-exemption