There are many costs associated with buying a property. Property transfer tax is a key closing cost that needs to be considered and understood.

What is property transfer tax?

The property transfer tax is known as a one-time kind of land transfer tax.

The PTT rate for British Columbia is set at 1% on the first $200,000 and 2% on the remainder of the purchase price balance greater than $200,000 and up to 2 million.

If a property is worth over 2 million dollars, then a 3% rate will be applied to the balance. Additionally, if a property is labelled residential and over 3 million, a further 2% will be applied to the portion of the sales price that is greater than 3 million.

Two real-life examples:

1. Assume the purchase price (fair market value) for a property is set at $800,000.

1% on the initial $200,000 would equal to $2,000.

2% on the remainder of the purchase price balance greater than $200,000 and up to 2 million would equal to $12,000. ($800,000-$200,000= $600,000 x 2%= $12,000)

The total property transfer tax for a property worth $800,000 is $2,000+$12,000= $14,000.

1. Assume the purchase price (fair market value) for a property is set at $3.9 million.

1% on the initial $200,000 would equal to $2,000.

2% on the remainder of the purchase price balance greater than $200,000 and up to 2 million would equal to $36,000. ($2,000,000-$200,000= $1,800,000 x 2%= $36,000)

3% on the portion greater than $2,000,000 would equal to $57,000. ($3,900,000- $2,000,000= $1,900,000 x 3% = $57,000)

 An additional 2% on the portion greater than $3,000,000 would equal to $18,000. ($3,900,000- $3,000,000= $900,000 x 2% = $18,000)

The total property transfer tax for a property worth $3.9 million is $2,000+$36,000+$57,000+$18,000= $113,000.

When is property transfer tax paid?
Property transfer tax is paid at the time of closing on the completion date.

Who needs to pay property transfer tax?

Usually, the buyer has to pay the PTT unless an exemption can be applied.

Are there exemptions to property transfer tax?

There are currently two exemptions to the property transfer tax. The exemptions include the first-time home buyer PTT exemption and the newly built home PTT exemption (750,000 and principal residence) (add more about these) and for the first-time homebuyer, there is a charge.

Is property transfer tax the same as annual property tax?

No. Annual property tax is a city tax that is due on a yearly basis while property transfer tax is a one-time provincial tax that is part of closing costs.

Is property transfer tax the same as foreign buyer tax?

No. Foreign buyers who purchase properties in certain areas may face a foreign buyer tax in addition to the PTT.