British Columbia levies a property transfer tax (PTT) or land transfer tax when a property changes ownership. All property purchasers must pay PTT based on the property’s fair market value unless they qualify for an exemption. This guide outlines the available property transfer tax exemptions, eligibility requirements, and application procedures to help you navigate this complex aspect of BC real estate transactions.
Overview of BC Property Transfer Tax
The BC property transfer tax is calculated as follows based on the property’s fair market value:
- 1% on the first $200,000
- 2% on the portion between 200,000−2,000,000
- 3% on the portion over 2,000,000 up to 3,000,000
- 5% on the portion exceeding $3,000,000 if residential
An additional 20% property transfer tax applies to residential properties purchased by foreign nationals, foreign corporations, or taxable trustees in specified areas of BC.
Unless an exemption applies, PTT must be paid when registering a property transfer with the Land Title Office.
What are Common BC Property Transfer Tax Exemptions?
BC Property Transfer Tax exemptions are government programs designed to reduce or eliminate tax liability for specific groups of buyers or types of property transfers. These exemptions exist primarily to improve housing affordability and support certain social policy objectives.
Each exemption program has specific eligibility criteria for the purchaser and the property. Failing to meet ongoing requirements after receiving an exemption may result in penalties or a requirement to repay the exempted tax amount.
First-Time Home Buyers Exemption
This program provides either full or partial exemption from property transfer tax for eligible first-time homebuyers in BC.
How to Qualify?
To qualify as a first-time homebuyer in BC, you must meet all these personal requirements at the time of property registration:
- Be a Canadian citizen or permanent resident.
- Have either lived in BC for at least 12 consecutive months immediately before registration or filed at least 2 BC income tax returns within the 6 taxation years immediately before registration.
- Have never owned an interest in a principal residence anywhere in the world at any time.
- Have never received a first-time home buyers’ exemption or refund.
These requirements apply to each purchaser. If multiple buyers are involved and not all qualify, only the percentage of interest held by qualifying first-time buyers receives the exemption.
The property must meet these criteria to receive the full exemption
- Be located in BC
- Have a fair market value of up to $835,000 if the home is purchased after April 1, 2024, or $500,000 if you purchase the home before April 1, 2024.
- Be used only as your principal residence
- Be 0.5 hectares or smaller
Larger properties with fair market values between $835,000 and $860,000 can qualify for partial exemptions (the previous threshold was $500,000 – $525,000).
After receiving the exemption
To retain the full exemption, purchasers must:
- Move into the home within 92 days of registration
- Continuously occupy it as their principal residence for one year
If the purchaser moves out before one year, they may qualify for a partial exemption based on the number of days occupied.
How to apply?
Your legal professional typically applies for this exemption when submitting the property transfer tax return during closing. If you qualified but didn’t apply during registration, you can apply for a refund between the first anniversary and 18 months after the registration date using form FIN 265.
False declarations regarding eligibility can result in penalties equal to the exemption amount plus the tax owing.
Newly Built Home Exemption
The Newly Built Home Exemption program reduces or eliminates property transfer tax for qualifying purchases of newly constructed homes, encouraging new housing development in BC.
How to Qualify?
BC defines newly built homes as:
- Houses newly constructed on vacant land
- New apartments in newly built condominium buildings
- Manufactured homes placed and affixed on vacant land
- Relocated houses that haven’t been occupied at the new location
- Houses resulting from property subdivisions that haven’t been occupied
- Residential conversions from previously non-residential buildings
To qualify, the purchaser must be:
- A Canadian citizen or permanent resident
- Planning to use the property as their principal residence
To receive the full exemption, the property must be:
- Located in BC
- Registered at the Land Title Office after February 16, 2016
- The first registration with completed improvements
- Used exclusively as the purchaser’s principal residence
- 0.5 hectares or smaller
- Have a fair market value of up to $1,100,000 or less (purchased after April 1, 2024) or $750,000 (purchased before April 1, 2024).
Partial exemption: Fair market value between $1,100,000 and $1,150,000 (previously $750,000-$800,000)
For properties registered before April 1, 2024, the previous thresholds apply.
What are the occupancy requirements?
Similar to the first-time buyer program, you must:
- Move into the property within 92 days of registration
- Continue occupying it as your principal residence until at least the first registration anniversary.
Can you get a refund for the vacant land?
If you purchased vacant land, paid property transfer tax, and subsequently built a qualifying newly built home, you may be eligible for a refund if:
- The fair market value of the land plus construction costs falls within the threshold limits
- You meet all other qualification criteria
- You move in and continue occupying as your principal residence for the remainder of the first year
How to apply?
Use exemption code 49 on the Property Transfer Tax Return for newly built homes. For refunds after the fact, complete form FIN 272 after the first anniversary but within 18 months of registration.
Foreign entities and taxable trustees are not eligible for this exemption, though individuals who become Canadian citizens or permanent residents within 12 months of registration may apply for a refund.
Family Exemptions
Family exemptions allow for tax-free property transfers between related individuals under certain conditions. This exemption applies when a related individual transfers a principal residence or an interest in a principal residence to you. No property transfer tax is payable on qualifying transfers.
BC law narrowly defines “related individuals” as:
- Your spouse, child, grandchild, great-grandchild, parent, grandparent, or great-grandparent
- The spouse of your child, grandchild, or great-grandchild
- The child, parent, grandparent, or great-grandparent of your spouse
“Child” includes stepchildren, and “spouse” includes:
- A person you are legally married to
- A person you have lived with in a marriage-like relationship for at least two continuous years
Importantly, siblings, aunts, uncles, nieces, and nephews are NOT considered “related individuals” for this exemption.
What property requirements must be met?
For full exemption, the principal residence must:
- Have been used as the principal residence by either the transferor or transferee before the transfer
- Have improvements designed to accommodate three families or fewer
- Be classified as residential by BC Assessment
- Have a total land area of 0.5 hectares (1.24 acres) or smaller
If a principal residence is transferred to multiple people and not all are related individuals of the transferor, the exemption only applies to the interest acquired by related individuals.
Other Common Exemptions
Beyond the major exemption programs, BC offers other property transfer tax exemptions for specific situations:
Marriage Breakdown Exemptions: Transfers resulting from marriage breakdowns may qualify for exemption when:
- The transfer occurs due to a written separation agreement
- The transfer is ordered by the court under the Family Law Act
- The transfer is between former spouses who have lived separately for at least 2 years
Family Farm Exemptions for:
- Transfers of family farms between individuals
- Transfers to or from a family farm corporation
Other exemptions include transfers:
- To registered charities
- For correcting conveyancing errors
- For company amalgamations
- For subdivision purposes
- To First Nations
- The following bankruptcy
- Between joint tenants and tenants in common
Each of these exemptions has specific qualification criteria and application procedures detailed in BC’s property transfer tax legislation.
What common mistakes should you avoid?
The most frequent mistakes that lead to exemption denials include:
- Misunderstanding eligibility requirements (especially first-time buyer criteria)
- Failing to meet post-registration occupancy requirements
- Applying for exemptions on properties exceeding value thresholds
- Missing refund application deadlines
- Providing incomplete or inaccurate information on applications
- Not understanding the “related individual” definition for family transfers
The Bottom Line
BC Property Transfer Tax exemptions offer significant financial relief for qualifying homebuyers, potentially saving thousands of dollars during real estate transactions. Understanding these exemptions before purchasing property allows for better financial planning and may influence your purchase decisions.
Working with qualified professionals ensures you identify and apply for all eligible exemptions. At Bestmortgageonline.ca, our experts can help evaluate your eligibility and guide you through the application process.
FAQs about BC Property Transfer Tax Exemption
Can I qualify for more than one exemption at the same time?
Generally, you can only claim one exemption for a property transfer. If you qualify for multiple exemptions, analyze which provides the greatest benefit. For example, if you are eligible for first-time homebuyers and newly built home exemptions, the newly built home exemption typically offers a higher threshold value.
What if I'm a permanent resident but not yet a Canadian citizen?
Permanent residents qualify for most property transfer tax exemptions. If you're not a permanent resident at registration but become one within 12 months, you may be eligible for a refund of the property transfer tax paid.
What if my property is slightly over the value threshold?
Partial exemptions are available on a sliding scale for properties with values slightly above the full exemption thresholds. These partial exemptions gradually reduce as the property value increases until they phase out completely at the upper threshold.
Who can help you apply for PTT exemptions?
While the application process is straightforward, professional assistance ensures you claim all eligible exemptions: - Notaries and lawyers handling your real estate transaction - Mortgage brokers (like us at Bestmortgageonline.ca) - Real estate agents familiar with BC tax regulations - Accountants specializing in real estate taxation
