PEI Real Property Transfer Tax, also known as Land Transfer Tax, represents a significant closing cost that homebuyers should factor into their budget when purchasing property in Prince Edward Island. Understanding how PEI Land Transfer Tax works, when it applies, and potential exemptions can help buyers make informed decisions and save thousands of dollars.
What is the Real Property Transfer Tax in PEI?
Real Property Transfer Tax (RPTT) is a provincial tax imposed on transferring real property in Prince Edward Island. Established under the Real Property Transfer Tax Act and its associated Regulations, this tax must be paid when registering a deed of conveyance in the province.
What Qualifies as Real Property in PEI?
Real property in Prince Edward Island are land, buildings, and specific structures or installations subject to Real Property Transfer Tax.
- Land (including water-covered land)
- Land with buildings or structures, including machinery and equipment that contribute to the building’s utility
- Bulk storage tanks and connected supply pipelines
- Infrastructure components such as wires, cables, pipes, towers, and installations that form part of broadcasting, telecommunications, or power distribution systems
This broad definition ensures that most real estate transactions in PEI fall under the RPTT regulations.
Before a deed can be registered, the purchaser must file an Affidavit of Purchaser, a legally required document filed with the Registrar of Deeds.
How is PEI Land Transfer Tax Calculated?
The Real Property Transfer Tax in Prince Edward Island is calculated at a rate of 1% of the greater of either the purchase price or the assessed value of the property.
PEI Land Transfer Tax Rate Table
| Property Value | Real Property Transfer Tax Rate |
|---|---|
| Up to $30,000 | 0% (exempt) |
| Over $30,000 | 1% of property value |
To illustrate how this works in practice, consider the following example:
If you purchase a home for $300,000, but its assessed value is $320,000, your RPTT would be calculated based on the higher amount:
- $320,000 × 1% = $3,200 in land transfer tax
Conversely, if the purchase price is $300,000 but the assessed value is only $280,000, your RPTT would be:
- $280,000 × 1% = $2,800 in land transfer tax
This tax is paid at the time of registration of the deed of conveyance and is a one-time payment.
Source: Real Property Transfer Tax, Government of Prince Edward Island
What Happens if the Assessed Value is Higher Than Purchase Price?
When a property’s assessed value exceeds its purchase price, the purchaser must pay a Real Property Transfer Tax based on the higher assessed value at the time of deed registration. However, there are remedies available if you believe the assessment is inaccurate.
If you find yourself in this situation, you have options:
- Pay the required tax based on the assessed value at registration
- Contact Taxation and Property Records at (902) 368-4070 to request a review of the assessed value
- If the review results in a lower assessment, you can apply for a refund of the difference in tax paid
The effective date of any assessment adjustment will be the date of conveyance, ensuring that any refund calculations are based on the appropriate timeframe.
To request a refund after a successful assessment review, complete the “Request for a Refund of Real Property Transfer Tax” form and submit it as directed. Documentation supporting the revised assessment will be required as part of this process.
This review option is particularly valuable in situations where market conditions may have temporarily disparaged market prices and assessed values.
Read more to know how different regions in Canada charge their Land Transfer Tax:
- BC Property Transfer Tax
- Ontario Land Transfer Tax
- Toronto Land Transfer Tax
- Alberta Land Transfer Tax
- Saskatchewan Land Transfer Tax
Are there RPTT Exemptions for PEI Home Buyers?
Certain property transfers may qualify for full or partial RPTT exemptions, including:
Low-Cost Property Exemption
If the purchase price or assessment value is greater than $30,000 or less, no RPTT is owed. This applies entirely to the property’s value, not the buyer’s income or first-time status.
First-Time Home Buyer Exemption
A full RPTT exemption exists when all purchasers qualify as first-time home buyers and the greater property value does not exceed $200,000. You must submit a Declaration Form signed by a notary public confirming you meet these criteria.
If you have not lived in PEI for 6 months yet, you can receive an RPTT refund after occupying the home for the next 6 months.
Read on to find out if you are eligible for the LTT rebate for First-Time Home buyers in PEI and other provinces in Canada.
Other Exemptions
Additional partial or full RPTT exemptions exist for:
- Transfers from marriage breakdowns
- Transfers to family members
- Transfers into or between wholly-owned corporations
Estate transfers, mortgage transfers, and partial transfers may also be exempt.
Support Programs for PEI Home Buyers
Prince Edward Island offers support programs to assist residents with home purchases and improvements, which can help offset some costs associated with property acquisition.
- Harmonized Sales Tax (HST) of 15% applies to new housing
- First-time buyers may qualify for PEI’s Down Payment Assistance Program loans up to $17,500
- Mortgage insurance premiums are subject to Provincial Sales Tax
- PEI residents can borrow up to $10,000 from the provincial government with the Energy Efficiency Loan Program for energy-efficiency home upgrades.
These programs can provide significant financial support to eligible homebuyers.
Land Transfer Tax PEI FAQs
How do I know if I qualify as a first-time home buyer in PEI?
You qualify as a first-time home buyer in PEI if you: are at least 18 years old; are a Canadian citizen or permanent resident; have lived in PEI for at least 6 months or filed income tax in the province in at least 2 of the past 6 years; have never owned a principal residence anywhere; have never received a first-time home buyer exemption before; and intend to use the property as your principal residence.
Where do I submit the Affidavit of Purchaser form?
The Affidavit of Purchaser form must be submitted to the Registrar of Deeds before a deed of conveyance can be registered in Prince Edward Island.
When do I need to pay the PEI Land Transfer Tax?
You must pay the PEI Land Transfer Tax at the time of registering the deed of conveyance with the Registrar of Deeds. This typically happens during the closing process of your property purchase.
Is there a transfer tax exemption for seniors in PEI?
PEI does not currently offer a specific Real Property Transfer Tax exemption for seniors. However, seniors may qualify for other exemptions based on their specific circumstances, such as the low-cost property exemption or inter-family transfer exemption.
What happens if I sell my property shortly after receiving the first-time home buyer exemption?
If you sell your property before occupying it as your principal residence for at least 183 consecutive days after receiving the first-time home buyer exemption, you must forfeit the exemption and pay the tax that would have been due at registration.
Key Takeaways
PEI’s Real Property Transfer Tax represents a significant closing cost that must be considered. PEI offers several exemptions to make homeownership more accessible, particularly for first-time buyers and family transfers. These exemptions can provide substantial savings but come with specific eligibility requirements and conditions that must be carefully followed.
When planning your property purchase in PEI, remember to:
- Calculate your potential RPTT liability early in the process
- Determine if you qualify for any exemptions
- Prepare the necessary documentation to support your exemption claim
- Budget for this expense along with other closing costs
- Consider provincial support programs that might offset some costs
Consult with a real estate lawyer familiar with PEI property laws for specific guidance tailored to your situation.
