Everything you need to know about Property Transfer Tax

When you purchase or gain an interest in property that is registered at the Land Title Office, you or your legal professional must file a property transfer tax return and pay the applicable property transfer tax, unless you qualify for an exemption. The property transfer tax is based on the fair market value of the property (land and improvements) at the time it was registered. The tax is calculated using a tiered rate: 1% on the first $200,000, 2% on the portion between $200,000 and $2,000,000, and 3% on amounts above $2,000,000. However, if you are a foreign national, foreign corporation, or taxable trustee, an additional property transfer tax applies on the residential portion of the property if it is located in a specified area of B.C. The first-time home buyers' program may reduce or eliminate the amount of property transfer tax you owe when purchasing your first home. To qualify for an exemption, you must be a Canadian citizen or permanent resident and meet one of the following criteria: have lived in B.C. for at least a year immediately before the registration date, or have filed at least two income tax returns as a B.C. resident in the last six taxation years before the registration. Additionally, you must have never owned a registered interest in a property that was your principal residence anywhere in the world and have never received a first-time home buyers' exemption or refund. The property itself must be used exclusively as your principal residence, have a fair market value of $835,000 or less (effective April 1, 2024), be 0.5 hectares (1.24 acres) or smaller, and contain only residential improvements. If one or more purchasers do not qualify, only the percentage of interest owned by the qualifying first-time home buyer(s) is eligible for the exemption. For example, if you acquired 60% interest in the property and another person acquired 40% interest, but only you meet the qualifications, only your 60% would be exempt. It’s also important to note that property transfer tax is distinct from annual property taxes, which are paid to your municipal or rural tax office to fund local services. The fair market value refers to the price a willing buyer would pay a willing seller for the property in the open market on the registration date. The government provides an online calculator to help estimate your property transfer tax, which should be factored into your closing costs.

Details provided by - https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/first-time-home-buyers + https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax