Purchasing a home is a huge financial decision, be it your first Kelowna home or your fifth. There are many extra costs associated with buying a home that need to be considered, particularly the BC Property Transfer Tax. Many homebuyers ask what is it? How can I plan for it? Are there any exemptions?
What is the Property Transfer Tax?
The BC Property Transfer Tax is a one-time payment based on the fair market value of the home you are buying, ie. the purchase price. This Property Transfer Tax is charged every time you make changes to a property’s title, which is the case when you are buying a home, or even if you are just purchasing an interest in a property. The revenue collected is used by the provincial government to pay for essential services like education and health care.
How is it calculated?
The BC Property Transfer Tax is calculated in an increasing scale depending on the value of the Kelowna property you are purchasing:
- 1% on the first $200,000 of the purchase price
- 2% on the value of the property above $200,000 up to and including $2,000,000
- 3% on any value above $2,000,000
- as of February 21, 2018 a further 2% is charged on the value greater than $3,000,000
Example: The current median home price in the Central Okanagan is $672,500
1% on the first $200,000 = $2000
2% on the value above $200,000 = $9450 ($472,500 x 0.02)
Total Property Transfer Tax = $11,450
Is there any way I can avoid it?
The Property Transfer Tax can add up quickly on your Kelowna home purchase. The good news is that there are some exceptions and exemptions to this tax.
First time home buyers are exempt from the Property Transfer Tax if the value of the home is less than $500,000, and they are Canadian citizens or permanent residents that plan to use the property as their primary residence. If two individuals are purchasing a property together and only one qualifies as a first time home buyer, you may apply a partial exemption to the percentage of the value of the home that the first time home buyer will own.
Newly build homes may also be exempt from the Property Transfer Tax. If the value of the new home is less than $750,000, and the buyers are Canadian citizens or permanent residents that plan to use the home as their primary residence, they may apply for a Property Transfer Tax exemption.
You can find more information on exemptions on the BC Property Transfer Tax info page.
The experienced team of Kelowna real estate agents at Quincy Vrecko & Associates are well versed in the Property Transfer Tax and prepared to guide you through all facets of the Kelowna home buyer process. Contact us today to get started.