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Property Transfer Tax Changes
We have summarized some changes to the property transfer tax introduced in the most recent budget: As you know one of the criteria for a first time buyer to qualify for the exemption from the property transfer tax for a purchase in the Capital Regional District was that the price had to be $275,000 or less. Effective February 19, 2003 a first time buyer purchasing a home in this area with a price greater than $275,000 and less than $300,000, assuming they meet the other criteria, will qualify for a partial exemption from the transfer tax. The method to calculate the partial exemption is as shown in the following example. Fair market value of property: $285,000 Tax at 1% on $200,000 & 2% on balance: $3,700 Proportional exemption: $3700 x ($275,000 + $25,000 - $285,000) = $2,220 Transfer tax payable = $3700- $2220=$1,480 Another criteria to qualify for the property transfer tax exemption was that the Buyer had to have resided in B.C. for 12 consecutive months immediately prior to the date of registration of the transfer. This has now been expanded to include a first time buyer that has filed two tax returns as a B.C. resident within the last six years. The other main change introduced by the budget involves the rule where a buyer would have been required to repay an exemption if they sold their property within one year or paid down their mortgage by more than $11,000 in the first year. Now the exemption would be pro-rated where buyers leave the property or pay down the mortgage (the greater of $11,000 or an amount that would reduce the mortgage to 70% of fair market value at the time of purchase) within the first year. The other criteria to qualify for the exemption still remain (i.e. 1st time purchase of principle residence, 70% or more financing, 1 year term on mortgage etc.). If you or your clients have questions as to whether they would qualify for the exemption from the property transfer tax and the amount of the exemption that would be applicable, please feel free to contact us.
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