Shopping for your first home is very exciting, but trying to plan for all of the unforeseen costs can be stressful. Most people are aware of Property Transfer Tax (“PTT”), which is a provincial tax payable when the title to a property changes hands. However, don’t automatically assume that you qualify for an exemption simply because you are a first time home buyer (“FTHB”). This could be a costly mistake, resulting in a delay or even potential legal liability if you are unable to complete the purchase due to an inability to pay an unexpected PTT bill.
In order to qualify for the exemption you must:
- be a Canadian citizen, or a permanent resident as determined by Immigration Canada;
- have lived in British Columbia for 12 consecutive months immediately before the date you register the property, or have filed 2 income tax returns as a British Columbia resident during the 6 years before the date you register the property;
- have never owned an interest in a principal residence ANYWHERE in the world at ANY TIME, and;
- have never received a first time home buyers’ exemption or refund.
The property you are purchasing qualifies for the full exemption if:
- the fair market value does not exceed $500,000.00 (partial exemptions are available for properties valued between $500,000.00 and $525,000.00);
- the size does not exceed 1.24 acres (0.5 hectares);
- it will only be used as your principal residence.
Your exemption may be disallowed under certain circumstances. In order to ensure that you keep your exemption you must meet the following requirements DURING THE FIRST YEAR:
- If you purchase an existing home, you must move into the home within 92 days of the date you register title to the property.
- If you purchase vacant land, you must build and move into your new home within 1 year of the date you register title to the land. The fair market value of the land (as of the date you register the property), plus the cost to build the home, cannot exceed $450,000.
- After you move into your home, you must continue to use the property as your principal residence for the remainder of the first year. You may retain part of the exemption if you move before the end of the first year.
- The ministry will send you a letter at the end of the first year you own the property to confirm that you meet the requirements as explained above.
CLICK HERE for more information.
**Please note that these rules differ from other programs for FTHB’s (such as the Canada Revenue Agency Home Buyers’ Plan, the First-Time Home Buyers’ Tax Credit and CMHC).