The Government of British Columbia has announced new changes to the Property Transfer Tax Act.
There are several changes to the act which came into effect in February of 2016.
The changes are:
a) A property transfer tax exemption for Canadian citizens and permanent residents who purchase newly built homes, condos and townhomes under $750,000. That could potentially have savings in closing costs of up to $13,000. The purchasers must reside in the property for at least one year. The Ministry will send a letter to the purchaser at the end of the year to confirm compliance of the one year residency
b) The $475,000 exemption limit remains in effect for first time home buyers purchasing a used home
c) The new guidelines apply to commercial property purchases as well;
d) For properties over $2 million, the property transfer tax is one per cent on the first $200,000, two per cent on values over $200,000 up to $2 million and three per cent on any value over $2 million
e) Purchasers will need to start disclosing their country of residence in all property transactions
f) The beneficial ownership of properties held by corporations will also be tracked.
We recently financed the purchase of a newly constructed townhome in Lake Country whereby the purchaser had just sold their existing property. This being the purchasers’ second home purchase however, they did not have to pay the property transfer tax due to the new rules set out by the British Columbia government. Savings to the purchasers amounted to $4,726.56 based on the purchase price, net Goods and Services Tax. That is a huge saving when it comes to closing costs and will, as stated in a) above, be even more significant when it comes to the purchase of a home up to $750,000.
The new changes to the property transfer tax should increase newly built home sales and increase construction of residential and potentially commercial properties.