First Time Buyers get a Break in Property Transfer Tax
Good news for First Time Home Buyers in Vancouver! The BC Government announced that they increased the Property Transfer Tax Exemption threshold for first time buyer’s, potentially saving Vancouver home buyers a few thousand dollars on property transfer tax.
Property Transfer Tax (PTT) is a tax that Vancouver Home Buyers have to pay on the sale price of their property (upon completion of the deal). The proceeds from this tax are spent on city improvements and maintenance. The tax is calculated by adding 1% of the first $200,000 with 2% of the remaining amount. Below are some examples:
$300,000 Kitsilano Condo: PTT = 1% on $200,000 + 2% on $100,000 = $4,000 PTT
$400,000 Kitsilano Condo: PTT = 1% on $200,000 + 2% on $200,000 = $6,000 PTT
$450,000 Kitsilano Condo: PTT = 1% on $200,000 + 2% on $250,000 = $7,000 PTT
$475,000 Kitsilano Condo: PTT = 1% on $200,000 + 2% on $275,000 = $7,500 PTT
First Time Home Buyer’s Program
In order to help First Time Home Buyers in Vancouver, the Government offers a First Time Home Buyers Exemption as along as you meet certain criteria (i.e. you are a Canadian Citizen, you have not owned property anywhere in the world, and more). Previously, the exemption could only be used on property up to $425,000 with partial exemptions on property up to $450,000 (you would have to pay a smaller percentage of the tax). The Government has now increased the full Property Transfer Tax exemption amount to $475,000 with partial exemptions to $500,000.
Simply put, if you qualify for the First Time Home Buyers Property Transfer Tax exemption when you buy a home for less than $475,000, you will pay $0 in Property Transfer Tax. The following table details the partial exemption amounts for homes up to $500,000.
$300,000 Home Price = $4,000 in Total PTT or $0 for First Time Home Buyers
$450,000 Home Price = $7,000 in Total PTT or $0 for First Time Home Buyers
$474,000 Home Price = $7,000 in Total PTT or $0 for First Time Home Buyers
$475,000 Home Price = $7,500 in Total PTT or $3,750 for First Time Home Buyers
$485,000 Home Price = $7,700 in Total PTT or $5,390 for First Time Home Buyers
$495,000 Home Price = $7,900 in Total PTT or $7,110 for First Time Home Buyers
$500,000 Home Price = $8,000 in Total PTT
Considering that most First Time Home Buyers will be purchasing property under the $500,000 mark, this could save them close to $8,000, which will go a long way towards purchasing furniture, paying down your mortgage or keeping money for life emergencies.
See the Government’s website for more information on the First Time Home Buyer’s Program.
Contact the WeLoveEastVan team if you have any questions – there are a few different scenarios that could affect the amount you’re eligible for, and we’re happy to go through the differences.
Lowering the Property Transfer Tax
Both the BC Real Estate Association and the Greater Vancouver Real Estate Board have initiated a campaign to lower the Property Transfer Tax for all Vancouver Home Buyers. The Government’s latest announcement is a step forward, but we’re still hoping to have the Property Transfer Tax lowered for every home buyer in Vancouver – whether it’s the first home, or fifth home. Take a look at HelpReduceThePTT.ca for information on their campaign.