Buyer's Guide » Don't forget About the Property Transfer Tax

Just as you're getting swept up in the fun and excitement of buying a home, your Realtor will sit you down for a frank talk about "closing costs," the extra charges and taxes you'll have to pay on top of the purchase price of your home. The heftiest of these is usually the Property Transfer Tax, or PTT, but the good news is that most first-time buyers are exempt from the tax.

The Property Transfer Tax is a tax paid to the British Columbia government by the purchaser of any piece of real estate in the province. It's calculated at 1% of the first $200,000 of the purchase price, plus 2% of any remainder. For example, on a $275,000 house, the PTT totals $3,500.

You will need to complete a Property Transfer Tax Return, which your lawyer or notary public can assist you with. The tax is payable on the date the purchase is completed at the Land Title Office.

The First Time Home Buyer's Exemption
First-time buyers are exempt from the PTT, but only if all the following conditions apply:

• The home was bought for less than $325,000 in the Lower Mainland or Victoria; or $265,000 in the rest of B.C.
• The amount borrowed to finance the home must equal 70% or more of the purchase price, and cannot include amounts borrowed from relatives or friends.
• Each purchaser must be a Canadian citizen or permanent resident and must have resided in B.C. for 12 months prior to the purchase.
• Each purchaser must not have owned an interest in any principal residence at any time in the past.
• If the property purchased is vacant land, construction of a residence must be completed within the year following registration of the purchase.
• The purchasers must occupy the property as a principal residence within 92 days of the completion date, and for a minimum of one year afterward.

There are a few other complex conditions governing PTT exemptions, but they don't affect most home buyers. Your Realtor can supply you with complete details.