February 22nd, 2016
The B.C. Government recently announced some changes to the Property Transfer Tax Act (the Act”) that will apply to all property transfers registered on or after February 17, 2016. These changes are:
- a new tax rate of 3% for properties with a fair market value over 2 million;
- a new exemption (Newly Built Home Exemption); and
- a new process of collecting data about homebuyers at the date of registration at the land title office.
3% Property Transfer Tax for Properties with a Fair Market Value Over 2 Million
The property transfer tax rate for properties with a fair market value at 2 million or under 2 million remains the same:
- 1% on the first $200,000; and
- 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000.
The only change in the property transfer tax rate is on the portion of the fair market value of the property greater than 2 million. Starting from February 17, 2016, homebuyers who purchase homes over 2 million need to pay property transfer tax at the rate of:
- 1% on the first $200,000;
- 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000; and
- 3% on the portion of the fair market value greater than $2,000,000.
Newly Built Home Exemption
Effective February 17, 2016, individual homebuyers can benefit from a new property transfer tax exemption when they purchase a newly built home as their principal residence. In such circumstances a full exemption is available for homes with a fair market value up to $750,000, with a partial exemption available for homes priced between $750,000 and $800,000.
To qualify for this “Newly Built Home Exemption”, the individual homebuyer must:
- be a permanent resident or Canadian citizen;
- move into the property with 92 days from the registration date; and
- continue to occupy the property as their principal residence for at least 1 year from the registration date.
In contrast to the First Time Home Buyer Exemption, an individual homebuyer can claim this Newly Built Home Exemption as many times as it is applicable as long as all the exemption qualifications are satisfied.
Data Collection of Homebuyers
The changes to the Act now require all homebuyers to disclosure their citizenship on registration of a taxable transaction.
For individuals, homebuyers are required to disclose whether they are Canadian citizens or permanent residents of Canada. If they are not Canadian citizens or permanent residents of Canada, they must disclose the foreign state or country of citizenship.
For corporations, homebuyers are required to disclose the citizenship of any director who is not a Canadian citizen or permanent resident of Canada.
In addition to the disclosure of citizenship, the Act requires the disclosure of the names, addresses, and citizenship information of settlors and beneficiaries of bare trusts.
These new data collection requirements are in effect effective February 17, 2016 for registration of a taxable transaction where the homebuyer is claiming the Newly Built Home Exemption, while all other data collection requirements set out in the Act are scheduled to come into effect in the Spring of 2016.
If you have any questions regarding these new changes to the Act, please contact us at (604) 273-8481.
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