First of all, what is a Property Transfer Tax (PTT)? Well, it’s a tax that is required for passing the title of a property from one person to another. It is basically like a one-time transaction fee that a buyer needs to pay. The tax is based on the property price which you agreed to on your contract.
Your PTT is calculated in portions of your property price:
1% on your first $200,000
2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000
3% on the portion of the fair market value greater than $2,000,000
RESIDENCE/CITIZEN
If you are a permanent residence/citizen of B.C., you would need to pay only the portions of your property price.
FOR EXAMPLE:
Let’s say the purchase price of the property you just bought is $500,000 (So it’s between $0 – $2,000,000)
Then the calculation would be:
Tax on amount (1%): 0.01 x $200,000 = $2,000
Tax on amount (2%): 0.02 x ($500,000-$200,000) = $6,000
TOTAL TAX: $2,000 + $6,000 = $8,000
NON-RESIDENCE/CITIZEN
If you are non-resident of B.C., the PPT is the same as above, but there is an additional Foreign-National Tax of 15% of your property price that you would need to paid. This tax is only imposed in B.C for all of Greater Vancouver Regional Districts except for Abbotsford and Tsawwassen First Nations.
FOR EXAMPLE:
Let’s use the same example as before, but this time you are a non-resident purchaser.
Property price is still $500,000.
The PTT you have to pay, calculated above, is $8000
The ADDITIONAL Foreign-National Tax would be: 0.15 x $500,000 = $75,000
TOTAL TAX: $8000 + $75,000 = $83,000
It’s extremely important to know how much Foreign-National Tax you need to pay as the Canadian Government has 6 years after you purchase your property to check your transactions. If they found out you didn’t pay all the tax, or none at all, then there will be a large fine and can result to 2 years in prison for tax avoidance.
Now you can be prepared for that Property Transfer Tax when you are settled for a new place to call home!
