The Property Transfer Tax (the 'PTT') is an expensive add-on for British Columbia real estate purchasers. However, certain buyers can claim either a complete or partial exemption from having to pay the PTT. One of the most commonly claimed exemptions is the one available to First Time Home Buyers. Who qualifies as a First Time Home Buyer and can legitimately claim this exemption? To qualify for the exemption, purchasers must:
i. Be a Canadian citizen, or a permanent resident as determined by Immigration Canada;
ii. Have lived in British Columbia for 12 consecutive months immediately before the purchase date, or have filed 2 income tax returns as a British Columbia resident during the 6 years before the closing date;
iii. Never have owned an interest in a principal residence anywhere in the world at anytime; and
iv. You have never received a first time home buyers' exemption or refund.
In addition, the property being purchased must:
v. be less than $425,000 to be eligible for the full exemption, or between $425,001 and $450,000 to be eligible for a partial exemption;
vi. be less than 0.5 hectares or 1.24 acres, with a proportionate exemption available for properties larger than this size; and
vii. be used by the First Time Home Buyer as their principal residence.
Importantly, if the First Time Home Buyers sell the property or acquire a new principal residence within 12 months of this purchase, they will lose the exemption and the Province will demand for the tax to be paid.
This discussion of the Property Transfer Tax and the First Time Home Buyers Exemption under the Property Transfer Tax Act is intended only as a brief introduction to the subject. Should you have any questions or concerns with respect to this or any other aspect of real estate law, please contact Brendan at Mullin DeMeo, at brendan@mdlawcorp.com, or (250) 477-3327.
