The tax one must always consider when purchasing or acquiring any real estate in BC is the Property Transfer Tax.
When you purchase or acquire an interest in a property that is registered at the Land Title Office, you will be required to pay property transfer tax.
A traditional purchase of real estate between two complete strangers seems straightforward enough. But property transfer tax may be payable when a family member gifts you real estate.
The property transfer tax is calculated as follows:
Effective August 2, 2016, an additional property transfer tax applies to residential property transfers to foreign entities in the Greater Vancouver Regional District. For more information, please click on the following link:
The property transfer tax is based on the fair market value of the property on the date of registration of the transfer. The fair market value is the price that a buyer would agree to pay and a seller would agree to accept to sell for a property in the open market on the date of registration of the transfer.
When a property transfer does not occur in the open market (ie., when a family member gifts the property for no money or at a reduced price), fair market value may be determined by a recent independent appraisal, or sometimes by the property valuation provided by BC Assessment (a BC Assessment can be successfully challenged).
When someone purchases a presale strata unit (not bare land strata) where the Completion Date is far into the future, the purchaser will generally pay property transfer tax on the purchase price on the contract plus any upgrades or additions.
If the contract for the pre-sale strata unit is assigned, the assignee will pay property transfer tax based on the fair market value of the property at the time the property was registered at the Land Title Office. You may transfer the right to purchase the property to a related individual (doesn’t include brothers and sisters) before the property is registered at the Land Title Office without affecting the taxable amount. If the right to purchase is transferred to someone that isn’t a related individual, they will need to pay tax based on the fair market value of the property at the time the property was registered at the Land Title office.
The property transfer tax is payable at time of registration of the transfer. It will be payable to our office along with the balance to complete in a form of a bank draft or certified cheque.
If you are considering purchasing property, take into account the property transfer tax.
If you are considering buying out your family member or business partner or friend in a joint property venture, take into account the property transfer tax.
If you are being gifted a property by a beloved family member, take into account the property transfer tax.
In future blog posts, I will be discussing a few potential exemptions of the Property Transfer Tax, such as the First Time Home Buyer exemption and the Newly Built Home exemption. If you have any questions about this post, please contact Lewis Nguyen at lewis (at) dbmlaw (dot) ca or 604-937-6373.