Our new legal assistant from Alberta was shocked to learn about the provincial government’s Property Transfer Tax, or PTT, which is charged on real estate transfers at a rate of 1% on the first $200,000 and 2% on any amount over $200,000, except for certain exemptions.
She was encouraged to hear that an exemption may be available to her as a first time home buyer. To qualify for this exemption, you must meet each of these criteria:
• You are a Canadian citizen, or a permanent resident;
• You have lived in BC for the 12 consecutive months immediately prior to the transfer of the property (or you filed 2 income tax returns stating your were a BC resident during the 6 years prior to the transfer);
• You have never previously owned an interest in a principal residence anywhere in the world at anytime; and,
• You have never received a first time home buyer’s exemption or refund.
If you meet all these criteria, the property must also qualify.
• The fair market value is not more than $425,000;
• The land can be no larger than 0.5 hectares (1.24 acres); and,
• The property will only be used as your principal residence.
If the property does not meet these requirements, you may still qualify for a partial exemption.
While you may qualify at the time the purchase completes, you must continue to satisfy certain criteria during the following year:
• If there is an existing home on the property, you must move into that home within 92 days of the transfer.
• If you purchase vacant land, you must build and move into your new home within 1 year of the date of the transfer. The value of the vacant land plus the cost of building your new home cannot exceed $450,000.
• You must continue to use the property as your principal residence for the balance of the year. If you move out before the end of the year, you may still be eligible for a partial exemption.
If you do not satisfy these criteria, the exemption may be reversed and you will be asked to pay the PTT, or a portion of it.
Confirm with your lawyer or notary whether you are eligible for the exemption. If you do not apply at the time the property is transferred, you can apply for a refund for PTT paid within 18 months of the date of the transfer.
For a free legal consultation to discuss your business, real estate, employment, or estate matters, contact:
Jason D. Jakubec
Lawyers West LLP
Main Line: 778-588-7051
Toll Free: 1-888-988-7052
As seen in SNAP Coquitlam.