BC Property Transfer Tax: What Homebuyers Need to Know

If you’re buying a home in British Columbia, don't forget about the Property Transfer Tax. This tax catches many buyers by surprise and can add thousands to your costs. Knowing how it works—and who gets a break on paying it—helps you avoid budget shocks on closing day.

For informational purposes only. Always consult with an attorney, tax, or financial advisor before proceeding with any real estate transaction.

BC Property Transfer Tax at a Glance

• British Columbia charges a transfer tax when you buy property: 1% on the first $200,000, and then rates increase as property value goes up.
• First-time homebuyers don't pay tax on homes under $835,000 (as of April 2024).
• New homes under $1,100,000 are tax-exempt (as of April 2024).
• Foreign buyers pay an extra 20% tax in many areas.
• Family transfers, divorce settlements, and farm properties may qualify for tax breaks.

What Is Property Transfer Tax?

Property Transfer Tax (PTT) is a fee you pay when you buy real estate in BC. The government charges this tax when the property title transfers from one owner to another.

The tax is based on what you pay for the property. You pay 1% on the first $200,000, then 2% on the amount between $200,000 and $2,000,000. Higher-priced homes are taxed 3% on amounts between $2 million and $3 million, and 5% on anything over $3 million.

Most buyers must pay this tax. But there are exceptions for first-time buyers and newly built homes. These exemptions help make buying more affordable for some people.

Who Pays Property Transfer Tax in BC?

Almost everyone buying property in BC pays this tax. The buyer, not the seller, is responsible for the tax.

The only people who might not pay are those who qualify for exemptions. First-time homebuyers, people buying new homes, and certain family transfers can get tax breaks.

Foreign buyers get no breaks. In fact, they pay extra taxes on top of the regular rates.

How Much Will You Pay?

The amount of tax depends on your purchase price.

• 1% on the first $200,000
• 2% on the amount between $200,000 and $2,000,000
• 3% on the amount between $2,000,000 and $3,000,000
• 5% on any amount over $3,000,000

Examples of how this works:

For a $500,000 home, you'd pay:

• $2,000 (1% of first $200,000)
• $6,000 (2% of remaining $300,000)
• Total: $8,000

For a $1,000,000 home, you'd pay:

• $2,000 (1% of first $200,000)
• $16,000 (2% of remaining $800,000)
• Total: $18,000

Unless you qualify for an exemption, budget for this tax. It must be paid when you register the property.

Tax Breaks You Might Qualify For

First-Time Homebuyers Program

First-time homebuyers get a big break—you pay no tax if your home costs $835,000 or less. Homes between $835,000 and $860,000 get a partial break.

To qualify as a first-time buyer:

• You must be a Canadian citizen or permanent resident.
• You must have never owned a home before.
• You must have lived in BC for at least a year.
• You must move into the home within 3 months.
• The home must be your main residence for at least a year.

This exemption saves first-time buyers up to $16,700 in taxes.

New Home Exemption

Purchased a newly built home? You might not pay any tax. New construction homes priced under $1,100,000 are completely exempt. Homes between $1,100,000 and $1,150,000 get a partial break.

To qualify for this exemption:

• You must be a Canadian citizen or permanent resident.
• The home must be your main residence.
• You must move in within 3 months.
• This must be the first sale of the property.

This tax break can save you up to $20,000. If you’re on the fence about whether to build or buy, this could affect your calculations.

Other Ways to Avoid the Tax

Several other situations qualify for tax exemptions:

• Property transfers between family members (like parents giving a home to children)
• Transfers due to divorce or separation
• Inheritance of property
• Farm properties may get partial exemptions
• Purpose-built rental buildings with at least four units

Check with your lawyer or notary if you think you might qualify for any of these breaks.

Extra Taxes for Foreign Buyers

If you’re not a Canadian citizen or permanent resident, you'll pay more. Foreign buyers face an additional 20% tax on home purchases in many BC regions.

This extra tax applies ON TOP OF the regular transfer tax. For example, a foreign buyer purchasing a $1 million property would pay:

• $18,000 (regular transfer tax)
• $200,000 (20% foreign buyer tax)
• Total: $218,000

The foreign buyer tax applies in:

• Metro Vancouver
• Fraser Valley
• Capital Regional District (Victoria area)
• Central Okanagan
• Nanaimo Regional District

Foreign students and workers with work permits might qualify for exemptions. Check the BC government website for details.

Speculation and Vacancy Tax

Don't confuse the Property Transfer Tax with BC's Speculation and Vacancy Tax. They're completely different.

The Speculation Tax targets empty homes. You pay this yearly tax if you own a home that sits empty for more than six months per year. Canadian owners pay 0.5% of the property's value annually, while foreign owners pay 2%.

You don't pay this tax on your main home. It only affects second homes and investment properties that sit vacant. (Keep in mind that short-term rentals are restricted to primary residences in B.C.)

For informational purposes only. Always consult with an attorney, tax, or financial advisor before proceeding with any real estate transaction.

Budgeting for the Transfer Tax

When buying in BC, factor the Property Transfer Tax into your costs. Unless you qualify for an exemption, this tax adds thousands of dollars to your purchase. Planning ahead helps you avoid surprises in your closing costs.

Talk to your real estate agent, mortgage broker, or lawyer early in the process. They can help you determine exactly what you'll owe and whether you qualify for any exemptions.

Planning a move to British Columbia? Call the agents at KelownaHomes.ca at 250-999-9844 to talk with a local real estate agent who can help you find your dream home in the beautiful province of British Columbia.