First Time Home Buyers’ Program
Other
Here is what we know: 1. There are no changes to the first time home buyer exemption limits; 2. All buyers (whether first time buyers or not) no longer pay PTT on purchases of NEW homes up to $750,000 in value; note the buyer must be a Canadian citizen or a permanent resident; there is a partial exemption for homes between $750,000.00 and $800,000.00; 3. PTT has changed so that there is now a 3% tax on amounts over $2,000,000.00. The 3% tax is only paid on the amount over $2,000,000.00, not the full price. These are effective for deals closing today and going forward. We had one client close on a new home yesterday, and we believe they are out of luck. We also had one client that was to close today on a $4,000,000.00 purchase, but we moved the completion to yesterday to save the client $20,000.00 in PTT.
Below is from the BC Government Website:
The First Time Home Buyers’ Program reduces or eliminates the amount of property transfer tax you pay when you purchase your first home. If you qualify for the program, you may be eligible for either a full or partial exemption from the tax.
If one or more of the purchasers don’t qualify, only the percentage of interest that the first time home buyer(s) have in the property is eligible.
For example, if you qualify and purchase a property with a fair market value of $400,000 with a person that doesn’t qualify you would still qualify. If you owned a 60% interest in the property, 60% of the tax amount would be eligible for the exemption.
Do I Qualify?
To qualify for a full exemption, at the time the property is registered you must:
- be a Canadian citizen or permanent resident
- have lived in B.C. for 12 consecutive months immediately before the date you register the property or filed at least 2 income tax returns as a B.C. resident in the last 6 years
- have never owned an interest in a principal residence anywhere in the world at any time
- have never received a first time home buyers’ exemption or refund
and the property must:
- be located in B.C.
- only be used as your principal residence
- have a fair market value of:
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- $425,000 or less if registered on or before February 18, 2014, or
- $475,000 or less if registered on or after February 19, 2014
- be 0.5 hectares (1.24 acres) or smaller
You may qualify for a partial exemption from the tax if the property:
- has a fair market value less than:
- is larger than 0.5 hectares
- has another building on the property other than the principal residence
Find out the amount of your exemption if you qualify.
If you don’t qualify because you are not a Canadian citizen or permanent resident, but you become one within 12 months of when the property is registered, you may apply for a refund of the tax. To apply for a refund call (250) 387-0604.
Apply
To apply for the First Time Home Buyers’ Program you need to complete the First Time Home Buyers’ Property Transfer Tax Return when you or your legal professional register the property transfer.
After you have applied you must meet additional requirements during the first year you own the property to keep the tax exemption.
Penalty for False Declaration
All applications are reviewed. You will be charged a penalty equal to double the tax if you falsely declare that:
- you have never owned an interest in a principal residence anywhere in the world at any time, or
- you have never received a first time home buyers’ exemption or refund
First Year of Ownership
At the end of the first year you own the property you will receive a letter. The letter is to conditionally confirm that you meet the occupancy and property value requirements after you:
Existing Home
To keep the tax exemption you must have:
- moved into your home within 92 days of the date the property was registered
- continued to occupy the property as your principal residence for the remainder of the first year
You may keep part of the exemption if you moved out before the end of the first year.
If the owner passed away, or the property is transferred because of a separation agreement or a court order under the Family Law Act before the end of the first year, you still qualify to keep the tax exemption.
Built New Home
If you registered a vacant lot and built your own home, to keep the tax exemption:
- the fair market value of the land when you registered the property plus the cost to build your home must be:
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- $450,000 or less if registered on or before February 18, 2014, or
- $500,000 or less if registered on or after February 19, 2014
- you must have built and moved into your home within 1 year of the date the property was registered
- you must have continued to occupy the property as your principal residence for the remainder of the first year
You may keep part of the exemption if you moved out before the end of the first year.
If the owner passed away, or the property is transferred because of a separation agreement or a court order under the Family Law Act before the end of the first year, you still qualify to keep the tax exemption.
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