Real Estate Purchases 102 – Understanding Property Transfer Tax

In English Articles by Steven Liu

Property Transfer Tax, often abbreviated to “PTT”, is a tax that is triggered upon change to a real property’s title. This include not only purchases of real estate, but any type of transfer of real estate from one person to another. It is worth noting however, there are a variety of exemption that are available upon the fulfillment of certain conditions. In this Article, we will provide an overview of how PTT is calculated, which will include how PTT is applied to residential real estate transactions, commercial real estate transactions.

Property Transfer tax is calculated using the fair market value of the land and improvements (buildings) on the date of registration, unless it is a purchase of a pre-sale unit. The fair market value, in this case, is the purchase price paid by a willing purchaser to a seller for a real property in the open market. Where the property transfer does not take place in the open market, that is, the transfer is between related individuals, such as a mother’s transfer to a son, or a transfer from one property to another, the fair market value is determined differently. Instead, the fair market value of a real property in a transfer between related individual is determined through a recent independent appraisal or the property value assessment as provided under BC assessment. Note however, there are certain situations in which the BC assessment values may not be used, notably, when:

  • Changes have been made to the property (e.g. rezoning) since the assessment
  • Market conditions in the area of the property have changed since the assessment
  • The land is classified as farm land
  • New or additional construction has been completed

The property transfer tax rate for residential properties is as follows:

  • 1% on the first $200,000,
  • 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000,
  • 3% on the portion of the fair market value greater than $2,000,000, and
  • 5% on the portion of the fair market value greater than $3,000,000.

The property transfer tax rate for commercial properties is as follows:

  • 1% on the first $200,000,
  • 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000,
  • 3% on the portion of the fair market value greater than $2,000,000.

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