Top frequently asked questions related to Presales' property transfer tax?
What is property transfer tax?
The property transfer tax is known as a one-time kind of land transfer tax.
The property transfer tax rate for British Columbia is set at 1% on the first $200,000 and 2% on the remainder of the purchase price balance greater than $200,000 and up to 2 million.
If a property is worth over 2 million dollars, then a 3% rate will be applied to the balance. Additionally, if a property is labeled residential and over 3 million, a further 2% will be applied to the portion of the sales price that is greater than 3 million.
What is the difference between property transfer tax and annual property tax?
Annual property tax is a city tax which is due on a yearly basis while property transfer tax is a one-time provincial tax that is part of closing costs.
Who pays the property transfer tax?
The buyer is responsible for paying the property transfer tax in most cases.
When is the property transfer tax due?
If you are a buyer in a real estate transaction, then you will be responsible for paying the property transfer tax on the completion date. Make sure to reserve room in your budget to accommodate for the property transfer tax.
What is an example of a property transfer tax payment breakdown?
Let us assume that the purchase price on a property is equal to $800,000. First, the 1% charge is applied on the initial $200,000 which would equal to $2,000. Then, a 2% charge is applied on the remainder of the purchase price balance greater than $200,000 and up to 2 million which would equal to $800,000-$200,000= $600,000 x 2%= $12,000. Hence the total property transfer tax for an $800,000 property is $14,000 ($2,000+$12,000).
1% of the fair market value up to and including $200,000.
2% of the fair market value greater than $200,000 and up to and including $2,000,000.
3% of the fair market value greater than $2,000,000.
If the property has residential property worth over $3,000,000, a further 2% tax will be applied to the residential property value greater than $3,000,000.
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