Are you a first-time homebuyer or thinking about purchasing a newly built home? If so, you’re in the right place. I’m Lisa Salt with Remax Vern and Salt Fowler, and today I have some important updates regarding the property transfer tax (PTT) that you need to know about. Starting April 1st, 2024, there are some significant changes rolling out that could impact you. Let’s dive into these changes.

What’s New with the Property Transfer Tax?

The government has made significant adjustments to the PTT, aimed particularly at benefiting first-time homebuyers and those looking at newly built homes. These changes are designed to make homeownership more accessible and to curb property flipping. Here's what you need to know:

Benefits for First-Time Homebuyers

If you’re entering the housing market for the first time, there’s some excellent news for you. For any property purchase under $835,000, the first $500,000 of your purchase price will now be exempt from the property transfer tax. This means no PTT on the first half-million of your home’s price. The remaining amount up to $835,000 will still be subject to PTT.

Before April 1st, the exemption applied only if the property was valued under $500,000, which was becoming nearly impossible in many markets. This update is a welcome change that better aligns with current market conditions.

Understanding the Savings

In British Columbia, the property transfer tax rates are:

• 1% on the fair market value up to $200,000
• 2% on the fair market value over $200,000 up to $2 million
• 3% on the fair market value over $2 million

For residential properties worth over $3 million, an additional 2% tax applies to the value above $3 million. These rates can add up quickly, so the new exemptions can result in substantial savings for first-time buyers.

Qualifying for an Exemption

To qualify for the first-time homebuyer exemption, you must:

• Be a Canadian citizen or permanent resident
• Have lived in BC for at least a year before registering the property
• Filed at least two income tax returns as a BC resident in the last six years
• Never owned a principal residence anywhere in the world
• Never received a first-time homebuyer exemption or refund before

The property must:

• Be your principal residence
• Have a fair market value of $835,000 or less
• Be 0.5 hectare (1.24 acres) or smaller
• Contain only residential improvements

If all these conditions are met, you will be exempt from the PTT on the first $500,000 of the purchase price.

Changes for New Home Buyers

For those buying a newly built home, there’s more good news. The full exemption on the property transfer tax for new homes has been raised from $750,000 to $1.1 million. If your new home is priced between $1.1 million and $1.15 million, you still qualify for a partial exemption. This is a significant increase that better reflects the current market and makes it easier to purchase a brand new home.

Qualifying for the New Home Exemption

To qualify for the new home exemption, the property must:

• Be registered at the land titles office after February 16th, 2016
• Be the first registration of the property with a completed improvement
• Be used as your principal residence
• Have a fair market value of $1.1 million or less

If the property has a fair market value greater than $1.1 million but less than $1.15 million, or if it’s larger than 0.5 hectares, you may still qualify for a partial exemption.

Conclusion

Navigating the property transfer tax can be complicated, but these new updates provide some much-needed relief for first-time homebuyers and those purchasing newly built homes. If you have any questions or need further assistance, feel free to reach out. For more detailed information on the property transfer tax, check out the links below. Also, don’t miss our video on all the taxes involved in buying a home in BC, titled "Buying, Owning, or Selling a House in the Okanagan." Just Add Salt!

Stay informed and happy house hunting!

__________________________________

About the Author: The article above, Navigating The New PTT Changes for FIRST TIME and New HOMEBUYERS, was provided by Lisa Salt, an authority on Vernon BC and area real estate and a leader in the field of real estate blogging and vlogging.  Lisa and her group have helped literally helped thousands of families buy and sell homes since 1993. 

Looking to buy a home in the Vernon/North Okanagan area?  Check out "Everything You Need to Know About Buying a Home" article. It’s free of charge and will save you a ton of time!

Looking to sell?  We use the latest technology to get our clients’ homes sold quickly and for as much money as possible.

We help people buy and sell real estate in the following Okanagan/Shuswap areas: Vernon, Armstrong, Enderby, Lake Country, Lumby, Westside and Salmon Arm/Shuswap.

Call or Text 250-549-7258 or email webinfo@saltfowler.com