Property Transfer Tax

Understand Property Transfer Tax

 

You are charged property transfer tax in British Columbia when you make changes to a property’s title, including:

  • acquiring a registered interest in the property
  • gaining an additional registered interest in the property
  • becoming the registered holder of a lease, life estate, or right to purchase for the property

 

The amount of tax you pay is based on the fair market value of the land and improvements (e.g. buildings) on the date of registration unless you purchase a pre-sold strata unit. The tax is charged at a rate of:

  • 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, and
  • 3% on the portion of the fair market value greater than $2,000,000.

 

For example, if the fair market value of a property is $850,000, the tax paid is $15,000.

Estimate Tax Payable with a Fair Market Value: $850,000.00

1% on $200,000 or less:   $2000

2% of remaining balance up to and including $2,000,000.00:   $13000

Total Tax Payable   $15000

 

If you have registered a life estate for the property, you will be taxed based on your life expectancy. To calculate the taxable value of your property, multiply the property’s fair market value by the percentage corresponding to your life estate term.

 

Fair Market Value

 

Fair market value is the price that would be paid by a willing purchaser to a willing seller for a property (land and improvements) in the open market on the date of registration.

 

Open Market Transfers

 

A property transfer is considered to be in the open market when anyone likely to be interested in purchasing the property can make an offer. For example, the seller lists the property with a realtor or advertises it for sale.

 

The purchase price is considered the fair market value in most cases as long as you register the property within a few months of signing the sales contract. Otherwise, you will need to verify that the purchase price is fair market value if:

  • there was a significant change in value
  • the condition of the property changed
  • you didn’t purchase the property in the open market

 

Non-Open Market Transfers

 

When a property transfer doesn’t take place in the open market, fair market value may be determined using other means such as:

  • a recent independent appraisal, or
  • the property valuation provided by BC Assessment

 

Generally, the property valuation provided by BC Assessment reflects your property’s fair market value as of July 1 of the previous year. For example, the 2013 roll value reflects market conditions at July 1, 2012. This means that the assessed value may not reflect the current fair market value of your property.

 

The current property valuation provided by BC Assessment can’t be used in certain cases, such as 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 (class 9)
  • new or additional construction has been completed
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