First Time Home Buyers’ Exemption
For many first time home buyers, the idea of purchasing a home may feel daunting, especially when there are additional costs like legal fees, inspection fees, and land transfer taxes to take into consideration. Luckily, there are government resources in place to help those purchasing a home for the first time.
Exclusive to British Columbians, the First Time Home Buyers’ Program is designed to alleviate the burden of one of the largest costs associated with purchasing a home — the property transfer tax.
Property transfer tax is a tax on the sale or transfer of ownership of any residential property within British Columbia. This tax is charged at a rate of 1% on the first $200,000 of the purchase price and 2% on the remainder up to and including $2 million. For properties over $2 million, the tax rate is charged at 3%.
With the First Time Home Buyers’ Program, buyers can see their property transfer tax either eliminated (for properties up to $500,000) or reduced (only for properties up to $525,000). However, there are a set of requirements that buyers must meet in order to qualify.
To qualify, buyers 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
In addition to these requirements, the property must:
– be located in B.C.
– only be used as your principal residence
– have a fair market value of:
$475,000 or less if registered on or before February 21, 2017, or
$500,000 or less if registered on or after February 22, 2017
– be 0.5 hectares (1.24 acres) or smaller
If your property does not meet all of the above requirements, then you may qualify for a partial exemption. Partial exemptions are granted if the property meets the following conditions:
– has a fair market value less than:
$500,000 if registered on or before February 21, 2017, or
$525,000 if registered on or after February 22, 2017
– is larger than 0.5 hectares
– has another building on the property other than the principal residence
We know that the cost of real estate is significantly higher in British Columbia than in the rest of Canada. In fact, the cost of purchasing a home in Greater Vancouver is more than double the average cost throughout the rest of the country. But with the First Time Home Buyers’ Program, the process of purchasing a new home can become more affordable, making it easier for potential new buyers to enter the market.
Ready to start looking for your first home? Check out our First Time Home Buyers Guide here.
Buyers, how about a free, no pressure 30-minute consultation on buying a home in today’s market with one of our Accredited Buyer’s Specialists? Give us a shout!