Some of my favourite clients are first time homebuyers. Last week, I met with a couple who were buying their first home after spending several months to find the right house for their growing family.
Michael and Natalie (not their real names) were very excited to be home owners for the first time and even more excited when I showed them how they saved more than $7,000.00 in property transfer tax.
Generally, everyone who buys property in British Columbia has to pay property transfer tax. The tax is calculated based on what the home is worth. You will pay one per cent on the first $200,000.00 and then two per cent on the balance. For example, if you bought a home worth $250,000.00, you would pay $3,000.00 in property transfer tax to the B.C. government.
But some first-time homebuyers, like Michael and Natalie, don’t have to pay property transfer tax because they qualify for the First Time Home Buyers’ Program.
To qualify, you must be a first-time home buyer, which means you’ve never owned property anywhere in the world.
Also, you must be a Canadian citizen or a permanent resident and you must have lived in B.C. for at least a year prior to purchasing the property or have filed at least two income tax returns as a B.C. resident in the last six years.
There are also requirements for the home you are buying.
The property must be located in B.C. and it must be the place you live most of the time.
As well, your home must be worth less than $500,000.00 and be located on a property that is 0.5 hectares or smaller.
If your property is worth between $500,000.00 and $525,000.00 or if your property is bigger than 0.5 hectares, you may qualify for a partial property transfer tax exemption.
Michael and Natalie met all the criteria to qualify for the full exemption – saving them more than $7,000.00, which was enough to pay the rest of their closing costs on their new home.
– Carolynne Burkholder is a full time lawyer born and raised in Vanderhoof.