An often underestimated or overlooked closing cost on the purchase of real estate in British Columbia (BC) is the Property Transfer Tax. The Property Transfer Tax (PTT) is a significant, additional closing cost when purchasing or acquiring an interest in real property, when registered at the Land Title Office, in BC. The legal professional that you hire to represent you is required to file a property transfer tax return to the BC government. Because property values are now so high in Metro Vancouver and the Fraser Valley, the amount of property transfer tax payable by home buyers can be a large sum.
Unfortunately, the amount of property transfer tax payable is not an amount that can be rolled into one’s financing (i.e. mortgage amount). Liquid funds like cash need to be available to pay up front, upon closing on the acquisition of a home.
Below is an illustration of what the tax amount payable might look like. The table below is for general informational purposes only and you should always consult with a legal or financial professional, to determine the exact amount you might owe in any particular transaction. There are also considerations that might affect the amount payable, including being over a $3M threshold that might trigger additional property transfer tax payable or perhaps you qualify for an exemption.
As can be seen (in mid 2023), for a typical Fraser Valley condo, the property transfer tax can amount to a figure in the mid to high teens. For a typical detached home, you would paying around $25,000 to $38,000! And that is paid with after-tax dollars, for most people.
The Government of BC has a dedicated webpage about the property transfer tax. There, you can use their handy calculator to estimate taxes payable. As well, the webpage has a link to detailed calculation examples, to help people determine which situations (i.e. exemptions) might apply to them.
As a buyer's agent, I help clients make sense of the property transfer tax and all other steps of the home buying process. Best of all, using me for home buying services is at no cost to you. Contact me today to get started.