The provincial government in British Columbia is trying to encourage more people to buy newly built homes by instituting a partial or total exemption from property transfer taxes for purchases of new homes. Construction starts have sputtered somewhat in BC (and elsewhere in western Canada), and the hope is that this will spur growth in that industry.
So what counts as a “newly built” home?
- A house built and set on a vacant land parcel
- A manufactured home set and affixed on a vacant land parcel
- A new apartment that is part of a newly built condo development
- A house that was already built but then is moved from one land parcel to one that is vacant, so long as no one has occupied the house since it was set on the vacant land parcel
- A building converted from another use to a residential home, such as an industrial building converted into a set of loft apartments
- A house that results from an existing improvement dividing a building, as long as the house has not been occupied
Does your new purchase qualify? Then you might be able to have your property transfer tax reduced or eliminated altogether.
Did you buy vacant land in BC and pay property transfer taxes on it? If you then put up a home on the land, you could qualify for a refund of some or all of the taxes that you paid.
How can you qualify for a reduction in your property transfer taxes?
You have to register the property (both improvement and land) at your land title office AFTER February 16, 2016. You also have to be an individual and either a permanent resident or a Canadian citizen. You will have to give your birth date and your Social Insurance Number (SIN) at the time of registration.
Your property has to be inside BC, has to serve as your primary residence, be no larger than 0.5 hectares (1.24 acres), and it must have a fair market value of no more than $750,000.
How do you apply for the exemption?
When you register the property at your local land title office, enter “49” as the exemption code when you fill out the Special Property Transfer Tax Return. This code indicates that you are applying for the Newly Built Home Exemption.
What are the occupancy requirements?
Once you register the property, there are some occupancy requirements that you have to fulfill if you want to qualify for the tax exemption. You have to move into the home within 92 days of your registration date at the local land title office, and you have to live in that home as your primary residence for the rest of the first year. At the end of that first year, you will get a letter confirming that you have met those requirements. Even if you move out before the end of that first year, though, you may hold on to some of the exemption, although the whole tax amount will not go away.
What if you didn’t apply for the exemption when you registered the property?
You can still apply for a refund if you qualify for the property transfer tax exemption but did not apply at registration.
What if you bought vacant land and now have a new house on it?
If you paid property transfer tax on the vacant lot, there are some situation in which you may apply for a refund. If you have built a new home on the property, meet the other qualifications for this Newly Built Home Exemption, and have a combined fair market value (land and home) that is no more than $750,000 (full exemption) or $800,000 (partial exemption), you can qualify for a refund so long as you moved into the home and kept on living there as your primary residence for the remainder of the first year.
If the property was transferred to you through a court order under Canada’s Family Law or through a separation agreement before that first year comes to an end, you could still qualify for a refund.
Where can you apply?
Fill out the Newly Built Home Application for Refund (PDF). Your refund application must take place between 12 months and 18 months after you initially registered your property at your local land title office.