Budget 2016 Frequently Asked Questions

The budgetary changes announced on February 16, 2016 in regard to the Property Transfer Tax Act include:

  • a new tax rate of 3% for properties with a fair market value greater than $2,000,000
  • a new exemption (Newly Built Home Exemption)
  • a new process of collecting data about transferees at the date of registration at the Land Title Office

View FAQS about:

Tax Rate Change

How does the new rate apply?

The new rate applies to all transfers registered on or after February 17, 2016.

How does the new rate apply to the transactions under section 3(2) of the Property Transfer Tax Act that started before February 17, 2016?

For transfers that started before February 17, 2016, use the tax rates that were in effect on the registration date of the first taxable transaction if subsequent applications for registration may be filed and registered at the Land Title Office on or after February 17, 2016.

How does the new rate apply to the correcting transactions registered after February 17, 2016?

Calculate the tax payable for a correcting transaction using the tax rates that were in effect on the date the original transaction was registered, and as if the fair market value of the correcting transaction was determined at that date.

Newly Built Home Exemption

How does the Newly Built Home Exemption work?

Effective February 17, 2016, there is an exemption from property transfer tax for newly built homes used as a principal residence. A full exemption is available for homes with a fair market value up to $750,000, with a partial exemption available for homes up to $800,000 (“qualifying value”). There are qualifications that pertain both to the individual (“qualifying individual”) and the property (“qualifying property”). Individuals must move onto the property with 92 days from the registration date and continue to occupy it as their principal residence for at least one year from the registration date.

If the transferee doesn’t continue to occupy the property as their principal residence due to separation or death, the exemption may still be retained.

What is “new” for the purpose of the Newly Home Built Exemption?

A new residential improvement for the purposes of the Newly Built Home Exemption includes:

  • an improvement that is constructed on and affixed to the land
  • a new apartment in a newly built condominium building
  • a manufactured home brought onto the land and affixed to the land
  • an already existing dwelling that is removed from one property and is placed and affixed to another vacant parcel of land
  • a dwelling that resulted from the subdivision of a parcel of land; the new residential improvement was developed from the division of the improvement that was on the parcel of land prior to the subdivision.

Does the exemption apply to the purchase of vacant land if the owner builds their principal residence on the land within one year from the registration of the taxable transaction at the land title office?

A transferee who buys vacant land must pay property transfer tax when they register the taxable transaction. If the purchaser builds a new house within one year from the date of registration, a refund application (PDF) can be submitted to the Property Transfer Tax office.

What sources can a transferee use to determine whether a house is “new” or not?

Information sources that can be used to determine whether the property qualifies as “new” under the Newly Built Home Exemption include, but are not limited to:

  • The vendor: the information is included as part of the contract of purchase and sale
  • LTSA: a title search shows that the application with the land title office is the first application for registration in respect of the qualifying property since the residential improvement was either built or placed on the parcel of land or since the subdivision of the parcel of land and the division of the improvement were effected
  • Municipal records searches such as Building Permits
  • BC New Homes Registry
  • BC Assessment information
  • The New Homes Warranty Insurance program

What happens if the transferee claims the Newly Built Home Exemption and they discover the house is not new?

If a transferee claims the Newly Built Home Exemption when they register a taxable transaction, but the property is not a qualifying property, the transferee becomes liable for the amount of property transfer tax that would have been payable at the date of registration, had the exemption not been claimed. The tax payable is due immediately in order to avoid additional interest accruing on the account.

Is there a penalty if a transferee claims the Newly Built Home Exemption but the property is not a qualifying property?

There is no penalty for claiming the exemption; however, once the transferee is aware their transfer does not qualify for the exemption or they are sent a Notice of Assessment, the tax is payable immediately.

How many times can a transferee apply for the new exemption?

As long as the exemption qualifications are met in full, a transferee can claim this exemption as many times as it is applicable.

When can a transferee apply for a refund for the Newly Built Home Exemption?

If the transferee qualified for the exemption at the time of registration of the taxable transaction but didn't apply when they registered the taxable transaction at the land title office, they may apply for a refund (PDF) after the first anniversary of the registration date and on or before 18 months from the registration date.

If the transferee doesn’t qualify because they are not a Canadian citizen or permanent resident, but they become one within 12 months of when the property is registered, they may apply for a refund (PDF) after the first anniversary of the registration date and on or before 18 months from the registration date.

If the transferee registered a vacant lot and paid the tax, they may apply for a refund of the tax paid if they meet all the Newly Built Home Exemption qualifications within the first year from the registration of the taxable transaction. They may apply for a refund (PDF) after the first anniversary of the registration date and on or before 18 months from the registration date.

Can a transferee apply for a refund of property transfer tax if they purchased and registered title prior to February 17, 2016?

The Newly Built Home Exemption is in effect for all the registrations of title on and after February 17, 2016. The exemption doesn’t apply retroactively.

Can a transferee apply for other exemptions, in addition to the Newly Built Home Exemption for the same transaction?

No.

Can a transferee apply for more than one refund (e.g. First Time Home Buyers and the Newly Built Home Exemption) for the same transaction?

No.

Can a transferee cancel a First Time Home Buyers (FTHB) application if they realize they qualify for the Newly Built Home Exemption?

A transferee can cancel an application for a FTHB and apply for a Newly Built Home Exemption if they meet all of the qualifications for the Newly Built Home Exemption. The cancellation and the application for a credit must be done no later than within 18 months from the date of registration.

A transferee who is not a FTHB but claims a FTHB exemption is liable for the penalty, even if they cancel the application and apply for a new housing credit under the Newly Built Home Exemption.

For more information, please call us.

Can a transferee cancel a Newly Built Home Exemption application if they realize they do not qualify but they qualify for a full or partial First Time Home Buyers (FTHB) credit?

A transferee can cancel an application for a Newly Built Home Exemption and apply for a FTHB credit if they meet all of the qualifications for the FTHB program. The cancellation and the application for a credit must be done no later than within 18 months from the date of registration.

A transferee who isn’t a FTHB but claims a FTHB credit, is liable for a penalty, even if they only apply for a credit.

Collecting Citizenship Information

The Property Transfer Tax Act is amended to require disclosure of citizenship, on registration of a taxable transaction, by all transferees.

Who are we collecting the information about?

Individuals

When registering a taxable transaction, transferees who are individuals are required to disclose whether they are Canadian citizens or permanent residents of Canada. If they aren’t Canadian citizens or permanent residents of Canada, they must disclose the foreign state or country of citizenship.

Corporations

When registering a taxable transaction, corporations are required to disclose the total number of directors, total number of directors who are Canadian citizens, and for any director who is not a Canadian citizen or permanent resident of Canada, you must disclose the director's name, address, and foreign state or country of citizenship.

Bare trust settlors and beneficiaries

The Property Transfer Tax Act is amended to require the disclosure of the names, addresses, and citizenship information of settlors and beneficiaries of bare trusts regardless of whether they are individuals or a corporation.

When are we required to start collecting the information?

The new disclosure requirements are in effect immediately for the registration of a taxable transaction if the transferee claims an exemption under the Newly Built Home Exemption.

All the other disclosure requirements will come into effect June 10, 2016.

What PTT form should be filed with LTSA if the form was signed by the transferee in the lawyer’s office prior to the release of the new PTT form version 26 on June 10, 2016?

To accommodate the collection of citizenship information, the new PTT form version 26 (V26) will be available for download from the Land Title and Survey Authority’s (LTSA) Electronic Filing System (EFS) June 10, 2016.

If you have a signed PTT form V25 at the time that we release the PTT form V26, to facilitate the transition to the new form, you can keep the signed PTT form V25 in your files.  However, when you file with LTSA you must file electronically an updated PTT form V26 and submit that version with all required fields filled in.

Share Button