Calculation examples for the property transfer tax

Person A and Person B sell their home to Person C and Person D. The fair market value of the property is $3,400,000 and legal ownership in the entire (100%) property transfers. Person C and Person D are foreign entities and the property is entirely residential within a specified area.

Calculate the tax payable:

• 1% of the fair market value up to and including $200,000 = $2,000
• 2% of the fair market value greater than $200,000 and up to and including $2,000,000 = $36,000 ($2,000,000 - $200,000 = $1,800,000 X 2% = $36,000)
• 3% of the fair market value greater than $2,000,000 = $42,000 ($3,400,000 - $2,000,000 = $1,400,000 X 3% = $42,000)
• Further 2% on residential property over $3,000,000 = $8,000 ($3,400,000 - $3,000,000 = $400,000 X 2% = $8,000)
• 20% for additional property transfer tax on taxable amount = $680,000 ($3,400,000 X 20% = $680,000)

The total tax payable is $768,000 ($2,000 + $36,000 + $42,000 + $8,000 + 680,000 = $768,000).

Note:  If the property value did not exceed $3,000,000, then the 2% tax on residential property over that value would not apply.

Person A and Person B sell their home to Person C and Person D. The fair market value of the property is $1,000,000 and legal ownership in the entire (100%) property transfers. Person C is a foreign entity, and the property is entirely residential within a specified area. Person D is a Canadian citizen.

First, calculate the general property transfer tax: 

• 1% of the fair market value up to and including $200,000 = $2,000
• 2% of the fair market value greater than $200,000 and up to and including $2,000,000 = $16,000 ($1,000,000 - $200,000 = $800,000 X 2% = $16,000)

The total general property transfer tax payable is $18,000 ($2,000 + $16,000).

Then, determine Person C’s proportionate share in the taxable fair market value of the residential property:

• 50% X $1,000,000 = $500,000

Person C’s proportionate share in the fair market value of the residential property is $500,000. From this, apply the 20% additional property transfer tax rate:

• 20% on $500,000 = $100,000

Therefore, the total tax payable is $118,000 ($18,000 + $100,000).

Person A transfers ownership of their property entirely (100%) to Person B who is a related individual. All requirements of the Related Individual – Principal Residence exemption are met for a full exemption and the fair market value of the property is $500,000.

Calculate the exempt tax amount:

• 1% of the fair market value up to and including $200,000 = $2,000

• 2% of the fair market value greater than $200,000 and up to and including $2,000,000 = $6,000 ($500,000 - $200,000 = $300,000 X 2% = $6,000)

The exempt amount is $8,000 ($2,000 + $6,000 = $8,000).

Person A transfers ownership of their property entirely (100%) to Person B and Person C. Person B is a related individual to Person A and will acquire 70%, but Person C is not a related individual and will acquire 30%. Person B meets all the requirements of the Related Individual – Principal Residence exemption. The fair market value of the property is $500,000.

First, determine the taxable amount based on the interest transferring:

• 1% of the fair market value up to and including $200,000 = $2,000
• 2% of the fair market value greater than $200,000 and up to and including $2,000,000 = $6,000 ($500,000 - $200,000 = $300,000 X 2% = $6,000)

The taxable amount is $8,000 ($2,000 + $6,000 = $8,000).

Then, determine the exempt value and the amount that must be paid:

• $8,000 X 70% = $5,600 (exempt for Person B)
• $8,000 X 30% = $2,400 (tax payable for Person C)

Therefore, the tax payable is $2,400 and the exempt amount is $5,600.

Person A transfer’s ownership of their property entirely to Person B who is a related individual. All the requirements of the Related Individual – Principal Residence exemption are met by Person B except that the property exceeds 0.5 hectares and is 2.02 hectares. In this case, a partial exemption would apply.

The total fair market value of the property is $600,000, with residential improvements worth $200,000 and the rest of the value in the land. The property is entirely residential and full legal ownership is being transferred. 

First, determine the tax that would have otherwise been payable on the taxable transactions fair market value:

• 1% of the fair market value up to and including $200,000 = $2,000
• 2% of the fair market value greater than $200,000 and up to and including $2,000,000 = $8,000 (600,000 - $200,000 = $400,000 X 2% = $8,000)

The taxable amount is $10,000 ($2,000 + $8,000 = $10,000).

Then, determine the adjusted value and the tax that would be payable on the adjusted value:

• Adjusted value = Taxable transaction’s fair market value - Fair market value of the interest in residential improvements – (Fair market value of the land transferred x [0.5 hectares/ total area of the parcel])
• $600,000 – $200,000 – ($400,000 X [0.5/2.02]) = $300,990.10

Next, calculate the tax on the adjusted value:

• 1% of the fair market value up to and including $200,000 = $2,000
• 2% of the fair market value greater than $200,000 and up to and including $2,000,000 = $2,019.80 ($300,990.10 - $200,000 = $100,990.10 X 2% = $2,019.80)

The tax on the adjusted value is $4,019.80 ($2,000 + $2,019.80).

Lastly, determine the exempt amount:

• Exempt amount = Transferee’s interest in the fair market value x (Tax otherwise payable on the fair market value - Tax on the adjusted amount)
• 100% X ($10,000 - $4,019.80) = $5,980.20

Therefore, the exempt amount is $5,980.20 and the tax payable is $4,019.80. 

Person A transfers 50% interest in their property to Person B who is a related individual. All the requirements of the Related Individual – Principal Residence exemption are met, except the property is 2.02 hectares, which exceeds 0.5 hectares. In this case, a partial exemption would apply.

The total fair market value of the property is $800,000, with improvements worth $400,000 and the rest of the value in the land. The property is entirely residential.

First, determine the tax payable if the property is not exempt. To do this, determine the taxable transaction’s fair market value:

• $800,000 X 50% = $400,000

The taxable transactions fair market value is $400,000.

Then calculate the tax that would be payable on this had no exemption applied:

• 1% of the fair market value up to and including $200,000 = $2,000
• 2% of the fair market value greater than $200,000 and up to and including $2,000,000 = $4,000 ($400,000 - $200,000 = $200,000 X 2% = $4,000)

The tax payable is $6,000 ($2,000 + $4,000 = $6,000).

Second, determine the adjusted value and the tax that would be payable on that adjusted value:

• Adjusted value = taxable transactions fair market value – (percentage interest in residential improvements x fair market value of the residential improvements) – (fair market value of the land transferred x [0.5 hectares/ total area of the parcel])
• $400,000 – (50% X $400,000) – ($200,000 X [0.5/2.02]) = $150,495.05

The tax payable on the adjusted valued is:

• 1% of the fair market value up to and including $200,000 = $1,504.95 ($150,495.05 X .01 = $1,504.95)

Lastly, calculate the exempt amount:

• Exempt amount = Tax otherwise payable - Tax on the adjusted value
• $6,000 - $1,504.95 = $4,495.05

Therefore, the tax payable on this transaction is $1,504.95 and the exempt amount is $4,495.05.

Person A, Person B and Person C each have 33.33% legal ownership in a single lot. They would like to subdivide the lot three ways, so each has their own lot. Person A will acquire lot A, Person B will acquire lot B and Person C will acquire Lot C through the subdivision.

The fair market value of the original lot is $500,000. Following the subdivision, lot A’s value is $250,000, lot B’s value is $200,000, and lot C’s value is $300,000.

To calculate each owner’s share in the subdivided lots, determine the total fair market value of the subdivided lots:

• $250,000 (lot A) + $200,000 (lot B) + $300,000 (lot C) = $750,000 (total fair market value of subdivided lots)

Then, determine each owner’s share in the subdivided lots:

• Lot A = $250,000 / $750,000 = 33.33% (Person A)
• Lot B = $200,000 / $750,000 = 26.67% (Person B)
• Lot C = $300,000 / $750,000 = 40% (Person C)

If the share in the fair market value of the smaller parcels per owner does not exceed what they had before the transfer, than they are exempt. If not, then tax is payable on the increase of their proportionate share in the fair market value of the subdivided lots. In this case, Person A and Person B’s share in the fair market did not increase. Person C’s share increased by 6.67% (40% - 33.33% = 6.67%), therefore tax is payable on Person C’s increase in the share of fair market value of the subdivided lots.

In this case, determine the fair market value subject to tax:

• $750,000 X 6.67% = $50,250

Then calculate the tax payable:

• 1% of the fair market value up to and including $200,000 = $502.50 ($50,250 X 1% = $502.50)

Therefore, the tax payable is $502.50 for Person C’s gain in the share of the fair market value from the original to subdivided lots.