Property Transfer Tax changes: Good news for first-time buyers
First-time home buyers received welcome news in the February 15, 2005 BC Budget.
Now, under the Property Transfer Tax (PTT) First-Time Home Buyers’ Exemption program, qualifying first-time buyers can purchase a home worth up to $325,000 in the Greater Vancouver, Fraser Valley and Capital Regional Districts.
In all other regions, the threshold increased to $265,000 from $225,000. Changes took effect February 16, 2005.
“The Real Estate Board actively lobbied the BC government for the increase,” says Government Relations Committee Chair, JanetCunningham.
“Increases in residential home prices meant the previous threshold of $275,000 was too low to exempt most first-time buyers’ from paying the PTT and impacted affordability.”
In all regions there is also a proportional exemption for buyers of homes with a fair market value up to $25,000 above the new thresholds. This means in the Greater Vancouver area, homes valued up to $350,000 ($325,000 threshold + $25,000 proportional exemption) will be charged a pro-rated PTT .
The Budget also increases the mortgage pay down limit in the first year of ownership to $13,000 from $11,000 in the Greater Vancouver, Fraser Valley and Capital Regional Districts.
The pay down limit is the maximum that a mortgage can be paid down in the first year without losing eligibility for the first-time buyers’ exemption.
Realtors, your clients who qualify for the First-Time Home Buyers’ program will receive a letter from the government specifying the maximum mortgage pay down limit for the first year. The amount is calculated based on the property value and the amount of financing. At a minimum, financing has to be 70 per cent (down payment 30 per cent.)
“I’d like to congratulate the government,” explained Cunningham. “Changes to the PTT mean an increase in affordable home ownership.”
To qualify for the PTT First-Time Home Buyers’ Exemption program, buyers must:
- be a Canadian citizen or permanent resident;
- have resided in BC for 12 consecutive months immediately prior to the date of registration of the transfer, or must have filed two income tax returns as a BC resident within the last six years;
- never at any time have held a registered interest in a principal residence; and
- not have previously obtained a first-time home buyers’ exemption or refund.
The PTT is calculated at a rate of one per cent on the first $200,000 and two per cent on the remaining value of the purchase price.
For more information on PTT, go to: www.rev.gov.bc.ca/rpt/ptt/ptt.htm. For the government bulletin with instructions to calculate the PTT, visit the Vancouver home page on realtorlink.ca. Under News and Notes, see First-Time Home Buyers’ program PTT changes.
For more information, please contact Harriet Permut, Government Relations Manager at 604-730-3029 or [email protected]