Kelowna Houses for Sale: The Land Transfer Tax Q&A

Land Transfer Tax

 Thinking of buying one of the Kelowna houses for sale? Get familiar with the Land Transfer Tax process first.

 

When you first began scouring listing after listing of Kelowna houses for sale, house-hunting was exhilarating. Now that you’ve found the perfect home, you’re on the other side—crunching numbers and filling out paperwork. Before you put in an offer, and especially if you’re a first-time homebuyer, one of the less-exciting areas you’ll want to do your homework on is ‘land transfer taxes.’ If you’re not familiar with that term, don’t worry. We’re here to break it down for you. 


What is land transfer tax? 

Land transfer tax, also referred to as property transfer tax, is a tax imposed by the government when purchasing one of the many Kelowna houses for sale. When you purchase a new home or piece of land that is registered at the Land Title Office, you’re required to pay the tax calculated on the sell price of the home or property.


Who pays land transfer tax?

The buyer is the party that’s responsible for paying this tax.


If I’m a first time buyer, am I required to pay land transfer tax?

Fortunately, there is an exemption for first time homebuyers. This exemption can either reduce or completely eliminate the amount of taxes owed. In order to qualify, you need to meet the following requirements:

  • You’re a Canadian citizen or permanent resident
  • You’ve lived in British Columbia for 12 consecutive months before purchasing a home, or you’ve filed two tax returns as a BC resident in the previous six years
  • You’ve never owned your own home before
  • You haven’t received a first time homebuyer’s exemption before 

To take advantage of the full exemption, the home you’re interested in purchasing must also meet a set of requirements. The property must:

  • Have a BC address
  • Be used as your principal residence
  • Not have a purchase price greater than $475,000
  • Be half an acre or smaller 

If the property doesn’t quite meet these requirements, you may be entitled to a partial exemption.


If I’m not exempt from this tax, how much will I owe?    

As of Feb. 16, 2016, the current property transfer tax rates are: 

  • 1% on the first $200,000
  • 2% on the remainder up to and including $2,000,000
  • 3% on any remainder greater than $2,000,000 

Are there any other land transfer tax exemptions available to me when purchasing Kelowna houses for sale? 

Although there are quite a few exemptions available, many homebuyers don’t find that they apply. However, there is another common exemption, and that’s the Newly Built Home Exemption. This exemption applies to any new:

  • home constructed on vacant land
  • apartment in a new condo building
  • manufactured home placed on vacant land 

The property must also: 

  • Have a BC address
  • Be used as your principal residence
  • Not have a purchase price greater than $750,000
  • Be half an acre or smaller

For a complete list of exemptions, check out the Government of B.C.’s website.

If you’re ready to take the plunge into homeownership, consider drawing up a monthly budget first. For tips on making a budget work for you, check out our previous post: 8 Ways to Make Your Budget Stick: Tips From a Kelowna Real Estate Team.

 

If you’re looking for a friendly and knowledgeable real estate agent who can guide you through the experience of buying your first home in the Kelowna area, contact the professionals at Quincy Vrecko and Associates. We’re passionate about what we do and would love to discuss what you value in a home. Call us today: 1-778-760-2860.