Most of the time, the purchase price is equivalent to the fair market value. The PTT that a purchaser has to pay on the completion date is determined automatically by the purchase price. For instance, if the property's purchase price is $500,000, the tax is 1% of $200,000 ($2,000) plus 2% of the remaining $300,000 ($6,000) for a total tax of $8,000.
However, not everyone is responsible for paying the PTT upon the registration of the transfer. The first time home buyers, for example, are allowed to claim an exemption from PTT if they purchase certain residential properties.
A purchaser who is eligible for the PTT exemption if he or she is:
- A Canadian citizen or a permanent resident;
- Has never owned an interest in a principle residence anywhere in the world (not just in Canada);
- Has never received a first time home buyers’ exemption or refund;
- The land of property is not larger than 0.5 hectares (1.24 acres);
- The property will be only used as the principle residence;
- The property’s fair market value does not exceed $475,000, the current threshold.
Tax Payable = PTT x (500,000-fair market value) / 25,000
Fair Market Value Exemption Amount Tax Payable
$475,000 $7,500.00 $0.00
$480,000 $6,080.00 $1,520.00
$485,000 $4,620.00 $3,080.00
$490,000 $3,120.00 $4,680.00
$495,000 $1,580.00 $6,320.00
$500,000 $0.00 $8,000.00
Want to know more about “property transfer tax act”, go to http://www.bclaws.ca/Recon/document/ID/freeside/00_96378_01#section6