Property Transfer Tax for First Time Buyers
Blog entry for Lance Phillips of Macdonald Realty, North Shore and Vancouver Real Estate Specialist 604-980-4370 or 604-838-5716
One of the often overlooked calculations when adding up costs in buying real estate is the Property Transfer Tax. It is important to know how to calculate this fee, especially as a first time buyer, as it is generally a large chunk of change. However, if you keep your sights somewhat low, you can escape this cost altogether.
Effective February 15th, 2005, the fair market value threshold for eligible residential property under the First-Time Home Buyers’ Exemption Program was increased by about 18 per cent. To $325,000.00 from $275,000.00 in the Greater Vancouver, Fraser Valley and Capital Regional Districts. Outside of these regions, the threshold is being increased to $265,000.00 from $225,00.00. In all regions, a proportional exemption is provided for residents that have a fair market value up to $25,000.oo above the new thresholds. Now in layman’s terms this means…
The usual Property Purchase Tax charged to anyone who already owns or has owned real estate is as follows:
1% of the first $200,000.00
2% of the balance
So if you were to purchase a property for the $325,000.00 as outlined above, the Property Purchase Tax would be calculated as:
1% of the first $200,000.00 = $2,000.00
2% of the balance ($125,000.00) = $2,500.00
Total =$4,500.00
What the exemption means is that if you are a first time buyer and buy a piece of property for up to, yet not more than $325,000.00 (as outlined for the above regions), the Property Purchase Tax will be waived. Zippity do da. More money for a new couch.
For more information regarding this and any other costs related to purchasing real estate, please contact me at lancep@macrealty.com.
Thought for the day - “There is always death and taxes. However, death doesn’t get worse every year.”