Land Transfer Tax in British Columbia
In most Canadian provinces, the largest closing cost homebuyers will face is land transfer tax – this can be especially true in British Columbia, home to the most expensive market in the country, Vancouver. Land transfer tax (LTT) is calculated based on the purchase price of a home, so you can imagine how fast it can add up in BC. In this blog series, we want to explain how LTT works in your province or city, so you’re not surprised by it on closing day. In today’s post, we’ll explain the British Columbia land transfer tax.
British Columbia Land Transfer Tax
In British Columbia, the land transfer tax calculation is based on two different marginal tax rates; essentially, the amount of LTT you pay depends on the purchase price of your home. Using the chart below, you can begin to see how LTT is calculated in British Columbia.
In British Columbia:
- The first $200,000 of your purchase price is subject to a 1.0% tax rate ($200,000 x 1.0%).
- And any amount you pay over and above $200,000 is subject to a 2.0% tax rate [(Purchase Price – $200,000) x 2.0%].
Example British Columbia Land Transfer Tax Calculation
Let’s use the example of a starter home in British Columbia. The 3-bedroom, 2-bathroom townhouse shown above is located in Burnaby, BC and has an asking price of $509,900. Enter the asking price into the British Columbia land transfer tax calculator and you’ll see that the total land transfer tax for this home would be $8,198.
To reach that number, our calculator ran the asking price of $509,900 through the price ranges and marginal tax rates we listed above:
- The first $200,000 would cost the buyer $2,000 ($200,000 x 1%)
- The next $309,900 ($509,900 – $200,000) would cost the buyer $6,198 ($309,900 x 2%)
So the total land transfer tax for this British Columbia home would be: $2,000 + $6,198 = $8,198.
British Columbia Land Transfer Tax Rebate
If you are a first-time homebuyer in British Columbia, you may be eligible for a land transfer tax rebate. Homes purchased for $425,000 or less will receive a full refund and homes purchased between $425,000 and $450,000 will receive a partial refund. Therefore, if you bought a home priced close to the example we’ve used here today, you would not be eligible for a land transfer tax rebate.
When you are considering buying a home, it’s important to know all of the closing costs ahead of time, so you can budget your finances accordingly. As you can see, your British Columbia land transfer tax can require a significant amount of cash at closing time, making it important to plan ahead for this cost.