In most Canadian provinces, the largest closing cost homebuyers will face is land transfer tax – this is especially true in expensive markets, like Vancouver, as the land transfer tax (LTT) calculation is based on the purchase price of the home. In this blog series, our goal is to explain how LTT works in your province or city. In today’s post, we’ll explain the Vancouver land transfer tax.
Vancouver Land Transfer Tax
In Vancouver, 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 Vancouver.
- 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 Vancouver Land Transfer Tax Calculation
According to the Canadian Real Estate Association (CREA), the average Vancouver home price is $772,569. Using a home priced near this average, we’ll calculate the Vancouver land transfer tax with our British Columbia land transfer tax calculator.
The two-bedroom condo seen above is located in Gastown and is priced at $769,000. Enter the asking price into the land transfer tax calculator and you’ll see that the total Vancouver land transfer tax for this condo is $13,380.
To reach that number, our calculator ran the asking price of $769,000 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 $569,000 ($769,000 – $200,000) would cost the buyer $11,380 ($569,000 x 2%)
So the total Vancouver land transfer tax for this condo would be: $2,000 + $11,380 = $13,380.
Vancouver Land Transfer Tax Rebate
If you are a first-time homebuyer in Vancouver, you may be eligible for a land transfer tax rebate. Unfortunately, these rebates only apply to homes under $450,000. 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 in the pricey Vancouver market, it’s important that you know all of the closing costs ahead of time, so you can budget your finances accordingly. As you can see, your Vancouver land transfer tax can require a significant amount of cash at closing time, making it important to plan ahead for this cost.
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