Marty Pospischil

Dexter Associates Realty

This page provides information on purchase propgrams and taxes in British Columbia, Canada

Click on the desired topic for more information: 

 

GST - Building and selling new houses

Link to the Gov't of BC page on this topic.

GST/HST applies to the selling price of new houses. This includes newly constructed houses or substantially renovated houses with major additions, and relocated houses. A new house is not generally occupied as a place of residence or lodging until after the construction, renovation, or relocation is complete.

Builders registered for the GST/HST charge GST/HST on the sale of a house and can claim input tax credits (ITCs) to recover the GST/HST paid on the goods and services used in the construction, substantial renovation, or relocation of the house.

If the buyer is an individual who will use the house as his or her primary place of residence and the purchase price is less than $450,000, the buyer may be entitled to the GST/HST new housing rebate. To determine if your buyer qualifies for the rebate, see our guide GST/HST New Housing Rebate.

Effective January 1, 2008, the GST rate is reduced from 6% to 5%, and the HST rate from 14% to 13%. In certain cases, GST at 6% or 7% or HST at 14% or 15% will apply to the purchase of a new house even where ownership and possession are transferred after December 31, 2007. In this case, you may be entitled to claim a transitional rebate. For more information, see transitional rebates.

Occasionally, a new house can be sold exempt from GST/HST. For example, if an individual builds a residential complex for his or her own use and not in the course of a business or an adventure or concern in the nature of trade and then sells it due to extenuating circumstances, the sale would be exempt from GST/HST.

Other exempt sales of residential property include:

  • the sale of residential housing by someone other than the builder;
  • the sale of previously occupied residential housing by a builder who is an individual where the residential housing is the builder's personal residence and no ITCs have been claimed for the house;
  • the sale of previously occupied residential housing by the builder where the builder has previously paid GST/HST because of the self-supply rules (GST/HST paid at the fair market value); and
  • the sale of a house and the lease of land to a person where the house and land are parts of a residential complex and are both supplied by the builder.

 

About the British Columbia Property Transfer Tax

Link to the Gov't of BC page on this topic.  

Property Transfer Tax is a land registration tax. It must be paid when an application for a taxable transaction is made at any Land Title Office in British Columbia to register changes to a certificate of title. Property Transfer Tax
is payable on the fair market value of the property being transferred. 

Fair market value is the price that would be paid by a willing purchaser to a willing seller in the open market on the date of registration. An open market is where the property is offered for sale so that anyone likely to be interested in purchasing it may make an offer. Often for a residential property, this is done by listing with a realtor or by advertising in the press and putting out a "For Sale" sign. If your tax return is reviewed by this office, you may be asked to provide evidence of how you knew the property was for sale.

Usually, fair market value is the purchase price. In other instances, such as where no money changes hands or the transfer did not take place in the open market, the fair market value must be determined by other means, such as an independent appraisal or by reference to the most relevant BC Assessment value.

BC Assessment property assessments reflect fair market value as at July 1 of the previous year. For example, assessed values for the 2007 tax year are based on what the property would have sold for in the open market as at July 1, 2006. Because property markets can change rapidly, you may need a more recent valuation, such as an independent appraisal, of what the property is worth at the time of registration.

Under the Interpretation Act, land means any interest in land, including any right, title or estate in it of any tenure, with buildings and houses, unless there are words to exclude buildings and houses or to restrict the meaning. Because there is no limiting definition in the Property Transfer Tax Act, tax is payable on the fair market value of the land, plus all improvements on that land at the time of registration.

Accordingly, houses and other structures attached to the land are included in the fair market value. Improvements may include timber, paving and anything that add value to the land. Manufactured homes registered in, and not excluded from, the Manufactured Homes Registry are not included.

You are required to pay Property Transfer Tax unless you qualify for an exemption. The most common exemption is for First Time Home Buyers.

First Time Home Buyer's Program

Link to the Gov't of BC page on this topic.  

Introduced in 1994, the First Time Home Buyers' Program is designed to help British Columbians purchase their first home. Under the program, eligible purchasers can claim an exemption from Property Transfer Tax if the fair market value of the home is less than the threshold amount.

Thresholds

For registrations on, or after, February 20 2008, the fair market value threshold for eligible residential property is $425,000.

A proportional exemption is provided for eligible residences with a fair market value of up to $25,000 above the threshold (i.e. up to $450,000).

Other Criteria 

To qualify for the First Time Home Buyers' exemption you must meet all of the initial eligibility criteria. To retain the exemption, there are also requirements which must be met in the year following the transfer. For a general overview of the eligibility criteria, please see the brochure, Property Transfer Tax and the First Time Home Buyers' Program. For complete information on all of the eligibility criteria, please see:

To claim the exemption you must file a First Time Home Buyers' Property Transfer Tax Return (FIN 269) and the appropriate Land Title forms at the Land Title Office when you apply to register your property.

Refunds 

If you do not qualify at the time of registration, but you meet all the requirements by the first anniversary of the registration date, you can apply for a refund of the tax paid. Applications for refund must be made within 18 months of the registration date. 

Basic Home Owner Grant

Link to the Gov't of BC page on this topic. 

The basic grant can reduce your property tax by as much as $570. The minimum tax payable ($350) ensures that all homeowners (or eligible occupants, which includes an eligible occupant of an eligible apartment, housing unit, land cooperative or multi-dwelling leased parcel) contribute towards the funding of local services such as road maintenance and police protection.

For 2008 the basic grant will be reduced by $5 for each $1,000 of assessed value over $1,050,000, and is eliminated on homes assessed at $1,164,000 or more.

If your property's assessed value is over $1,050,000 but has more than one residence on it, you may still qualify for the home owner grant on one residence. For further information, please call our office toll-free in British Columbia at
1-888-355-2700.

To be eligible for the grant, you must meet the following criteria:

  • You are a Canadian citizen or landed immigrant and ordinarily reside in British Columbia.
  • You are the registered owner or eligible occupant of the home. The home must be located within the province.
  • The home is your principal residence -where you live and conduct your daily activities. The grant does not apply to summer cottages, second homes or rental properties.
  • Spouses who live together, including those who are married or who live together in a marriage-like relationship, including same-gender partners, can qualify for a grant on only one residence in the province in a calendar year.
  • Spouses who live apart can each claim a grant on their principal residence if they have a written separation agreement or a court order recognizing the separation.

Please see the Eligibility Criteria for further conditions that may apply.

The grant should be claimed prior to the tax due date, even if you do not pay at that time. The grant is considered unpaid tax until it is claimed. By claiming the grant prior to the due date, you avoid paying a penalty on this portion of the tax.

You must apply for the grant each year after you receive your property tax notice and before December 31. The grant is applied toward the current year's property tax. It does not apply to School Referendum Taxes, arrears, delinquent taxes, penalties, utilities or user fees which may also appear on your tax notice.

Please see How to Apply for more information.

If you are over 65, have a disability, or receive a war veteran's allowance, you may be eligible for the Additional grant.

Other types of grants:  Basic  ||  Additional  ||  Retroactive  ||  Multiple

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