What Is Property Transfer Tax And How Do You Prepare For It?

Property Transfer Tax (PTT) is a one-time provincial cost accompanied by the purchase of a home which is charged at closing once the title is transferred and registered. This is not the same as the annual property tax required of the city. One can prepare for this by learning how to calculate PTT, who pays it, when it would be directly applicable to them, and any exemptions.

Who Pays?

As established, the buyer is the party that pays the PTT upon completion of the real estate transaction. The seller Never pays this.

How much is PTT?

As a Canadian citizen, or Permanent Resident, PTT is calculated based on fair market value:

1% on the first $200,000
2% on the balance up to and including $2,000,000
3% on the balance greater than $2,000,000
An additional 2% will be added on residential properties valued greater than $3,000,000

If you are NOT a Canadian citizen or a Permanent Resident, then an additional 20% PTT of the fair market value of your proportionate share of the purchased property is added. As we are dealing with proportionate shares, it must be noted that if there are buyers that are acquiring a property together, where one individual is a Canadian citizen or a Permanent Resident, and one is not, then the additional 20% will only be applied to the share of the property for the individual who is not.

What is the fair market value of PTT?

Generally, fair market value is the purchase price of the property. Thus, PTT is usually calculated based on the purchase price in the Contract of Purchase and Sales.

However, where there is a situation of no monetary exchange (eg. inheritance), the fair market value is based on the appraisal report from a third party.

How can I calculate PTT?

PTT Calculator

Calculation Examples:

PTT in BC Purchase price $750,000

If you are purchasing a residential property for $750,000, the tax paid is $13,000

1% on the first $200,000 = $2,000
2% on portion greater than $200,000 and up to and including $2,000,000 = $11,000 ($750,000 – $200,000 = $550,000 X 2% = $11,000)
For a purchase price of $750,000 there is no portion above $3,000,000 – so this taxable rate does not apply
TOTAL PTT DUE: $2,000 + $11,000 = $13,000

PTT in Vancouver Purchase price $4,500,000

If you purchase a residential property for $4,500,000, the tax is $143,000.

1% on the first $200,000 = $2,000
2% on portion greater than $200,000 and up to and including $2,000,000 = $36,000 ($2,000,000 – $200,000 = $1,800,000 X 2% = $36,000)
3% on portion greater than $2,000,000 = $75,000 ($4,500,000 – $2,000,000 = $2,500,000 X 3% = $75,000)
A further 2% on the portion greater than $3,000,000 = $30,000 ($4,500,000 – $3,000,000 = $1,500,000 X 2% = $30,000)
TOTAL PTT DUE: $2,000 + $36,000 + $75,000 + $30,000 = $143,000

PTT Exemptions

Individuals may be exempt from PTT if they are first-time home buyers of a primary residence for properties under $500,000.00 or under $750,000.00 if the primary residence is newly built.

Additionally, if both do not apply to you, there may be an exemption that you may be eligible for: PTT Exemptions.