There are multiple types of assistance for First Time Home Buyers (FTHBs). There is the BC FTHB Program, which is not the same as the FTHB Tax Credit, which is also different from the Home Buyers Plan. I will explain the other items in follow-up posts, but for now let’s focus on the BC First Time Home Buyers program.
The FTHB Program in British Columbia allows for buyers to reduce or eliminate the property transfer tax they would pay when purchasing their first home. The property transfer tax is a tax that is payable to transfer title of your purchased home into your own name. This is not the same thing as your annual property taxes.
The property transfer tax is charged at a rate of 1% on the first $200,000, 2% on the portion of fair market value greater than $200,000 and up to and including $2,000,000, and 3% on the portion of fair market value greater than $2,000,000. For example, if you purchase a house/condo worth $450,000, you will pay a property transfer tax of $7,000 (1% of $200,000 plus 2% of $250,000).
This tax can potentially be a substantial additional closing cost when purchasing a home. In order to qualify for this First-Time Home Buyers’ Program and be exempt from paying your property transfer tax, you must:
· Be a Canadian citizen or permanent resident
· Have Lived in B.C. for 12 consecutive months up until you register the property OR filed at least 2 income tax returns as a B.C. resident in the past 6 years.
· Have never owned any portion, of any home or residence, anywhere in the world at any time.
· Have never received a first-time home buyers’ exemption or refund.
If you qualify for the program, the purchase property must also qualify, such that:
· It is located in B.C.
· It is your principal residence (not an investment property)
· Lot size is smaller than 0.5 hectares (53,819.60 sq. ft.)
· It has a fair market value of $475,000 or less. If fair market value is greater than $475,000, but less than $500,000, it is eligible for a partial exemption. To find out what that portion would be, give me a call and I can figure that out for you. I’m here to help.