In their 2021 budget, the Liberals have increased the income eligibility threshold from $120K to $150K and the home price limit from 4 times household income to 4.5 times. These changes come as Toronto's housing market and Vancouver real estate climb to new all-time highs.
The Government of British Columbia provides rebates on land transfer taxes for first-time home buyers. The amount that you can qualify for depends on the value of the property.
If the value of the home that you are purchasing has a fair market value of less than $500,000, then the First Time Home Buyers’ Exemption would cover the full amount of the transfer tax. That means you will not have to pay any land transfer tax. Afterwards, a sliding scale is used up to $525,000 to determine the land transfer tax incentive and the remaining tax payable (see the chart below). Properties above $525,000 will not qualify for the First-Time Home Buyers’ Program.
|Market Value||Transfer Tax Exemption||Transfer Tax Payable|
First-time home buyers in BC can receive a refund or exemption on their BC property transfer tax. The amount that first-time buyers are eligible for will depend on the purchase price of their home. The maximum property transfer tax refund amount is $8,000, which will apply for homes with a price of $500,000. For homes with prices between $500,000 and $525,000, the amount of the tax exemption is gradually reduced. First-time home buyers purchasing a home that costs $525,000 or more will not receive any property transfer tax refund amount.
Did you know that land transfer tax is called property transfer tax in British Columbia? BC property transfer tax is based on the fair market value of a property. The property transfer tax rates are also split into different brackets, with the rate being higher for higher market values. For more information, visit our BC property transfer tax page.
Let’s say that a first-time home buyer has purchased a home in Victoria. How much can they receive from first-time home buyer incentives, and how much property transfer tax will they have to pay?
The property transfer tax for a $400,000 home is $6,000. The first-time home buyer incentive will take off $6,000, meaning that there will be $0 property transfer tax payable.
|Purchase Price of Home||Land Transfer Marginal Tax Fee||Land Transfer Tax Calculation|
|First $200,000||1%||$200,000 x 1% = $2,000|
|$200,000 to $2,000,000||2%||($400,000 - $200,000) x 2% = $4,000|
|$2,000,000 to $3,000,000||3%||$0|
|$3,000,000 and over||5%||$0|
|BC Property Transfer Tax||$6,000|
|BC Property Transfer Tax Refund||-$6,000|
|Total BC Property Transfer Tax||$0|
Homes with a price under $500,000 are fully exempt from the BC property transfer tax for first-time buyers, but what about homes over $500,000? There is a small window between $500,000 and $525,000 where first-time home buyers in BC can receive a partial property transfer tax exemption. In the case of a $510,000 home, the first-time buyer’s exemption amount would be $4,920. A first-time buyer will be exempt from paying $4,920 on a $8,200 property transfer tax bill. The remaining amount, $3,280, is the amount that will need to be paid.
|BC Property Transfer Tax||$8,200|
|First-Time Home Buyer Exemption Amount||-$4,920|
|Total Property Transfer Tax Payable||$3,280|
What about homes that are over $525,000? Unfortunately, first-time home buyers that are purchasing a home over $525,000 will not be eligible for any property transfer tax exemption. This is something for new home buyers to keep in mind when planning out a BC home purchase, especially in Vancouver’s housing marketwhere the average price of a home is well over $1 million.
In the case of a $800,000 home, the total property transfer tax payable would be $14,000. There is no relief from any first-time home buyer exemption in this case.
|BC Property Transfer Tax||$14,000|
|First-Time Home Buyer Exemption Amount||-$0|
|Total Property Transfer Tax Payable||$14,000|
Foreign nationals are not eligible for BC's first-time home buyer incentives. If a foreign national purchases a home in British Columbia, even if they are a first-time home buyer, they will not receive the BC first-time home buyer property transfer tax exemption. Instead, first-time home buyers that are foreign nationals will need to pay the full amount of the property transfer tax.
In the case of a $400,000 home, the foreign national will need to pay $6,000 property transfer tax.
|BC Property Transfer Tax||$6,000|
|First-Time Home Buyer Exemption Amount||-$0|
|Total Property Transfer Tax Payable||$6,000|
If you’re a first-time home buyer that is purchasing your home with another individual, and that individual does not qualify as a first-time home buyer, then you can only receive 50% of the normal property transfer tax rebate. For example, on a $500,000 home, the property transfer tax exemption would be $8,000. Since only 50% of the purchasers are eligible, the tax exemption will be 50% of $8,000, which is $4,000. This means that there is $4,000 property transfer tax leftover which will need to be paid.
|BC Property Transfer Tax||$8,000|
|First-Time Home Buyer Exemption Amount||-$4,000|
|Total Property Transfer Tax Payable||$4,000|
BC’s definition of a first-time home buyer is more stringent than the definition used for some federal government programs. For example, BC only considers someone to be a first-time home buyer if they have never owned a home at any time. The federal Home Buyers' Plan considers someone to be a first-time home buyer if they haven't owned a home in the last four years. If someone owned a home and then sold it, they are considered to be a first-time home buyer in Canada after four years have passed. For more information on federal benefits and incentives for first-time home buyers, visit our first-time home buyer incentives page.
The BC Home Owner Mortgage and Equity Partnership, also called the BC HOME Partnership, was a first-time home buyer loan program in BC. The program gave 1st time home buyers the ability to borrow a down payment loan of up to 5% of their home's purchase price, with the loan to be repaid over 25 years. This helped first-time home buyers in BC with their down payment. The BC HOME loan program was closed in 2018.
Most homeowners in British Columbia are eligible to receive the BC home owner grant to be used towards their BC property tax. This grant is available to homeowners, including first-time home buyers, if the assessed value of their home is $1,625,000 or less. The amount of this grant depends on your location. You can apply to receive the home owner grant once every year. If the grant makes it so that your annual property tax will be $350 or less, then your home owner grant amount will be reduced until your annual property tax is $350.
|Location||Annual Grant Amount|
|Rest of the Province||$770|
To qualify as a first-time home buyer, you must have never owned or had an interest in a home anywhere in the world previously.
To qualify, you must be a Canadian citizen or a permanent resident, and have lived in B.C. for 12 consecutive months or filed at least two income tax returns as a B.C. resident in the past six years. If you are not a Canadian citizen or a permanent resident, you can still qualify for the transfer tax exemption if you become one within 12 months. The property that you are purchasing must be located in B.C. and be used as your principal residence.
To qualify for the full land transfer tax exemption, the property must be 0.5 hectares or smaller and have a market value of $500,000 or less. You can still qualify for a partial land transfer tax exemption if the property is larger than 0.5 hectares or the market value is less than $525,000.
The provincial government also offers additional tax rebates for all homeowners. The BC Home Owner Grant provides a $570 annual property tax grant for people living in Victoria, Vancouver, and the Fraser Valley if your assessed property value is less than $1,525,000. People living outside of those areas will receive a grant of $770. You can receive additional grants if you are a senior, a veteran, or a person with disabilities. The BC Newly Built House Exemption also reduces the property tax payable on newly built homes.