In British Columbia, taxes associated with real property fall generally into two categories (click the link for each tax for more detailed information):
A. Taxes which arise on Transfer of Property:
- Good and Services Tax: 5% of the purchase price payable (usually by the Buyer) on sales of “non-exempt” real property (note: used residential property is exempt). Rebates are available for new residential homes. For homes where construction commenced prior to April 1, 2013, a 2% Transition Tax may also be payable.
- Income Tax: depending on how a taxpayer (Seller) is holding property, the disposition (sale) of that property may result in a taxable capital gain. Non-Residents are subject to a mandatory withholding to ensure this tax is paid. Canadian residents who are selling their principal residence are exempt from any capital gain.
- Property Transfer Tax: 1% of the fist $200,000, and 2% of the remainder of the purchase price payable by the Buyer on every transfer of property filed in the BC Land Title Office. Common exemptions are: first time home buyers, principal residence transfers to related individuals, transfers arising from separation agreement/ divorce.
B. Taxes which arise from the ownership of the Property
- Property Taxes – these taxes are levied by local government (municipality or regional district). Homes owners will qualify for a home owners grant against their property for their principal residence. Property taxes for the current year are usually adjusted on the conveyance of the property.