ATTN Buyers: Changes to Property Transfer Tax
Purchases of brand new homes, up to $750,000 – by all buyers, regardless of whether you’re a first time home buyer or not – are exempt from the PTT, so long as you’re a Canadian citizen, or a permanent resident. There’s a partial exemption on new homes between $750,000 and $800,000. If you happen to purchase a brand new home for say $802,000 the property transfer tax will be applicable on the entire amount, not just the last $2,000.
Also since brand new homes are sometimes marketed as including GST, just to clarify, the PTT is calculated on the net price with the GST backed out of it. This exemption applies only to principal residences as well – so if you’re purchasing a brand new home under $750,000 as an investment property, which you don’t plan on residing in, full Property Transfer Tax will be applied to the purchase price.
Purchases of homes over $2,000,000 now have PTT levied in the amount of 3% on all amounts over $2,000,000. The 3% tax is paid only on the portion over $2,000,000 – not the full price. This may not seem to be a change that affects many transactions, but this change is quite significant as it applies to the purchase of all commercial, industrial, and office buildings as well!
These changes were effective immediately after the budget was released, so on all deals closing now and going forward do take these new figures into consideration.