2018-05-14 12:27:57 Tax Professional English Read about the transfer tax exemption on newly built homes in British Columbia. Review which homes qualify for this exemption, find out... https://d1bkf7psx818ah.cloudfront.net/wp-content/uploads/2018/05/08100457/Accountant-researches-British-Columbia-Newly-Built-Home-Exemption.jpg Saving Tax Dollars With British Columbia's Newly Built Home Exemption

Saving Tax Dollars With British Columbia’s Newly Built Home Exemption

2 min read

If you have clients who are buying a newly built home in British Columbia, you may want to help them look into the newly built home exemption. This program can help your clients reduce or eliminate the property transfer tax.

Who Qualifies?

To participate in the program, your clients must be a Canadian citizen or permanent resident. They must also be an individual. Businesses, trusts, and similar entities can’t claim this credit. The transfer must also have happened after Feb. 16, 2016.

After registering the transfer, your client has 92 days to move into the property, and must live there for the remainder of the first year. Generally, if your client decides to move or sell the home before that, they have to pay back the amount they saved. If the owner dies before that or if the property transfers due to a divorce, the exemption still stands.

What’s a Newly Built Home?

When a home is built on a previously vacant parcel of land, it’s classified as a newly built home, but a variety of other homes fit into this category as well, including condos in new buildings, manufactured homes placed on vacant lots, and already-built homes that are moved to vacant lots. This category also includes buildings that are redesigned into homes such as a warehouse turned into condos.

In addition to meeting the above qualifications, the property must be in British Columbia, and it must be your client’s primary residence. This credit doesn’t apply for rental homes or vacation properties.

How Much Is the Exemption?

Homes worth less than $750,000 can receive a full exemption. That covers all the transfer tax that would normally be due in this situation. Additionally, the home must be on a lot that is 1.24 acres or less. If your client’s home is worth more than that threshold, they can receive a partial credit on homes worth up to $800,000. For instance, as of 2018, if the home costs $751,000, your clients can receive an exemption worth $12,759.60. That brings the transfer tax down to $260.40. If the home is worth $799,000, the exemption is only worth $279.60, and the transfer tax is $13,700.40.

Your clients may also be eligible for a partial exemption for homes on larger lots. If the lot has other buildings that aren’t the primary residence, your client may not be able to claim the full exemption, but again, they may be able to get a partial exemption.

How Do You Apply for the Exemption?

When people buy a home in British Columbia, they have to complete a property transfer tax return and pay any transfer tax due. Luckily, your clients can apply for the exemption right on this form. Simply enter exemption code 49 on the form, and then submit the form to the Land Title Office.

Helping your clients with their income tax returns is just the beginning. You may also want to offer advice, consultancy services, and planning for other types of taxes, so it’s important to stay up-to-date with federal and provincial programs and exemptions.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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