The first-time buyer exemption, with the math

The first-time buyer exemption is the largest single discount a buyer in British Columbia will see at closing. It is also the one people most often assume they have and then find out they do not.

Three prices, three answers

The exemption depends on the fair market value of the home, and it works in bands.

Up to $500,000, the exemption covers the whole tax. On a $480,000 home the Property Transfer Tax would be $7,600, and a qualifying buyer pays nothing.

Between $835,000 and $860,000, the $8,000 fades out on a straight line. At $850,000 the tax is $15,000, the exemption has shrunk to $3,200, and the buyer pays $11,800. Above $860,000, there is no exemption at all.

Two sides, at the same time

Exemptions qualify on two fronts at once: the person and the property. You can meet every personal requirement and still lose the benefit because the property does not fit, and the reverse happens just as often.

On the personal side, you must be a Canadian citizen or permanent resident, must never have owned an interest in a principal residence anywhere in the world, and must have lived in BC for twelve consecutive months before registration or filed two income tax returns as a BC resident in the past six years.

After closing, you must move in within 92 days and stay for at least a year. Miss either one and the exemption can be clawed back.

What to ask before you write the offer

Do I qualify on both sides, the person and the property, at this price? Confirm both before the offer, not after it.