BC First-Time Buyer Property Transfer Tax Exemption: Who Qualifies Under the 2024 Rules

BC's first-time home buyers' exemption can remove up to $8,000 of property transfer tax. Your lawyer or notary claims it when your purchase is registered, but whether you qualify depends on facts only you know: your status, where you have lived and filed taxes, and whether you have ever owned a home anywhere.

This article works through those tests in more detail than a general overview, and explains what happens if your plans change in the first year.

The four personal tests

Section 4 of the Property Transfer Tax Act defines a first-time home buyer. Each buyer who wants the exemption must meet all four tests, and most are measured on the registration date, the day your transfer is submitted to the Land Title Office, not the day you sign the contract.

• Status. You are a Canadian citizen or permanent resident on the registration date.
• Connection to BC. You lived in BC as your principal residence continuously for at least one year immediately before registration, or you filed BC income tax returns as a BC resident for at least 2 of the 6 taxation years before registration.
• No previous home. You have never held a registered interest in land, in BC or anywhere else, that was your principal residence.
• No previous exemption. You have never received this exemption or refund before.

Our overview of first-time home buyer programs in BC compares these tests with the federal programs. The sections below deal with the situations that most often raise questions.

Edge cases on status, residency and past ownership

Becoming a permanent resident or citizen after you buy

If you are not yet a citizen or permanent resident on the registration date, you cannot claim the exemption at registration. But if you gain that status on or before the first anniversary of registration, and you met the other tests, section 7 lets you apply for a refund within 18 months of registration.

Moving to BC from another province

A buyer who moved from Alberta or Ontario a few months ago usually has not lived in BC for a full year. The alternative test only helps if you have already filed two BC resident tax returns in the last six years, for example because you lived here before. If neither applies, the exemption is not available for a purchase registered before you reach the one-year mark.

Owning a home before, here or abroad

The ownership test is about land that was your principal residence and in which you held a registered interest. A condo you owned overseas and lived in counts, even if you sold it years ago. A rental property you owned but never lived in does not, on its own, disqualify you. Being added to a parent's title on the family home you lived in can count against you, which is worth checking before anyone changes title for convenience.

Buying with someone who does not qualify

The test is applied to each buyer. Where only one co-buyer qualifies, the Province applies the exemption only to that buyer's percentage interest, so a 50% owner who qualifies gets half of the full benefit.

The property tests and the $835,000 line

The property must be used only as your principal residence. Since April 1, 2024, the full exemption applies where the fair market value on the registration date is $835,000 or less, and a partial exemption applies up to $860,000. The exemption removes tax on up to $500,000 of value, which at the general rates of 1% and 2% in section 3 is worth up to $8,000.

Between the two thresholds, section 5 reduces the exemption on a straight line. Example only: at a fair market value of $850,000, the buyer keeps (835,000 + 25,000 - 850,000) / 25,000, or 40%, of the $8,000, which is $3,200.

Lots larger than 0.5 hectares, and properties with buildings other than your home, get only a partial exemption under section 6.

Qualifying presold strata units have a special valuation rule. For an arm's-length purchase in the open market under a written agreement made before the strata plan is deposited, property transfer tax and first-time buyer exemption eligibility generally use the total consideration paid, including upgrades and any assignment premium. Market appreciation before completion does not itself increase that value. Other purchases follow the applicable valuation rules.

You also cannot claim both this exemption and the new housing exemption on the same purchase. If you are buying a newly built home, your lawyer will compare the two.

The one-year occupancy rule, and what you repay

Under section 8, you must move in within 92 days of registration and live in the home as your principal residence until at least the first anniversary. If you buy vacant land, you must build a home and move in before the first anniversary, and the land value plus construction costs must stay within the same thresholds.

What happens if you do not:

• You never move in. The full exempted tax becomes payable under section 9.
• You move out before the first anniversary. Section 9 pro-rates the repayment by the formula 1 - (n / 365), where n is the number of days from registration until you stopped living there. If that is 360 days or more, nothing is owed. Example only: moving out on day 300 of an $8,000 exemption means repaying about $1,425.
• Death or separation. No repayment is owed if the buyer dies before the first anniversary, or if the home is transferred under a written separation agreement or a Family Law Act court order.

The Province can register a lien on the property to secure an amount owing under section 11, and asks buyers who move in late or move out early to contact it. A false declaration about earlier ownership or an earlier exemption carries a penalty equal to the exemption claimed, on top of the tax.

If the exemption was missed at registration

If you qualified but the exemption was not claimed when the transfer was registered, section 7 allows a refund application within 18 months of registration. The Province's guidance is to apply from the first anniversary. Our guide to property transfer tax rates and exemptions explains how the tax return is filed on completion.

Buying your first home? Confirm you qualify before completion

Our real estate lawyers can review your purchase contract and your history against each test, claim the exemption on the property transfer tax return at registration and explain the occupancy obligations that follow.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.