The First Time Home Buyers Program reduces or eliminates the amount of property transfer tax assigned as payment when you purchase your first home. If you are eligible for qualification, you may be partially or fully exempt from taxation on your purchase. Before we get to the exciting news of saving you cash on your biggest investment to date, clarification on a few key terms will make the process smoother. Fair market value can be defined as the monetary amount a purchaser is willing to pay a seller for a property on the date of registration, this includes land as well as land improvements (think buildings, and other structural developments). The definition of principle residence can be a tricky term to define, where in simplistic terms it is defined as the usual place a person makes their home, many individuals have complicated living arrangements that can create confusion. IF a person intends to own more than one property however, the individual does not have the ability to designate which is the principle residence. Instead, the principle residence is determined by where the individual predominantly lives and conducts their daily affairs on a consistent and on going basis. Alright, we have the basics, now onto checking off the boxes of qualifications.
How to qualify for the Vancouver First Time Home Buyers Program
Individually to qualify you must be a Canadian citizen (it helps if you like Tim Horton’s and are good at apologizing, sorry we had to say it), or a permanent resident (someone who has acquired permanent resident status by Immigration Canada, but is not yet a Canadian citizen), and reside in BC for 12 consecutive months immediately prior to the registration of the property, OR have filed 2 consecutive provincial income tax returns within BC in the last 6 years. You must have never owned a principle residence anywhere in the world, at anytime, thus never receiving a First Time Buyer’s exemption or refund. To be considered for a full exemption your property must be located within the province of BC, only be used as a principle residence and have a fair market value of $475,000 or less and be 0.5 hectares (1.24 acres) or smaller in lot size. To be considered for a partial exemption your property again must be located within the province of BC, only be used as a principle residence and have a fair market value between $475,000 and $500,000, with the possibility of being larger than 0.5 hectares (1.24 acres) in lot size. Considerations are made if additional land improvements (buildings other than your primary residence) are located on the property.
The Application Process for the First Time Home Buyers Program
The applying process for the First Time Home Buyers Program requires that you complete the First Time Home Buyer’s Property Transfer Tax Return when you (or your legal professional) register the property transfer action. Bare in mind after the initial application is submitted you must meet additional requirements during the first year of home ownership to retain the tax exemption benefit. The conditions to be met for the purchase of an existing home involve moving into the residence 92 days of the date of registration, and you continued to occupy the property for the remainder of the year. After the year has passed you will be supplied a conditional confirmation letter. Consider heavily the penalties for false declarations, upon review fines consist of DOUBLE the tax amount that was exempted.
A common question addressed is if multiple buyers are involved how the tax exemption can be applied. If you are purchasing a home collectively and one or more of the purchases does not qualify. only the percentage of interest the qualified purchaser has within the deal is considered eligible for the First Time Home Buyers Program, so please consider evaluating the qualifications of individuals separately to not lose an opportunity to save on your first home!
I’d love to help you transition from renter to first time home owner!
For more information on real estate market in Vancouver, current trends, buying a home or selling a home, contact Leo Wilk – Your Top Vancouver Realtor.
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