Transfer of a principal residence

When a related individual transfers a principal residence or an interest in a principal residence to you, the transfer may qualify for a full or partial property transfer tax exemption.

A property is a principal residence if it meets all of the qualifying criteria:  

• the improvements on the land are classified as residential by BC Assessment,
• the improvements are designed to accommodate three families or less,
• the land is 0.5 hectares (1.24 acres) or smaller, and
• before the transfer, either the person transferring the property (the transferor) or you (the transferee) have resided and used the property as their or your home.

A person can only have one principal residence at a time.

Full exemption

A full exemption is available if the transferor and the transferee are related individuals and the property meets all the qualifying criteria as a principal residence. 

Transfers not involving a trustee

When a related individual transfers a principal residence, you may qualify for a full exemption, if the following criteria are met:

• You are a Canadian citizen or a permanent resident as defined in the Immigration and Refugee Protection Act (Canada)
• The transferor is not a trustee, and
• The property has been the principal residence of either you or the transferor for a continuous period of at least six months immediately before the transfer.

To claim this exemption, select exemption 05 – Related Individual – Principal Residence on the property transfer tax return.

Transfers involving trustees

When a principal residence is transferred to you through the estate of a deceased, or a trust set up under the will of the deceased, the transfer may qualify for a full exemption if it meets all of the criteria:

• The property that you acquire was the deceased’s principal residence immediately before their death or the property was your principal residence for a continuous period of at least six months immediately before the deceased’s death,
• The transferor is registered as the trustee of the deceased’s estate or of the trust set up under the deceased’s will at the land title office,
• You are a beneficiary of the estate or of the trust,
• You are a Canadian citizen or a permanent resident as defined in the Immigration and Refugee Protection Act (Canada), and
• You and the deceased were related individuals at the time of their death.

To claim this exemption, select exemption 40 – Related Individual – Deceased Estate on the property transfer tax return.

Note: the transfer of the deceased’s estate into the name of the trustee should have been registered at the land title office prior to the transfer from the trustee to the beneficiaries (exemption 40). Thus, the transferor is a registered trustee of the deceased’s estate or of a trust set up under the deceased’s will at the time they transfer the property to the beneficiaries under exemption 40.

Transfers involving trusts settled during the lifetime of the settlor

A settlor is the person who contributed the property to the trust estate or contributed the assets to the trust estate to acquire the property. A settlor does not have to be the creator of the trust.

When you acquire a principal residence from a trust set up during the lifetime of the settlor, you may qualify for an exemption, if all of the following criteria are met:

• The property that you acquire was the principal residence of either you or the settlor for a continuous period of at least six months immediately before the date of the transfer
• The transferor is registered as trustee at the land title office
• You and the settlor of the trust are related individuals
• You are a beneficiary of the trust, and
• You are a Canadian citizen or a permanent resident as defined in the Immigration and Refugee Protection Act (Canada).

To claim this exemption, select exemption 41 – Principal Residence - Trust on the property transfer tax return.

For information on the transfer of a principal residence to the Public Guardian and Trustee, visit Exemptions for Transfers to and from Trust Companies or the Public Guardian and Trustee.

Partial Exemptions

If the principal residence you acquire is on land larger than 0.5 hectares (1.24 acres) or, in addition to the principal residence, the property includes improvements classed as non-residential, you may qualify for a partial exemption.

The partial exemption applies to:

• The portion of the fair market value (FMV) of the land that is equivalent to the ratio of 0.5 hectares of the total area of the land, and/or
• The FMV of the improvements on the land that are classified as residential by BC Assessment.

To calculate the amount of the partial exemption, calculate the property transfer tax payable on the FMV of the taxable transaction as if it were not exempt and subtract the tax on the adjusted value.

The adjusted value is determined by using the formula:

FMV of the taxable transaction – FMV of the interest in residential improvements – (FMV of the land transferred x [0.5 hectares/total area of the parcel])

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Partial exemption calculation examples

Example 1

You acquire 100% interest in a principal residence. The property is fully residential and is on 2 hectares. The property’s FMV is $700,000. The improvements’ FMV is $200,000.

The partial exemption is $6,500.

The property transfer tax payable is $5,500.

To calculate the partial exemption amount, you apply the following steps:

STEP 1: Calculate the property transfer tax payable on the property’s

               FMV as if the transfer were not exempt.

Tax payable on $700,000 FMV is $12,000.

STEP 2: Calculate the adjusted value.

The adjusted value is:

 $700,000 (FMV of the property) – $200,000 (FMV of residential improvements) – ($500,000 (FMV of land) X [0.5/2])) = $700,000 - $200,000 - $125,000 = $375,000

The adjusted value is $375,000.

STEP 3: Calculate the property transfer tax payable on the adjusted

               value.

Tax payable on the adjusted value of $375,000 is $5,500.

STEP 4:  Calculate the partial exemption amount: the tax payable on

                the taxable transaction as if not exempt, calculated in Step 1

                minus the tax payable on the adjusted value calculated in      

                Step 3. 

The partial exemption is for $6,500.

STEP 5: Calculate the amount of the property transfer tax payable:

              the tax payable on the taxable transaction, calculated in Step 1  

              minus the partial exemption amount calculated in Step 4.

The property transfer tax payable is $5,500.

Example 2

You acquire 50% interest in a principal residence. The property has residential and non-residential classed improvements and it is on 0.2 hectares.  

The property’s FMV is $700,000:  

• The residential improvements’ FMV is $200,000
• The non-residential improvements’ FMV is $100,000
• The land’s FMV is $400,000

The partial exemption is $11,000.

To calculate the partial exemption amount, you apply the following steps:

STEP 1: Calculate the property transfer tax payable on the property’s

               FMV as if the transfer were not exempt.

The taxable transaction’s FMV (i.e., 50% X $700,000) is $350,000.

Tax payable is $5,000.

STEP 2: Calculate the adjusted value.

The adjusted value is:

50% (interest acquired) x [$700,000 (FMV of the property) - $200,000 (FMV of residential improvements) – $400,000 (FMV of land transferred)] = 50% X [$700,000 - $200,000 - $400,000].

The adjusted value is $50,000.

STEP 3: Calculate the property transfer tax payable on the adjusted

               value.

Tax payable on the adjusted value is $500.

STEP 4:  Calculate the partial exemption amount: the tax payable on

                the taxable transaction as if not exempt, calculated in Step 1,

                minus the tax payable on the adjusted value calculated in     

                Step 3. 

The partial exemption is for $4,500.

STEP 5: Calculate the amount of the property transfer tax payable:

              the tax payable on the taxable transaction, calculated in Step 1 

              minus the partial exemption amount calculated in Step 4.

The property transfer tax payable is $500.

For more examples, visit the Calculation Examples for the property transfer tax.

Part interest is transferred from related individuals

If the total interest acquired is not all from a related individual, an exemption can be claimed on the part transferred from a related individual. 

To claim a part exemption, select the applicable principle residence exemption code on the property transfer tax return. Use the Exemption of General PTT (Override) line in the Tax Calculation section of the return to claim part exemption. 

Examples of using a part exemption

Example 3

Margaret, Leanne and Theo each owns one third of the subject property. Margaret is Leanne and Theo’s mom and lives on the property as her principal residence. Leanne and Theo are siblings.

The family decides to add Jenaya, Theo’s wife, to the title. Each owner transfers an 8.33% interest to Jenaya. Now each original owner and Jenaya owns a 25% interest in the property. Jenaya can claim an exemption for Related Individual – Principal Residence for the 8.33% transferred from each of Margaret and Theo. Jenaya needs to pay property transfer tax on the 8.33% interest transferred from Leanne because they are not related individuals. 

The property is fully residential and is on 0.2 hectares. The property’s FMV is $700,000.

STEP 1: Calculate the property transfer tax payable on the property’s

               FMV as if the transfer were not exempt.

The taxable transaction’s FMV (i.e., 25% X $700,000) is $175,000.

Tax payable is $1,750.

STEP 2:  Calculate the part exemption amount: on the 16.67% transferred from related individuals. The exempt part (25%-8.33%) X FMV ($700,000) is 116,690. The exemption amount at 1% tax rate is $1,166.90.

STEP 3: Calculate the amount of the property transfer tax payable:

The tax payable on the taxable transaction, calculated in Step 1, 

minus the part exemption amount calculated in Step 2.

The property transfer tax payable is $583.10.

To claim this exemption, Jenaya will select Exemption 05 – Related Individual – Principal Residence on the property transfer tax return. In the Tax Calculation section of the return, Jenaya will record the part exemption amount ($1,166.90) on the Exemption of General PTT (Override) line.

Net interest increase

Example 4

Sandra and Patrick are spouses and each owns 25% of the subject property. Jennifer and Robert, the daughter and son in law, also each own 25% of the property. All four owners live on the property as their principal residence. The property is less then 0.5 hectares and is entirely residential.

Now, Jennifer and Robert divorce and Robert removes his name from the title. The remaining three owners will each own 33.33% of property.

Sandra’s interest increases from 25% to 33.33% because she acquires another 8.33% interest in the property from Robert. Similar to Sandra, Patrick and Jennifer register an 8.33% increase in their interest of the property.

Sandra, Patrick and Jennifer file a property transfer tax return. Each transferee reports a purchase of their 8.33% interest in the property and claims a full exemption. No tax is payable.

To claim this exemption, select exemption 05 – Related Individual – Principal Residence on the property transfer tax return.