Taxation, Closing Costs, and Financial Calculations
Taxes affecting transactions
Candidates must know the Property Transfer Tax (PTT) in BC, including the first-time home buyers' exemption and the new home exemption thresholds, and the additional foreign buyer tax where applicable. Understand property tax (based on assessed value and mill rates), the homeowner grant, and the GST treatment of new versus used residential property. Know capital gains treatment for investment property and the principal residence exemption concept.
Closing costs
Typical closing costs include the deposit, down payment, PTT, legal fees and disbursements, title insurance, survey, adjustments for prepaid taxes and utilities, and strata fees. Understand the statement of adjustments: the seller credits the buyer for prepaid expenses and the buyer credits the seller for accrued items. Know how interest and tax adjustments are prorated to the completion date.
Calculations and traps
A frequent trap is applying PTT to the wrong base or forgetting the exemption is a refund of tax paid at registration. Another is confusing the completion date with the possession date for adjustment purposes. Questions also test whether GST applies to a used home (generally no) versus a new home (generally yes).
Worked example
A first-time buyer purchases a $600,000 resale home. BC PTT at 1% on the first $200,000 and 2% on the remainder is $2,000 + $8,000 = $10,000. If the buyer qualifies for the first-time buyer exemption within the threshold, the tax may be reduced or eliminated. Always check the current threshold before answering.