Exception for property transfer tax -

QUESTION:

Hi,
I purchased a condo in BC, Canada, last April and after 8 month transfered the property to my parents as I was told by my lowyer that if the transfer is done after more than six month I will be excepts for property transfer tax.

Now I am billed by Ministry of small buisness with the full tax amount and to be approved for an excemption, they are asking for a proof that my parenst actually resided in this property at least six month before the transfer.

Unfortunatly although my parents reside ther, but all the bills are under my name as I am the one managing them.


Just to note that I do own my own property. And my parents are first time home buyers.

My question is that what is the exact act for the tax excepmtion transfer that can apply to us here? Does it required the property to be occupied by the transferee 6 moth prior to the transfer?

If so, do you have any solution that can help me here.

Thanks for your help in advance,

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david ingram replies:

I am not a BC property transfer tax specialist although I have been involved in enough.

I have no idea what the six month rule your lawyer is describing is about. 

As described in your question, you owe the PPT because you did not reside in the property for 12 months after purchase.

At any time, you should have been able to give it to your parents without their paying the PTT if you did not rent it out to others after purchase. This would apply whether they were first time purchasers or not.

If you rented it ou, they would have to be first time purchasers and the property had to be under about $350,000 - the rate changed to $375,000 in Feb 2007.

To be First time Purchasers:

* they can NOT have ever owned another property anywhere in the world.
* They must be Permanent Residents of Canada
* there must be a mortgage on he property for at least 70% of the value and it cannot be back to you for instance.
* they must fill in form   FIN269   at http://www.rev.gov.bc.ca/rpt/ptt/FormsandGuides/0269Sample.pdf

Nothing in your question indicates to me that 'you' would be exempt from PTT If you just bought the unit as a gift for your parents ..

Perhaps, what is being thought of is that when it was bought in your name, it was always your parents and that you were just a trustee.  In that case, you would be filling in the FIN269 as their trustee and getting affidavits or something showing that they were the residents. Surely, neighbours or someone can testify that they lived there.  They would have their BC medical, driver's licences, library cards to show as evidence as well.

The tax people are very specific about paperwork as well.  In my own case 5 years ago, I was in the middle of a $5,000,000 bankruptcy and a divorce at the same time.  Even though we KNEW who was to get the house, the trustee seized teh house from me (absolutley no reason to at the time) and then my now ex wife Jose Rodgers had to pay PPT on the house to get it back from the trustee.  Totally unfair, unreasonable and silly but if it is done in the wrong order, you are toast.

And to be fair, when I got the house back from my ex wife in the divorce, there was no PPT.

Two other thoughts.  If you bought this house for parents who =were not Permanent residents of Canada and they became permanent residents with 12 months, they (or anyone else) has 18 months from the time the property was originally transferred to apply for the Firt Time exemption.

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