# Micah Verceles

## Prime Mortgage Rates

Land transfer tax (LTT) is often mistakenly ignored when computing for the overall costs of buying a home. All provinces levy taxes for transfer of title, except for Saskatchewan and Alberta, who impose small transfer fees instead.

Over-all, the tax is computed as a percentage of property value, factored with marginal tax rates - rates which differs in each province. Under a marginal tax rate, the payer is divided into brackets which determines the rate the home price is taxable at. As the value of the home increases, the more brackets are added to the base range, thus the higher the tax rate is. In other cities like Toronto, a municipal tax is also added.

Here is a sample computation based on British Columbia’s tax rates:

 Purchase price of home Marginal Tax rate First \$200,000 1.0% Over \$200,000 2.0%

So for example, Tara bought a home valued at \$250,000 then her LLT is computed as follows:

Step 1: Get the first margin computation.

1% of \$250,000 =
\$2,000

Step 2: Subtract the total home value to the amount of the first bracket to get the taxable portion of the second bracket (since the total home value is over \$200,000)

\$250,000 -  \$200,000 = \$50,000

Step 3: Get the second margin computation from the remaining \$50,000

2% of \$50,000 = \$1,000

Step 4: Add up the first and second margin rates.

\$2,000 + \$1,000 =\$3,000 ( Your total LLT)

The good news is that first time homebuyers from Ontario, British Columbia, Prince Edward Island and the City of Toronto can avail land transfer tax rebates to alleviate this unwelcome cost.

British Columbia LLT Rebates

First time homebuyers can be eligible for a full LLT refund on homes valued at \$425,000 or less. With homes with \$426,000 - \$450,000 fair market value, the first time homebuyer will be eligible for a partial refund computed as follows:

[ (\$450K - fair market value) / 25K ] x LTT amount

You can only qualify for this rebate upon meeting these conditions:

• ### You are a Canadian citizen or permanent resident as verified by Immigration Canada.

• Have lived in BC for the last 12 months prior to the purchase of the home or has filed at least 2 income taxes in the last 6 years when the property is registered.

• Never have any outstanding balances or owned a residence anywhere in the world at anytime.