When it comes to Family Property Tax Transfer Exemptions, there are a few key criteria that need to be met. Generally, there are a few situations with Property Transfer Tax where tax exemption occurs. This blog is with respect to tax exemptions for transfers of principal residences between family members.
Key Criteria for Family Property Tax Transfer Exemptions
When transferring a property between family members, there is no property transfer tax. However, there are a couple of key criteria here that need to be met for this tax exemption to occur.
1. The transfer occurs in an up down order.
A family member is defined as “up down”. An up down order occurs between grandparents, parents, children or grandchildren. Family property tax transfer exemptions happen in an “up down” or “down up” manner. The transfer cannot go sideways. Therefore, family property tax transfer exemptions cannot made between sisters, brothers, second cousins or anything like that. It must be a transfer going up down.
2. It has to be the Principal Residence of either the buyer or seller for the past 6 months.
If it is an investment property, a speculation office, warehouse or other type of property, those will attract a property transfer tax. The property must be a Principal Residence in order to qualify for the family property tax transfer exemptions in this case.
3. There is no maximum value on the property.
Unlike the other two tax exemptions – First Time Home Buyer Exemption and New Home Buyer Exemption – there is no maximum value on the property. So if the property is worth millions, there is still no property transfer tax included as long as the relevant criteria are met.
4. The buyer has to be a Canadian citizen or a Permanent Resident.
These are four key criteria to be eligible for Family Property Tax Transfer Exemptions.