Title changes can happen for a variety of reasons. Some of those reasons include: tax purposes, marriage or divorce, co-signer / requalification changes, or estate planning.
If you are adding a spouse or other family member to the title, and the home is your primary residence that has been occupied for at least 6 months, there will be no Property Transfer Tax payable. This also applies to common law spouses. This is considered a property transfer tax exemption for a related individual. There are other property transfer tax exemptions which can be found here.
If the home is not your primary residence, and you are a related individual, the property transfer tax will be payable based on the interest that is acquired.
It is important to note that if the property that is not your principal residence, the title changes could have capital gains implications. Each person’s tax situation is unique, so it is highly recommended that you consult with an accountant and a Notary Public or Lawyer before proceeding with any formal title changes.
If you are adding a non-family member to the title, the property transfer tax will have to be paid on what is considered to be the fair market value of the property. The BC Assessment web site is a useful tool to help you estimate the current value of a property.
Title changes will also impact mortgage financing. If you have an existing mortgage, the lender will require the new owner to also sign on the mortgage. This could trigger re-qualification even if the loan amount is not changing. The intended reason for the person being added to the title should be clear since any future actions taken around the property, including selling, transferring or further re-financing, will require the lender’s authorization.
If you had a family member co-sign when you first acquired the home, and now you qualify on your own, you can apply to have them taken off the title and the mortgage with formal approval from the lender. No property transfer tax would be payable, however you would incur some notarial fees to register the mortgage and amended ownership. Also worth noting is that depending on the interest that person owns, they may have to pay Capital Gains Tax even if they are not receiving any money from the transaction.
If you need to calculate Property Transfer Tax, Spagnuolo & Company has a calculator that is available here.
Cam Sherk is a local Notary Public in Squamish, BC, and we thank him for his contribution to this post. He can be reached at 604-567-8711 for any questions.