Does the Seller Pay the Transfer Tax When Selling a Home in New Brunswick?

If you are selling a home in New Brunswick, one of the first questions is whether the Real Property Transfer Tax will come out of your proceeds. The answer starts with who the Act says owes the tax, which is not always the same as who ends up bearing the cost.

This article explains what the Act says: who must pay, how the amount is worked out, which transfers are exempt, and what can happen if the tax is not paid. Who bears the cost in a particular sale is a separate question, so confirm it with a lawyer and check your agreement of purchase and sale.

This article covers the law of New Brunswick.

Who the Act says must pay

The transfer tax is payable by every person who tenders a deed for registration in the province. It must be paid before the deed is registered, and for electronic deeds it is paid electronically as the Minister approves.

The Act ties the obligation to the act of tendering the deed, not to the words seller or buyer. This article does not say which side pays as a matter of contract or custom in a given sale. Look at your agreement and ask your lawyer who is tendering the deed and how the cost is handled in your closing.

How the amount is worked out

For deeds tendered on or after April 1, 2016, the tax is 1% of the greater of the consideration for the transfer or the assessed value of the real property. Assessed value means the value of the property at the time the deed is registered, taken or extrapolated from the current assessment list.

The province compares the price paid with the assessed value and taxes the higher one. A price below the assessment does not lower the tax.

The tax is rounded to the nearest dollar, with fifty cents treated as one dollar.

Partial interests and other special cases

• Partial interest: if only a share of the property is transferred, the transferred share's percentage is applied to the assessed value when computing the tax.
• Deed registrable in more than one registry office: the tax is payable only once, on the first transfer tendered.
• Older agreements: lower earlier rates of 0.5% from June 1, 2012 to March 31, 2016, and 0.25% before that, are kept for agreements for sale or purchase signed before specified dates.

If your sale involves a share of a property or an older agreement, have a lawyer confirm how these rules apply.

Transfers that are exempt

No transfer tax is payable on registration of certain instruments. These include:

• Leases under 25 years
• Wills
• Certain transfers from estates to beneficiaries or heirs
• Transfers to registered charities
• Transfers to the Crown and its agencies
• Transfers made only to secure a debt
• Other classes exempted by regulation

The Act as read has no first-time buyer exemption. Whether an estate transfer qualifies depends on its details, so ask a lawyer before assuming it does.

Registration and your yearly property tax

Registering the deed is a separate step from paying the tax. Electronic instruments can be submitted only by subscribers, who are Law Society of New Brunswick members authorized to practise law and who have an agreement with Service New Brunswick, apart from stated exceptions. Paper submission is allowed in limited cases, such as when a registered owner submits the instrument personally.

The assessed value also drives your yearly property tax, which is a different tax from the transfer tax. Service New Brunswick assesses each property annually with values as of January 1, and bills go out in early March. Each person in whose name the property is assessed must pay the taxes on it, and unpaid amounts attract penalties set by regulation. Assessment information can be searched online through Service New Brunswick's Property Assessment Online.

How property tax and other closing costs are shared between you and the buyer depends on your agreement and your lawyer's accounting for the sale, so it is worth confirming with a lawyer.

If the tax is wrong or unpaid, and what to do next

The Minister may assess or reassess within one year of registration where a false statement was made or no assessed value was determined. Unpaid tax bears interest and can be registered as a lien.

• Find the current assessed value of your property.
• Compare it with your sale price, since the higher figure is taxed.
• Read your agreement of purchase and sale for any wording on the tax.
• Ask your lawyer who will tender the deed and how the tax is paid at closing.
• Tell your lawyer if the transfer involves an estate, a charity or a partial interest.

Frequently asked questions