How Much Is Real Property Transfer Tax in PEI?

If you are budgeting for closing costs on a home in Prince Edward Island, the transfer tax is one number you want to get right early. It is charged when the deed is registered, so it is part of the money you need to have ready.

The calculation has a twist: the tax is not always based on what you paid. This article explains the rate, what the tax is based on, and the exemptions that may reduce or remove it.

This article covers the law of Prince Edward Island.

The rate and what it is based on

Real Property Transfer Tax in PEI is 1% of the greater of the purchase price and the assessed value of the property.

That means you pay on whichever figure is higher: the consideration (the price) or the assessed value at the time the deed is registered. If you negotiate a low price on a property with a higher assessment, the assessment is the figure that counts.

What assessed value means

Under the Real Property Transfer Tax Act, assessed value is the property's value taken from the current assessment roll at the time the deed is registered. It is not an appraisal you order, and it is not necessarily the same as the price you agreed to.

• Find out the current assessed value before you finalize your closing budget.
• Compare it with your purchase price, because the higher of the two is used.
• Multiply the higher figure by the 1% rate to estimate the tax.

Is there tax on a purchase under $30,000?

Possibly not. No transfer tax is payable on a deed where the greater of the consideration and the assessed value does not exceed $30,000. A property is exempt only if both the price and the assessed value are $30,000 or less.

The province publishes this as a named exemption, the Low-Cost Real Property Exemption. A cheap purchase price alone is not enough if the assessed value is higher.

The first-time home buyer exemption

The tax is waived for a first-time home buyer who meets the criteria in the Act, and all purchasers of the property must qualify as first-time home buyers to get the exemption. If you are buying with someone who has owned before, the exemption may not be available.

A first-time buyer who does not live in the home as a principal residence for 183 consecutive days after registration must pay the tax that would have been payable at registration. If you pay the tax at registration because the residency test was not yet met, you may apply for a refund after occupying the property as a principal residence for at least 183 days following the deed date, using the Request for Refund of Real Property Transfer Tax plus the notarized declaration.

What to do next

• Confirm the assessed value and compare it with your price.
• Decide whether the low-cost or first-time buyer exemption could apply to every purchaser.
• Get the right forms from the government forms page for Real Property Transfer Tax.
• Have the declaration signed before a notary public or commissioner for taking affidavits if you are claiming the first-time exemption.
• Ask your lawyer to confirm the tax amount before closing.

Frequently asked questions