What it costs to close a commercial property purchase in BC
The cheque at closing is bigger than the down payment. Here is every line on it, with the tax done for you.
The short answer
Property transfer tax is the largest single closing cost on a commercial purchase in British Columbia: 1 percent of the first 200,000 dollars of fair market value, 2 percent from 200,000 to 2,000,000 dollars and 3 percent above that, with a further 2 percent on any residential portion above 3,000,000 dollars. GST on commercial property is usually self assessed by a GST registered buyer rather than paid in cash at closing, and the rest of the cheque is legal, appraisal, environmental, building condition, lender and broker costs, none of which a conventional lender finances.
| Cost | Who charges it | How it scales |
|---|---|---|
| Property transfer tax | Province of British Columbia, paid at registration | Tiered on fair market value, further 2 percent on residential value above 3,000,000 |
| GST | Canada Revenue Agency | 5 percent of price, usually self assessed by a registered buyer rather than paid at closing |
| Appraisal | Lender's panel appraiser, paid by you | With property complexity and type |
| Phase 1 environmental site assessment | Environmental consultant | With site size and history, Phase 2 if flagged |
| Building condition assessment | Engineering consultant | With building size and age |
| Legal fees and disbursements | Your lawyer and the lender's lawyer, often both on your account | With deal complexity and number of parties |
| Lender commitment fee | Lender, set out in the commitment | A percentage of the loan amount |
| Broker fee | Your broker, disclosed in writing before you commit | A percentage of the loan amount |
| Title insurance and land title fees | Insurer and Land Title Office | With price and number of registrations |
| Adjustments | Vendor, on the statement of adjustments | Property tax, rent and deposits prorated to closing |
Property transfer tax on a commercial purchase
The tiers are marginal, not flat. You pay 1 percent on the first 200,000 dollars of fair market value, 2 percent on the portion from 200,000 to 2,000,000 dollars and 3 percent on everything above 2,000,000 dollars. The tax applies to the fair market value at the time of registration, whether the property is commercial, industrial, multifamily or bare land.
The further 2 percent applies only to residential value above 3,000,000 dollars, and on a mixed use building only to the residential portion of the value. The additional 20 percent for foreign nationals, foreign corporations and taxable trustees also applies to the residential portion only, and only in five specified areas: Capital Regional District, Fraser Valley Regional District, Metro Vancouver Regional District, Regional District of Central Okanagan, Regional District of Nanaimo. A purely commercial building carries no additional tax.
Source: Province of British Columbia, property transfer tax. Checked September 18, 2026.
Run the tax on your price
Your purchase
Fair market value at the time of registration
Property transfer tax
- 1 percent on the first 200,000 dollars
- $2,000
- 2 percent from 200,000 to 2,000,000 dollars
- $36,000
- 3 percent above 2,000,000 dollars
- $90,000
- Total property transfer tax
- $128,000
Rates checked at gov.bc.ca on September 18, 2026. Your lawyer or notary calculates the tax on the transfer form and confirms any exemption.
New rental buildings can be exempt
From January 1, 2025 to December 31, 2030 a new qualifying purpose built rental building is exempt from property transfer tax. The building must be non stratified, hold at least 4 separate apartments, and the entire residential portion must be rented on a monthly basis or longer for at least 10 years from registration. Buildings registered in 2024 were exempt only from the further 2 percent.
On a new rental acquisition that is a material number, large enough to change the equity you need on the day, so it belongs in the underwriting from the start. It sits alongside the insured financing on new construction and the leverage available under MLI Select financing.
The exemption is claimed on the transfer form by your lawyer and confirmed against the conditions. We do not give tax advice.
GST: usually a paper entry, sometimes a cheque
Under CRA rules the sale of commercial real property is generally taxable, whether the property is new or used, while the sale of a used residential complex is generally exempt. Where the buyer is GST registered the vendor does not collect the tax and the buyer self assesses it on its own return, and where the property is used in commercial activity the input tax credit usually offsets it on that same return. That is why most commercial purchases do not involve a GST cheque at closing.
Where the buyer is not registered, or the property is a new residential rental building, the rules differ and rebates may apply. Register for GST before closing if you intend to be registered, because your registration status on the closing date is what counts. Give your accountant the contract before you waive conditions, not after.
Source: Canada Revenue Agency, GST memorandum 19.4.1. Checked September 18, 2026.
The reports the lender will want
- An appraisal from the lender's panel, ordered by the lender and paid by you.
- A Phase 1 environmental site assessment, with a Phase 2 following where the Phase 1 flags a past use, a neighbouring use or a storage tank.
- A building condition assessment on most income producing buildings, covering roof, envelope, structure and mechanical life.
- A survey or a title review, depending on what the lender's lawyer asks for.
- On strata property, the Form B, the depreciation report and the council minutes.
Order them in sequence rather than all at once. On a site with an industrial history the environmental report is the one most likely to stop the deal, so it goes first there, and the building condition assessment follows once the site is clear. Spending on every report in the same week is how buyers end up paying for three reports on a purchase that one of them was always going to stop.
Lender, broker and legal costs
The lender charges a commitment fee, set out as a percentage of the loan in the commitment letter, and part of it is often payable when you accept the commitment, with the balance at funding. A broker fee, where one applies, is disclosed to you in writing before you commit.
Most files carry two lawyers: yours on the purchase and the lender's on the security, with both accounts landing on you. On CMHC insured files there is also the CMHC application fee and the insurance premium, and you can price the premium with our CMHC premium calculator. The premium is normally added to the loan. The rest of this list is cash.
Adjustments on the statement
Property taxes, rents, security deposits with interest, prepaid expenses and utilities are all prorated to the closing date on the statement of adjustments. On a tenanted building the deposits come across as a credit to you, since you inherit the obligation to return them.
Your mortgage also carries an interest adjustment from the funding date to the first payment date, which is a small cash item most buyers do not plan for.
What this does to your equity cheque
Lenders size the loan on the lower of price and appraised value, and none of these costs sit inside it. Take a commercial only purchase at $5,000,000 with a 75 percent loan. The loan is $3,750,000 and the equity is $1,250,000. Property transfer tax on that price is $2,000 on the first tier, $36,000 on the second and $90,000 on the third, a total of $128,000. Cash to close, before reports, legal and fees, is $1,378,000.
Size the debt first with the commercial mortgage calculator, then set the equity against what lenders actually require on the down payment page, then add this page on top.
Closing cost questions we hear most.
Related reading
Know the whole cheque before you waive.
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