The Provincial Deed Transfer Tax (PDTT) was introduced on April 1, 2022, and imposed a 5% provincial tax on property transfers where an ownership interest of more than 50% was granted to non-residents of Nova Scotia. This tax was calculated by multiplying 5% by the greater of the sale price or assessed value for the property transferred. As such, it applied to gifts of land as well as to sales.

Under the original rules, if 50% of the ownership was held by one or more residents of Nova Scotia, (either at closing or within 6 months of closing), then no tax was payable.

In the Spring 2023 legislative session, a change was made to the rules. For any transfers closing on or after July 1, 2023 the tax will apply where any ownership interest is being granted to non-residents of Nova Scotia. The tax will be payable on a pro-rated basis, proportionate to the percentage of ownership held by non-resident owners.

The Provincial Tax Policy and Administration Team has advised that there will continue to be an exemption for non-residents who move to Nova Scotia within 6 months. However, that exemption will be at the individual owner level. All non-residents who are moving to Nova Scotia within 6 months must provide proof of residency for the exemption to apply.

This change will apply to all purchases and transfers with closing dates on or after July 1st, 2023, regardless of when the Agreement of Purchase and Sale was signed.

If you are contemplating a sale or gift of land in which a non-resident of Nova Scotia will be acquiring a half interest or less in a property, you may want to consider the new tax rules when scheduling your closing.