HST - If you
buy a newly constructed home, you must pay the 12% HST. However, if your house
is less than $450,000 you may be eligible for a rebate. There is no HST on resale
housing unless there have been substantial renovations to the property.
Property Transfer Tax - This tax is
1% on the first $200,000 of the sale price and 2% on the remainder. Most first-time
buyers may be exempt from paying this tax if they meet this criteria. The main
criteria are:
- Borrower has never owned a principal residence
anywhere
- Borrow at least 70% of purchase price
- Be a Canadian citizen or permanent resident,
and been in BC for a minimum of 12 months
- Threshold amount is $375,000 in Greater Vancouver
Regional District.
Property tax Adjustment - You may have
to reimburse the sellers for any prepaid property taxes or utilities. Generally,
property taxes for the calendar year are paid at the beginning of July. If you
purchase a property before July 1st, the seller will be paying you for the days
they owned the home after January 1st. If you purchase a property after July 1st,
you will pay the seller for the days you own the property before December 31st.
(One day’s taxes on owner occupied properties are – annual taxes divided
by 365)
Strata Cost Adjustments – For
strata properties only, you may have to pay for strata fees owed (depending on
your purchase/sale date).
Mortgage loan insurance and application
fee - If you get a high-ratio mortgage (a mortgage where you pay less than
a 25% down payment) you will have to buy mortgage loan insurance from CMHC or
a private company. If you qualify for a 5% down payment, CMHC charges an insurance
fee that equals 2.75% - 2.90% of the mortgage. If you put 10% or 20% down, your
insurance fees will decrease to 2% and 1.00% respectively. The insurance premium
usually gets added to your mortgage.
You will also have to pay an application fee.
CMHC's standard fee is approximately $235. CMHC also offers a basic service for
a $75 fee but it must be accompanied by an appraisal.
Property Appraisal - Before your lender
approves your mortgage, you may be required to have an appraisal done. The property
is evaluated by a professional appraiser to determine the market value of the
property. This is done to ensure that:
The lending institution is not over advancing
on the property.
- This protects the borrower from over paying.
- Sometimes your lender covers this cost otherwise,
you are responsible for covering this cost. The fee ranges from $150 to $350.
Survey Certificate – Generally,
a bank will require a survey to confirm that the house does not encroach or cross
over the property line. The seller will often already have a survey, especially
if the seller also had a mortgage on the property. Otherwise, a new survey on
a house will cost approximately $150 to $350. CMHC requires a survey on all hi-ratio
insured mortgages. Surveys are not necessary if the purchaser is buying a strata
property.
Home Inspection fee - A home inspection is a report on the condition of the home that can alert you to any potential issues such as moisture problems, pyrite, radon gas or urea-formaldehyde. The fee is about $500 to $700, depending on the size and complexity of the inspection.
Legal fees - Lawyers/Notaries fees
for closing the sale range according to the complexity of the deal but they will
probably be at least $400.
Disbursements to Land Titles Office - These
fees are approximately $300. Your lawyer/notary will arrange this payment.
Insurance Binder – This is a
requirement by the bank to ensure that the purchaser has arranged fire insurance
on the new home. Proof of coverage by way on an insurance binder is necessary
and usually costs about $35.00. (This is not applicable for a strata property).
Note: Buyer should insure property
one day before completion date.
