Purchasing Expenses
There are one-time costs and ongoing expenses associated with purchasing a property. The largest one-time cost is a deposit of 5% of the purchase price which is usually due upon acceptance of an offer. The deposit amount can be applied to your down payment amount.
In addition, it is a good idea to have 1.5-2% of the purchase price set aside to cover closing costs.
One Time Closing Costs may include:
- Legal fees (Lawyer or Notary)
- Adjustments for prepaid expenses from seller (property taxes, strata fees, etc.)
- Property Inspection
- Moving expenses
- Service and utility hook up
- Renovations and repairs
- Property Transfer Tax
- GST
- Property Appraisal
- Survey of Land
Property Transfer Tax
It is paid to the provincial government: 1% on the first $200,000 and 2% on the remainder of the purchase price.
First time purchasers may be exempt from the property transfer tax if the purchase price is under the threshold of $425,000 and the property will be their primary residence. Upon closing your lawyer will apply for the exemption.
HST (HARMONIZED SALES TAX)
The current rate is 5%. HST is applicable on new construction and on the resale of properties that have been used commercially.
HST can be deferred on rental property if the buyer becomes a HST registrant and continues to rent the property nightly. A new owner of a rental property can register for HST with the help of their lawyer or accountant. Your rental management company then remits the HST charged on rentals. You will be required to file an annual HST return. Please consult a Canadian accountant for tax advice.
HST Rebate on New Homes
The HST New Housing Rebate program provides a refund on the construction or purchase of most newly constructed or substantially renovated houses used as primary place of residence. The rebate reduces the GST on homes valued at $525,000 or less are eligible for a rebate of7l .43% of the provincial portion (7% of the 12%HST) paid to a maximum rebate of’ $26,250. Homes priced at $525,000± are eligible for a flat rebate of $26,250.
