Extra Costs When Buying a Property

Ever wondered about the extra costs of buying a property besides the purchase price?


1%  Property Purchase Tax
A successful purchase starts with budgeting for the closing costs. Not only do you have to plan to have enough to pay the lawyer or notary, but the 1% Property purchase tax is a big part of this as well. Most people must pay this tax, although first time home-buyers may be exempt. Check this government link to see if you are exempt as a first time home buyer, CLICK HERE to see if you qualify or


NOTE: The Property Purchase Tax (PPT) is a separate provincial tax on all property transfers. The GST is not the PPT. The cost NEW CONSTRUCTION real estate transactions only will add 5% GST to the transaction. The people of BC will be particularly affected since our province has some of the highest priced real estate in the country. Approximately 40% of all real estate transactions in BC involve sales priced over $400,000, the original threshold for an GST rebate.As the province transitions back to the PST, which will replace the HST effective April 1, 2013, measures to ease the HST burden on new home buyers, include:
 

Tax Rates

The property transfer tax rate is:
  • 1% on the first $200,000,
  • 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000,
  • 3% on the portion of the fair market value greater than $2,000,000, and
  • If the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000 (effective February 21, 2018).
If the property is classified as residential and farm, or is residential mixed class (such as residential and commercial), you pay the further 2% tax on only the residential portion of the property.The BC Transition Tax will help ensure that whenever purchasers buy a new home they will all pay a consistent and equitable amount of tax, whether the home is built:
  • entirely under the HST;
  • entirely under the PST; or
  • partly under HST and partly under the PST.

Lender (Appraiser) A bank is not just a bank. Having the right backer can be extremely important – it is your money we’re talking about after all! Make sure that your lender and financial representative is someone with whom you feel comfortable, and be wary of any lender who promises you more than you think you can reasonably afford. Your lenders may or may not require an independent appraisal, and typically will make arrangements for the appraisal themselves. Also a Mortgage Broker sometimes might just be a good alternative to a bank for financing, but always compare rates first. 

Lawyer or Notary. Your home purchase is far too important a transaction to skimp on legal representation at the risk of leaving yourself open to costly future issues.
Find a lawyer or notary who is willing to take the time to answer your questions and who specializes in real estate law. Look at these web sites to select a lawyer or notary for your area: NOTARIES and LAW SOCIETY 

Home Inspector No home inspection is 100% guaranteed, but a few hundred dollars to catch a major problem now is certainly better than many thousands to correct that ‘surprise’ down the road.
Take a look at the Canadian Home Inspectors web site for a list of home inspectors in your area: Home Inspectors

Contractor Planning some renovations? You’re not the only one! The home renovation industry is booming, and in some markets, booking a contractor must be done months in advance (that’s a long time to go without a kitchen). Don’t let finding the right contractor slip through the cracks – planning ahead will almost certainly make your renovation smoother, and you contractor will appreciate the advance notice. Not a bad idea to check the Better Business 

The information contained on this page is deemed to be correct and from reliable sources, however it is advisable to verify if necessary as laws are subject to change.