Shaun Kimmins

Buying and Selling Property: Additional Costs

Some of the additional costs you'll encounter when buying property are as follows:

Income Tax

Non-residents pay tax on income generated in Canada. The type and amount of tax and the requirement to file tax returns depend on your specific situation and the type of income generated. Canada has tax treaties with many countries, including the United States and the UK. A tax treaty is designed to avoid double taxation for people who would otherwise pay tax on the same income in two countries. You should consult a lawyer and an accountant who are familiar with your circumstances prior to entering into any purchase or rental agreement.

Property Transfer Tax  (different from property tax below)

Property Transfer Tax is a provincial tax on the transfer of real estate. It is 1% of the first $200,000, and 2% of the remainder of the purchase price. The First Time Home Buyers' Program provides a tax exemption from Property Transfer Tax for individuals buying their first home. Buyers who meet the following conditions will be eligible for the exemption.

        Buyer:

• must be a Canadian citizen or permanent resident who has never owned a home anywhere in the world, and has
  • lived in BC for one full year prior to the purchase, or
  • filed two income tax returns as a BC resident within the last six years.
  If the buyer is not a Canadian citizen or permanent resident at the time of completion, but becomes one within one year of completion, the buyer can apply for a tax refund.
• must occupy the property as their principal residence for the first year                  
•  For vacant land, a house must be constructed within one year of completion and the buyer must occupy the house for the balance of the year.

        Property:

• must not exceed $425,000. A proportional exemption is now available for properties that have a value greater than $425,000
• in the case of vacant land, the value of the land plus the total construction costs must not exceed the amounts stated above.
• must be classified as residential. 

GST - (Goods and Services Tax)  - is 5% on new construction and substantially renovated properties. GST is sometimes included in the list price. Buyers of new properties costing $350,000 or less can apply for a partial GST rebate as long as the property is the purchaser's primary residence. For new properties costing $350,000 - $450,000, the rebate is decreased proportionally to zero for properties costing $450,000 or more. For more info on GST, please see: the Revenue Canada website 

Clearance Certificate This document is required for non-resident owners disposing of real estate in Canada. Fees for its preparation and filing vary and usually range from $300-$1000, depending on the nature of the transaction.

Capital Gains Tax is not applicable on your principal residence if you are a Canadian resident. 

Property Tax is levied annually. The difference between Property Tax and Property Transfer Tax is that PTT is a one-time provincial tax which is charged at the time of title transfer and Property Tax is paid annually to the local taxation authorities. It is determined by applying the value of the property as assessed by the provincial assessment authority to the current tax rates as stated by the local tax authority. The amount can differ each year but generally Property Tax falls between 0.5-2.5% of the home's market value.

Other Expenses

Realtor's Commissions

Commissions are paid by the seller. Our commissions are typical of full-service agency commissions and are 7% on the first $100,000 of the sale price and 2.5% on the remainder. 5% GST is applied to the commission. Commissions are paid via a debit on the seller's statement of adjustments at the time of completion.

Appraisal

Your lender may require a property appraisal at your expense. Costs vary $150-$300.

Site Survey

Your lender may require an up-to-date survey. If the Seller does not have one, you may have to absorb the costs to have one done.

Legal Fees

Lawyer or notary fees will vary depending on the complexity of the transaction and are often $600-$1000. Your legal rep will review your contracts, search the title, draft mortgage documents and facilitate the closing. 

Home Inspection

Typically $150-$400.

Insurance

Fees vary.

Strata Fees (similar to Home-Owner's Association fees)

These are monthly fees that typically cover the costs of building insurance, building  maintenance, garbage removal, water, gas, recreation facilities, and concierge services. Fees vary depending on the level of services provided by the strata and are usually available on the listing detal sheet.