Buying property ? Don't forget about these closing costs when purchasing your home or investment property:
1. GST (Goods & Services Tax): Houses purchased from the builder are subject to GST. A purchaser of a newly built house should be satisfied as to how GST is treated before signing the contract. The contract they have entered may require the payment of an additional 5% in GST. New home buyers can apply for a rebate of the 5% GST if the purchase price is $350,000 or less. The rebate is equal to 36% of the GST to a maximum rebate of $6,300. There is a proportional GST rebate for new homes costing between $350,000 and $450,000. There is no rebate for homes priced at $450,000 and above.
2. PTT (Property Transfer Tax): This tax is payable on the purchase of all real property in BC. The calculations are as follows:
- 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, and
- 3% on the portion of the fair market value greater than $2,000,000.
3. Canada Mortgage & Housing Corporation (CMHC) Insurance Premium: If a purchaser has less than 20% down payment, they will need Mortgage Load Insurance. Buyers with mortgage loan insurance can purchase a home with as little as 5% down. The cost of insuring the loan (loan insurance premium) depends on the size of the down payment. The premium can be added to the mortgage and paid as part of the monthly payment, or paid in a single lump sum at the time of purchase.
Click here for the CMHC Premium Calculator
4. Legal Fees: Legal representation will cost you approximately $875 - $1000 for a purchase and a mortgage. The legal fees to only register a mortgage will be in the $500 - $600 range. Your legal fees should be negotiated up-front with your lawyer or notary.
5. Property Tax Adjustment: Generally, property taxes for the calendar year are paid in July (February & July in Vancouver). If you purchased a property before July 1st, the seller will be paying you for the days they owned the home from January 1st to the completion day. You are then responsible for the entire amount to be paid to the municipality on July 1st. If you purchase a property from the completion day to December 31st, they will already have been paid the entire amount to the municipality on July 1st, therefore you will need to pay for your portion of those taxes. To calculate this amount: one day's taxes on owner occupied properties is the annual taxes, less $570 homeowner grant, divided by 365 days.
6. Property Inspection: An inspection is a thorough evaluation of the structure, systems, and components of a home. The inspection report usually comments on the condition of, but not limited to: foundations, electrical, plumbing, heating, water heaters, appliances, fireplaces, drainage, roof, walls, floors, attic, crawl spaces, patios, etc. The inspection is optional and normally costs $300-$500.
7. Processing/Appraisal Fee: This covers property valuation, administrative and processing of documentation for your mortgage. The fee (usually $300) will vary according to the value of the property, and whether you have a conventional or high-ratio mortgage.