Buying a home
Buying home is usually stressful for most people. It is very expensive and it is mostly the people’s biggest investment most of the time. We at Edmonton Real Estate Lawyer Group are keen to help our clients by reducing the amount of stress they undergo and by making the entire process a lot easier for them to understand. Here you will learn all about:
- Closing costs and adjustments
- Property transfer tax
- Goods and service tax
- Legal costs
- Third party closing costs
- 1st time home buyers
- Closing adjustments
- Special consideration for non-resident buyers
- Purchase closing process
With Edmonton Real Estate Lawyer Group you can have a chance of having a stress-free process of purchasing a home. We offers highly professional help from a team of dedicated lawyers and professionals, give us a call.
Closing costs and adjustments
Property Transfer Tax (PTT)
PTT is a tax applied to real estates. There are 3 different types of rates:
- 1% rate on the first $200,000 of the property’s market value
- 2% rate if the value of the property is anywhere between $200,000 and $2,000,000
- 3% rate if the value of the property is greater than $2,000,000
These taxes are submitted once the buyer registers as the new house owner in the Land Title and Survey Authority. 1st time buyers have an exemption.
Goods and service tax
GST is a standard Canadian federal tax paid by the first occupiers of a new property. Also, any new occupiers of the renovated property have to pay the same tax. The rate is 5% of the purchase price, and is usually included in the total purchase price. Make sure you read the contract carefully or with a help from your lawyer.
Rebates are readily available and do go for up to 36% of the GST if the buyer decides to use the property as a principal residence. This rebate is available for homes which are priced $350,000 or less. If the value is higher than $350,000, the rebate is phased out completely and for the values of $450,000 and more, the rebate is not available. If you want to rent the property out, you may still be eligible for a rebate, as long as your lease contract is long-term.
Legal costs are usually present, and tend to go from $800 to $1,100. Whether you hire lawyer or a public notary, these expenses cannot be avoided. Sometimes, additional charges may be applied. Costs that are included in the price are professional fees, land title search and registration fees, miscellaneous and office disbursements.
Third party closing costs
These expenses are often quoted separately because they are different with every transaction. Costs are different from state to state, and are a subject to change. For instance, a municipal tax certificate can cost anywhere from $25 to $100. Bear it in mind that third party closing costs should be discussed with your lawyer, and taken into consideration before the entire process.
1st time home buyers
Acquiring basic knowledge of the real estate is the first thing to do as a 1st time home buyer. Try and learn as much as you can about mortgage, lenders, insurance policies, etc. After which you can hire a team of professionals that will cover these areas for you. , this will give you the opportunity of having more than mere opinion and speculations to work with, and you will be able to make the right call. If you are buying your first home, remember to do some necessary research especially about the market. If you hit the market at the right time with adequate knowledge, you could pay a lesser money.
Also, first time buyers have a property transfer tax exemption. If you qualify for the exemption and meet certain criteria, you will receive a tax exemption. Some of the criteria include:
- The buyers must be Canadian citizens
- The buyers must have resided in B.C. for at least 12 months or filled income tax returns as residents of B.C.
- Must have never owned a principal residence before, anywhere in the world
Full exemption comes for properties valued around $475,000 or less, while partial exemption comes for properties valued between $475,000 and $500,000.
Closing adjustments are often related to the process where the buyer reimburses the seller for any prepaid expenses from which the buyer may benefit, and the seller reimburses the buyer for any post-paid expenses from which the seller will benefit. Closing adjustments include municipal taxes, municipal water and sewer fees, strata maintenance fees, and rent and security deposits.
Important considerations for Non-Residents
If you are a non-resident of Canada, you can still own property in British Columbia, but with certain important considerations.
Non-residents have different mortgage qualifications, and it may be a lot harder to qualify for a mortgage.it is advisable for you to consult with your lawyer and see the options that are open to you. You will also be required to open a Canadian bank account, in person.
Another important thing for non-residents is to be aware of the tax system. Normally, each year, a non-resident is charged with 25% withholding of taxes on the gross rental income. Each year before January the 1st, a non-resident can apply for a form which may reduce the withholding of the taxes, and be treated as an equal, or resident of Canada. To find out more about taxes, contact a Canadian tax accountant.
Residential Purchase Closing Process
When it comes to closing process of a residential purchase, there are 7 steps total:
- Employ the service of a public notary or a lawyer. Make sure you contact them as early as possible once the whole process starts.
- Your lawyer or notary will have to gather some information from you regarding the ownership. You have to declare whether you are going into a “joint tenants” with your spouse, or “tenants in common”.
- Your lawyer or notary will do the research and present you with the Statement of Adjustment. On it, you will see the total amount which has to be paid in order to complete the purchase of the property.
- Your lawyer or notary will prepare the closing documents (title transfer, mortgage, property transfer tax forms, and Statement of Adjustment). After that, the lawyer or notary will forward the seller’s closing documents to the seller’s lawyer or notary.
- You will meet with your lawyer or notary 1-3 days before closing to sing documents and bring the balance of down payment
- Your lawyer or notary will register the transfer and mortgage documents, send them to the seller’s lawyer or notary and let you know once the transaction is complete
- You will receive your house keys directly from your realtor on the Possession Date as set out in the Contract of Purchase and Sale
Enjoy your new home!