Buying a home
Buying a home for most people is very expensive and stressful. However, in most cases, it is people’s largest and most valuable investment. At Ottawa Real Estate Lawyer Pros, we ensure the reduction in stress our customers go through to buy their homes, and also see to making the process comprehensively easy. If all you seek is, an easy and stress-free process of being a homeowner, then Ottawa Real Estate Lawyers are your best shot. Give us a call if you want to employ the services of excellent experts in purchasing a home.
Below is a detailed information about:
- Goods and service tax
- Third party closing costs
- Property transfer tax
- Closing adjustments
- Legal costs
- Purchase closing process
- 1st time home buyers
- Special consideration for non-resident buyers
Goods and Service Tax (GST)
The Goods and Service Tax is a federal tax paid by the first occupants of a new property, as stipulated by the Canadian standard. This same tax will likewise, be paid by any new occupant of the renewed property. It is 5% of the property purchase price and is normally added to the total price. Ensure you read and understand the contract or seek help from your lawyer.
If the buyer of the property, chooses to use the property as a major residence, rebates are made available and normally go for about 36% of the Goods and Service Tax. Note that, only homes that cost $350,000 or less are entitled to this rebate, while homes that cost more than $350,000 are not entitled to it. However, as long as your lease contract is long-term, you may still be entitled to a rebate if you choose to rent the property out.
Third Party Closing Costs
Considering their differences compared with other transactions, these expenses are normally quoted separately. All costs are prone to change, just like they vary from one state to another. For instance, the cost of a municipal tax certificate ranges from $25-$100. It is also necessary to keep in mind that the, third party closing costs discussed in details with your lawyer and considered before the whole process.
Property Transfer Tax (PTT)
The Property Transfer Tax is a type of tax applicable 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 falls between $200,000 and $2,000,000
- 3% rate if the value of the property is greater than $2,000,000
These taxes are tendered, immediately after the buyer registers as the new house owner in the Land Title and Survey Authority. Although, there are exceptions for first time home buyers.
Closing adjustments include strata maintenance fee, security deposits, municipal taxes, rent, sewer and municipal water fees. It usually refers to the process, where the seller reimburses the buyer for any and all postpaid expenses, from which it is beneficial to the seller, and the buyer reimburses the seller for any prepaid expenses from which the buyer may benefit from.
Legal costs range from $800-$1,100, and can not be avoided. Whether you employ the service of a public notary or a lawyer, you can not do away with these expenses. There may be additional fees sometimes, depending on professionalism and time to be taken. The costs that are normally added to the price include, miscellaneous office disbursement, professional fees, registration and land title fees.
1st time home buyers
The best step to take, if you are first time home buyers, is to learn about the basics of the real estate. Acquire as much knowledge as you can, about insurance, mortgage, policies, lenders, necessary documents, etc. After which you can hire the services of experts that will assist you in covering these areas. Following this process, will ensure, you have more than just ideas and thoughts to work with, and aid taking the right steps. When making plans to buy your first home, make sure to spend some time observing and making findings about the market. This is because, you can be lucky to pay a considerably less money, with the right research and timing.
First time home buyers, also have an exemption regarding property transfer tax. So, if you meet up the requirements and qualify for the exemption, you will receive an automatic tax exclusion. Some of the requirements to be met include:
- The first time home buyer, must have never owned a major residence before, anywhere in the world
- The buyer must be a Canadian citizen
- The buyer must have lived in B.C. for not less than a year or filled income tax returns as a resident of B.C.
A total or complete exemption are stated for properties that cost $475,000 or less, whereas a partial or semi exemption are for properties that cost $475,000 – $500,000.
Important considerations for Non-Residents
Owning a property in British Columbia is feasible, even if you are a non-resident of Canada. Although, not without certain relevant considerations.
A non-resident of Canada has varying mortgage qualifications, and for such person it may be very difficult to qualify for a mortgage. It is therefore, advisable you talk with your lawyer and know the options you have. Keep in mind also, that you will be expected to open a personal Canadian bank account.
The tax system is another very important thing a non-resident has to be in the know of. Every year, a non-resident is normally charged 25% of the taxes on the gross rental income. So, for each year before January 1st, a non-resident can reduce the withholding of taxes by applying for a form, which will make him/her (non-resident) be treated as a resident of Canada or an equal. Contact a Canadian tax accountant to learn more about the taxes.
Residential Purchase Closing Process
There are seven steps involved in Residential Purchase Closing Process. They are:
- Ensure you employ the services of a professional lawyer or public notary. And do that as early as the whole process begins
- Some information will be required ed from you, by your chosen lawyer or notary concerning ownership of the property. Ensure to make it clear if you are solely owning the property, going into a “tenants in common” or “joint tenants”
- Your notary or lawyer will make necessary findings and provide you with the Statement of Adjustment. Present in this, will be the total cost to be incurred in order to complete the purchase of the desires property
- Closing documents which include the statement of adjustment, title transfer property transfer tax forms, and mortgage, will be prepared by your notary or lawyer. After which he/she will send the seller’s closing documents to the seller’s notary or lawyer
- You will be required to meet with your notary or lawyer 1-3 days before closing, I’m order to sign documents and obtain the balance of down payment
- The mortgage and transfer documents will be registered by your notary or lawyer, sent to the seller’s notary or lawyer and give you a feedback immediately after the transaction is complete
- The keys to your new home will be given to you directly by your realtor, on the Possession Date as stated in the Contract of Purchase and Sale
Have a fulfilling stay in your new home!