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Buyer's Expenses
Costs Incurred When Buying Property
Building Inspection Fees
An inspection is an examination of the condition of the property after your offer is accepted.
* Approximately $300 to $700, depending on the square footage of the property
Appraisal Fees
An appraisal of the property (if required by your lending institution) will be performed to ensure that the value is reasonable relative to the purchase price.
* Approximately $200 to $300
Survey Certificate Fee
A survey certificate is required by your lending institution to indicate where buildings are located on your property line. The survey certificate can be obtained from the seller for free if the seller has a copy. It does not apply to the strata units.
* Approximately $200 to $375
Property Title Transfer Tax
A tax collected by the provincial government every time a property changes title.
* 1% of the first $200,000 of the purchase price plus 2% of the remaining balance
Harmonized Sales Tax (PST and GST)
GST on New Housing
The 5% Goods and Services Tax (GST) will apply to the sale of new residential homes in British Columbia, where ownership and possession take place on or after April 1, 2013.
GST New Housing Rebate
Your client may be eligible for a GST rebate if they buy, as their primary residence, a new home priced up to $450,000. The rebate is equal to 36% of the 5% GST portion of the HST paid on the first $350,000 of the price of a new home. The GST rebate is phased out for homes priced between $350,000 to $450,000. New homes priced at $450,000 and above receive no GST rebate.
2% BC Transition Tax
The 2% BC Transition Tax is a new, temporary tax that will apply to the sale of the new residential homes if ownership and possession take place on or after April 1, 2013 an the construction or substantial renovation of the new home is 10% or more complete as of April 1, 2013. The 2% tax ceases to apply if ownership and possession transfer on or after April 1, 2015. The BC government asserts the 2% reflects an embedded PST builders pay on materials (construction inputs). Under the HST, builders can write off that embedded 2%, but they cannot under the GST.
The 2% BC Transition Tax does NOT apply to:
* The sale of vacant land.
* The sale of new commercial units.
* REALTOR® commissioins.
2% BC Transition Tax Rebate for Builders
The Transition Tax rebate for builders (sellers) recognizes that the builder will not be able to claim input tax credits on the PST paid on building materials acquired after March 31, 2013. The rebate is available where both of the following conditions are met:
* The 2% BC Transition Tax applies to the sale of the new housing, and
* Construction or substantial renovation is at least 10%, but not more than 90%, complete before April 1,
2013.
The Transition Tax rebate for sellers of new housing will be calculated on the degree of completion of the housing as of April 1, 2013:
Determining the percentage of completion of contstruction or substantial renovation of a home
There are different methods a builder can use to determine the percentage of completion of construction. These are detailed in the Canada Avenue Agency's GST/HST Info Sheet GI-105, How to Determine the Percentage of Completion for Purposes of the Provincial Transitional New Housing Rebates and the Transitional Tax Adjustment in Ontario and British Columbia (July 2010).
In order to determine the percentage of completion of a home undergoing substantial renovation, the Canada Revenue Agency provides details in the GST/HST Technical Information Bulletin B-092, Substantial Renovations and the GST/HST New Housing Rebate (January 2005).
PST
The 7% Provincial Sales Tax (PST) will not apply to sales of real property. However, the PST will apply to certain types of housing which, at the time of purchase are tangible personal property (for example a mobile home purchased without land) and where possession transfers on or after April 1, 2013. The PST will also apply to construction inputs that are used to improve real property on or after April 1, 2013.
Presales and Completed New Homes for Sale under the GST
The 12% Harmonized Sales Tax (HST) will generally cease to apply to sales of real property (including new residential real property) if ownership and possession of the property transfer on or after April 1, 2013. At that point the 5% GST will apply to the sale of new home sales.
Agreements signed before April 1, 2012, with possession on or after April 1, 2013, but before April 1, 2015
If your client buys a presale residential proerty and they have an agreement dated before April 1, 2012 and they take owndership and possession on or after April 1, 2013, they will not pay the 12% HST. Instead, buyers will pay the 5% GST. They will also have to pay the 2% BC Transition Tax on the full home price if the construction or substantial renovation of the new home is 10% or more completed as of April 1, 2013. If ownership and posession is on or after April 1, 2015 then the 2% tax is not applicable.
Agreements signed on or after April 1, 2012, with possession on or after April 1, 2012, with possession on or after April 1, 2013, but before April 1, 2015
If your client buys a presale residential property and they have an agreement dated on or after April 1, 2012, and they take ownership or possession on or after April 1, 2013, they will not pay the 12% HST. Instead, buyers will pay the 5% GST. They will also have to pay the 2% BC Transition Tax on the full home price if the construction or substantial renovation of the new home is 10% or more completed as of April 1, 2013. If ownership and possession is on or after April 1, 2015 then the 2% tax is not applicable.
Agreements signed on or after April 1, 2013, with possession on or after April 1, 2013, but before April 1, 2015
If your client buys a presale or completed new residential property and they have an agreement dated on or after April 1, 2013, and they take ownership and possession on or after April 1, 2013, they will have to pay the 5% GST. They will also have to pay the 2% BC Transition Tax on the full home price if the construction or substantial renovation of the new home is 10% or more completed as of April 1, 2013. If ownership and possession is on or after April 1, 2015 then the 2% tax is not applicable.
Grandparented Agreements
Agreements signed on or before November 18, 2009, or construction which began before July 1, 2010, with possession on or after April 1, 2013 (Double-straddling, grandparented)
Special transitional rules apply if your client has bought a presale residential property and they have an agreement dated on or before November 18, 2009, or construction began before July 1, 2010 (the HST start date in BC) and for which ownership and possession transfer on or after April 1, 2013 (the HST end date in BC). This is known as a double-straddling home sale. In this situation, your client will pay both the 5% GST and the 2% BC Transition Tax.
Agreements signed after November 18, 2009, or construction which began before July 1, 2010, with possession on or after April 1, 2013 (Double-straddling, non-grandparented)
Special transitional rules apply if your client has bought a presale residential property and they have an agreement dated after November 18, 2009, and construction began before July 1, 2010 (the HST start date in BC) and for which ownership and possession transfer on or after April 1, 2013 (the HST end date in BC). This is known as a double-straddling home sale. In this situation, your client will pay both the 5% GST and the 2% BC Transition Tax. However, the 2% tax will not apply where construction was substantially completed before July 1, 2010 and the PST Transitional New Housing Rebate was not claimed by February 17, 2012.
New Addendums Required for the Contract of Purchase and Sale for New Housing
A vendor or seller of real estate (including a builder or an agent of the builder) that enters into a written agreement of purchase and sale after February 17, 2012 and before April 1, 2015 for newly constructed or substantially renovated housing in BC, or an interest in such housing, must provide specific information in writing to the purchaser. In some cases the information must be provided in the written Contract of Purchase and Sale while in other cases the information must be provided in a written addendum to the contract.
The updated Contract of Purchase and Sale for new housing and two new Addendums to the Contract of Purchase and Sale for new housing are mandatory starting December 1, 2012. This is a requirement of the New Housing Transition Tax and Rebate Act and the New Housing Transition Tax and Rebate Regulation.
Each of the two addendums are available on WEBForms™ under Printable Forms for use by REALTORS® who are acting for a client or clients in new housing transactions. There are two BCREA guides that address the addendums, and they are also available on WEBForms™ under Guides.
To determine which of the two new addendums is applicable to a particular new housing transaction, you must determine whether or not the seller of the property is a “foreign supplier.” The two addendums are:
1. Addendum for a Contract of Purchase and Sale that was signed on or after December 1, 2012, and before April 1, 2015, with ownership and possession before April 1, 2015, and the seller is a not a “foreign supplier”.
2. Addendum for a Contract of Purchase and Sale that was signed on or after December 1, 2012, and before April 1, 2015, with ownership and possession before April 1, 2015, and the seller is a “foreign supplier”.
A “foreign supplier” refers to a non-resident of Canada who sells real estate in Canada. The non-resident is not required to collect tax on the transaction, and therefore the buyer is required to remit the applicable tax, GST and possibly the 2% BC Transition Tax, directly to the government.
Vacant Land
GST paid on land
The 5% GST is applied to the sale of vacant land under the following circumstances:
* If the land is purchased from a developer.
* If the land was used for business purposes at any time in the past, even if the land was purchased from an individual.
* If the land was subdivided into more than two lots (three or more), even if the land was purchased from an individual.
2% BC Transition Tax and Vacant Land
The 2% BC Transition Tax does NOT apply to vacant land. The BC government asserts that this 2% tax reflects an embedded PST builders pay on materials.
Commissions and Fees
If a commission or fee is payable before April 1, 2013 it is subject to the 12% HST. If a commission or fee is payable on or after April 1, 2013 then it is subject to the 5%GST.
Legal Fees
Miscellaneous legal fees paid to a lawyer or notary public for searching title of a property, investigating title of a property, drafting documents, land title registration, etc.
* Approximately $650 to $1,000 plus Tax
Adjustment Fees
Miscellaneous fees such as prepaid taxes and management fees.
* These vary for each buyer and should be confirmed by your lawyer or notary public prior to closing
CMHC Application Fee
CMHC mortgage loan insurance application fee. This only applies to buyers that have less than 20% down payment.
* If an appraisal is required by the lending institution, CMHC offers a mortgage insurance application package that includes the appraisal for $165. The cost of a regular CMHC mortgage loan insurance application is $75.
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