How much does buying a home cost?
Buying a home can be overwhelming… there are so many terms and expressions that you may not have heard before. That is why you need a team to help you throughout the process… A realtor, a mortgage broker, a lawyer/notary and a home inspector
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Need a mortgage broker?
Contact Patti Wheatley of the Mortgage Group
https://pattiwheatley.com/
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Property taxes are paid yearly to your municipal or rural tax office. (You will be able to claim a Homeowners Grant of $570 every year as long as you live in the home)
Did you know – When you purchase a home you are responsible for a property transfer tax? This tax should not be confused with annual property taxes.
Property transfer tax – is paid when you acquire an interest in real estate. There is an exemption available for First time homebuyers if….
Property transfer tax exemption for BC First Time Homebuyers
- Property purchase price must be $500,000 or less for a full exemption.
- Between $500,000 and $525,000 there is partial exemption
- You must be a Canadian resident that has lived in BC for at least 1 year
- You must never have owned a property that was your principal residence anywhere in the world
- You must never have received a First-Time homebuyer exemption or refund
If your purchase price is over $525,000, you need to budget for a hefty tax bill.
- 1% of the first $200,000
- 2% of the rest, up to $2,000,000
- 3% of the value over $3,000,000
- Example - $600,000 purchase – equals a transfer tax of $10,000
Did you know - while saving up for your down payment, you can put your money in your RRSP, this reduces your taxable income for the year of deposit and can produce a tax refund. Your savings will grow tax free, and you can borrow from your RRSP for your down payment.
First Time Homebuyers Plan
- Allows you to withdraw up to $35,000 from your RRSP’s as a tax-free loan
- You then have 15 years to repay the loan. You repay it back to your RRSP account.
- You are considered a First-time homebuyer if in the last 4 years you have not lived in a home owned by you or your current spouse/common law partner.
Home inspection
I can recommend the right home inspector for your purchase. Depending on the property inspections can cost between $400-$1000. There are many different types of inspections, for example; Does the property have a pool? Was there an oil tank previously on the land? Is there a secondary suite? All of these will effect the costs.
GST
Do you have to pay GST on your purchase?
GST (5%)s charged on top of the purchase price of the home, and applies only for new homes in BC. This means that GST is payable on newly constructed properties such as a pre-sale high-rise condo sold by a developer, or an owner builder home. (usually detached)
Any property that is not brand new (has been lived in) and has been used for residential purposes in the past are exempt from GST. Essentially, the GST has already been paid for at the first point of purchase.
GST also applies to homes that are substantially renovated, and to meet this requirement typically 90% of the building that existed before the renovations began must be renovated to a minimum degree. In addition to the 90% method, there are other common methods that include comparisons of the square footage of the floors, walls, and number of bedrooms between renovated and non-renovated.