What are the costs involved in buying real estate in British Columbia?
In addition to the purchase price, there are a number of other costs you need to keep in mind.
GST: 5% GST may be applicable - typically on a new home. (First-time buyers' rebate program)
Property Transfer Tax: (First-time buyers may be exempt from paying this tax)
- 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.
- If you’re a foreign national or foreign corporation and the residential property is located in the Greater Vancouver Regional District, you also pay the additional property transfer tax of 20% on the fair market value of your proportionate share. (THERE IS CURRENTLY A BAN ON FOREIGN OWNERSHIP OF HOUSING) More info and details of excemptions.
Prepaid property taxes or utility bills: You will have to reimburse the sellers for any prepaid property taxes or utilities. Generally property taxes for the calendar year are paid at the beginning of July. If you purchase a property before July 1st, the seller will be paying you for the days they owned the home after January 1st. If you purchase a property after July 1st, you will pay the seller for the days you own the property before December 31st.
Mortgage loan insurance: If you get a high-ratio mortgage (less than 20% down payment) you will have to buy mortgage loan insurance from CMHC or a private company. The insurance premium. usually gets added to your mortgage.
Mortgage application fee: The bank or mortgage company may sometimes charge a fee for processing a mortgage application. This type of fee is more common when your down payment is less than 20% of the total purchase price. It is usually a few hundred dollars and varies between financial companies.
Property appraisal: Before your lender approves your mortgage, you may be required to have an appraisal done. Sometimes your lender covers this cost otherwise you are responsible for covering this cost. The fee ranges from $200 to $500.
Land Survey Fees: A land survey is a proceess where a surveyor will inspect the property to ensure that the boundary lines in the title of the property are being followed. Using the legal description of the property and specialized surveying instruments, the surveyor will measure the land and note the boundary lines. Surveys are not necessary if the purchaser is buying a strata property.
Home inspection: We will always recommend that you get a home inspection by a certified home inspector. A typical home inspection ranges between $500 and $600. Larger homes may cost more.
Title Insurance: Title insurance will check the title history of the property to determine if there are items that could affect your interest in the property, such as outstanding liens, taxes, or unpaid judgements. The financial company may require a title insurance policy to reveal potential errors before the mortgage is issued. Title insurance can also be used as a substitute, if both parties agree, to a recent survey because Title Insurance protects the lender and buyer against defects in the title.
Legal fees: A lawyer or notary is needed to complete your purchase. Their fees will range in price, depending on the services provided.
Disbursements to the Land Titles Office: These fees are approximately $500. Your lawyer or notary will arrange this payment.
Prorated Costs: You will need to reimburse the sellers for any prepaid property taxes or utilities that they have already paid for the year.
Speculation Tax: The speculation and vacancy tax is an annual tax based on how owners use residential properties in areas in B.C. It's designed to turn vacant homes into housing for people in British Columbia, and ensure foreign owners and those with primarily foreign income contribute fairly to B.C.’s tax system.
Empty Home Tax: In Vancouver, properties deemed or declared empty in the previous reference year will be subject to a tax of 3% of the property’s previous year's assessed taxable value with the Empty Home Tax.
BC Home Flipping Tax: The BC home flipping tax applies to income you realize from the sale of properties in British Columbia if you have owned them for less than 2 years. The tax rate will be highest for those who owned properties for the shortest period and will decline the longer the property is owned. The tax rate will be 20 percent for income earned from properties sold within 365 days of purchase and will decline to zero between 366 and 730 days.
Federal Flipping Tax: Starting on January 1, 2023, the new deeming rule applies to flipped property to ensure that profits are subject to full income inclusion. Under the new rule, profits from the sale of a flipped property are deemed to be business income. Where the new deeming rule applies, profits on the sale cannot be treated as a capital gain (50-per-cent income inclusion) and the Principal Residence Exemption is not available.
Other costs to consider:
- Home insurance
- Moving costs
- Renovations or repairs
- Strata fees
- Gardening expenses
