Buying a House in BC – Taxes & Other Expenses
Let me start by saying that I am Mortgage Advisor and not a Realtor, but it is very common for my clients to ask about home purchase related expenses when we sit down to plan a personalized mortgage solution. Many of these questions are related the various taxes that are applicable for a home purchase in Metro Vancouver. In many cases, most local families getting ready for a new home search would typically hire a Realtor and have a plan for what there down payment amount will be. However, there are several related or hidden expenses to be prepared for. In this blog, I wanted to share some key things to plan for when purchasing a home and other considerations for mortgage approval and budgeting.
What taxes do you pay on a house purchase in BC?
Property Transfer Tax (PTT)
Home buyers are all subject to a Property Transfer Tax (PTT). Here’s how it’s calculated:
· 1% on the first $200k of the purchase price
· 2% on the amount over $200k and up to $2 million
· 3% on any amount over $2 million.
· Plus, another 2% is on any amount greater than $3 million for residential properties
There is also an incentive for qualified first-time home buyers in the way of an exemption on amounts up to $500k level. As well, first-time buyers could use a pro-rated exemption for amounts between $500k to $525k. There are some other exemptions available to qualified buyers. Please see the fact sheet from Real Estate Board of Greater Vancouver for full details: REBGV Fact Sheet
Goods & Services Tax (GST)
The GST amount on a new home in BC is 5% overall. There are GST rebates available for homes that are prices up to $350k and a pro-rated rebate on homes up to $450k amount. For full details and extensive information on GST New Housing Rebates, you can visit: GST Rebates in Canada
Are there any other taxes or hidden expenses for purchasing a home in BC?
Now that we’ve addressed the main two taxes most are subject to, let’s take a quick look at some other variable expenses such as adjustments for the sale contract, related fees, insurance and other. I suggest that you discuss this potential expenses (or hidden expenses) with your Realtor in detail to plan ahead and to be ready with a savings reserve in case you need to exercise it.
· Property taxes that have been prepaid by the seller
· Rent and security deposits for rental suites
· Appraisal fees $300 to $450 range
· Land survey fees $500 range
· Legal or Notary Public fees
· Utility connections and Municipal hook ups for gas, water and more
· Home, fire and liability insurance
As mentioned, the above is just a quick overview of typical expenses to know of when buying a home in BC. As well, I recommend factoring in a proper home inspection and insurance coverage to protect yourself from any major surprises or unplanned expenses. There are some items that maybe included in a mortgage loan application and I’d be happy to customize a solution for your needs to support your next home search. I invite you to connect with me anytime.
All the best,
Sukh Sangha