First things first!
Buying your first home is a big step—and an exciting one. If you are looking to break into the housing market in Vancouver, it is important that you are ready to act when the right house comes along. Here are the things you need to know about to help you get started. Desirable homes sell quickly due to high demand in Greater Vancouver. If you’re a first-time home buyer, you’ll have lots of questions about whether to buy, what you can afford, which type of mortgage to choose, and more. We are focused on ensuring your first home purchase is as pleasant as possible, our dreamliving team has the knowledge and connections to guide you through the process, and get you the best deal for your personal situation.
Property Transfer Tax. You have to pay this provincial tax upon closing. The cost is a percentage of the property's purchase price and varies by province. Home buyers in BC pay a provincial Property Transfer Tax (PTT) when they buy a home. The tax is charged at a rate of 1% on the first $200,000 of the purchase price and 2% on the remainder up to and including $2 million. The PTT is 3% on amounts greater than $2 million.
Qualifying first-time home buyers may be exempt from paying the Property Transfer Tax (PTT) if their home is priced up to $500,000. There is a proportional exemption for homes priced between $500,000 and $525,000. At $525,000 and above the rebate is nil.
To qualify for a full property transfer tax exemption, at the time the property is registered you must:
- Property must have fair market value of $500,000
- be a Canadian citizen or permanent resident
- have lived in B.C. for 12 consecutive months immediately before the date you register the property or filed at least 2 income tax returns as a B.C. resident in the last 6 years
- have never owned an interest in a principal residence anywhere in the world at any time
- have never received a first time home buyers' exemption or refund
Qualifying buyers of new homes may be exempt if the purchase price of their home is priced up to $750,000. There is a proportional exemption for homes priced between $750,000 and $800,000. At $800,000 and above, there's no rebate.
Non-Resident Tax An additional 15% PTT is charged on the purchase price to buyers in Metro Vancouver who are not Canadian citizens or permanent residents of Canada, and who don’t have work permits.
Partial Exemptions. You qualify for a partial exemption if:
- The property has a fair market value of up to $25,000 more than the qualifying value of $500,000 up to $525,000 (only if purchasing an existing home), the land is larger than 0.5 hectares (only 0.5 hectares of the land are eligible), or a portion of the improvements on the land is used for commercial purposes or there is a separate dwelling on your land (only the principle residence portion is eligible).
|Fair Market Value||Exemption Amount||Tax Payable|
|Less than $500,000.00||Full amount of tax normally due||$0|
Deposit. A deposit is provided from the buyer to the seller as a token of the buyer's assurance and intention to buy the property involved. The deposit is applied against the purchase price of the home once the sale has closed. Deposits are usually around 5% of the purchase price depending on the area.
Down Payment. At least 5% of the purchase price is usually required for a high-ratio mortgage and at least 20% of the purchase price is usually required for a conventional mortgage.
Mortgage Loan Insurance Premium. If yours is a high ratio mortgage (less than 20% down payment), you may need mortgage loan insurance. To get this insurance, you will be asked to pay the required insurance premium. Your lender may add the mortgage insurance premium to your mortgage or you can pay it in full upon closing. Mortgage loan insurance helps protects lenders against mortgage default, and enables consumers to purchase homes with a smaller down-payment — with interest rates comparable to those with a 20% downpayment.
Property Insurance. The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing the structure of your home and its contents. Property insurance must be in place on closing day.
Legal or Notary Public fees. Buyers typically hire a lawyer or Notary Public to assist with drafting documents and ensuring the title of the home is properly transferred. Must be paid upon closing and cost about $1000 (plus GST). Your lawyer will also bill you for any disbursements they incur such as land titles costs to check on the legal status of the purchased property.
Realtor Fees. It will cost you $0 to work with a Realtor to buy a home in Vancouver. In most instances, the Seller offers compensation directly to the Buyer’s Realtor upon the completion of the sale. You’ll have peace of mind and professional representation, and it doesn’t cost you a thing. Our dreamliving team can help you make a purchase with the least amount of problems. We will offer expert advice on what to look for, conditions to include, negotiation strategy etc. After all, we work for you.
Strata Maintenance Fees. Typically paid on the first day of each month. Your monthly strata fee is money that’s used by the strata corporation to pay the common expenses of the development. Your individual fee is assessed by taking the total cost of the strata’s expenses and dividing that by the unit entitlement of your strata lot. This means the larger square footage of your home, the bigger your fee.
Home Owner Grant. The purpose of the Home Owner Grant is to help reduce the amount of residential property tax British Columbians pay. The home owner grant applies to taxes paid by British Columbians to their municipality or to the Surveyor of Taxes for rural areas. The grant is available to Canadian citizens or holder of permanent residency status in Canada, who live in British Columbia, and he or she must occupy the home as his/her principal residence.
If your property has an assessed or partitioned value of $1,600,000 or less, the home owner grant may reduce your taxes up to $570. The grant is reduced by $5 for each $1,000 of assessed value over $1,600,000. This means the grant isn’t available for properties assessed over $1,714,000.
Home Buyers' Plan: Registered Retirement Savings for down payments Canada Revenue Agency's Home Buyers' Plan lets qualifying home buyers use up to $25,000 of their Registered Retirement Savings Plan (RRSP) to buy a home. Couples can use up to $50,000. The home must be a principal residence, the home buyers must not have owned a home within the past five years and the loan must be repaid with 15 years.
CMHC Mortgage Loan Insurance Premium Refund: Energy-efficient homes can be linked to increased comfort and healthier living while improving energy efficiency reduces greenhouse gas emissions and lowers the cost of owning and maintaining your home. CMHC Green Home offers a premium refund of up to 25% to borrowers who either buy, build or renovate for energy efficiency using CMHC-insured financing.
First-Time Home Buyers' Tax Credit: This federal non-refundable income tax credit for qualifying buyers of detached, attached, apartment condominiums, mobile homes or shares in a cooperative housing corporation. It's calculated by multiplying the lowest personal income tax rate for the year by $5,000. The HBTC is calculated by multiplying the lowest personal income tax rate for the year (15% in 2016) by $5,000. For 2016, the credit will be $750.
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