Real Estate Closing Costs

Once you have an unconditional accepted offer on a home you are selling or buying it will be time to start thinking about which lawyer or notary you will use for completing the transaction. Closing costs will vary depending on how complicated the transaction is and somewhat upon which firm you choose. The closing costs will vary depending on whether you are buying or selling. Buyers can expect the following costs at closing:

  • Property Transfer Tax (PTT) on most properties and possibly Goods and Services Tax (GST) on newly-built properties
  • Legal fees – These include lawyer/notary professional fees, land title search, land title registration and other nominal fees
  • Closing adjustments (property taxes already paid by the seller, etc.)

Sellers can expect the following costs at closing:

  • Fees to discharge/payout a mortgage
  • Lawyer/Notary Fees
  • Real estate commission fees and possibly withholding tax (applies to non-residents of Canada)
  • Closing adjustments

The statement of adjustments is the document which lays out the amounts owed and the credits due to both the buyer and seller. During the appointment with the lawyer/notary, buyers and sellers will be presented with this summary of charges/credits with either a final amount due (buyers) or to be received (sellers).

It’s a good idea to speak to a potential lawyer/notary about there workflow and their schedule before choosing one so that the closing process will go smoothly with plenty of time to sign documents before completion date.  I have several good lawyers and/or notaries I can refer should you require one.

HST – How it Will Apply to Real Estate Purchases in BC

Result of the tax grab
The government's effect on your wallet.

The HST is coming to BC and it may end up costing you more on the purchase of a home in Vancouver and all of BC. Currently the GST (5%) minus any applicable New Housing Rebate applies to new and substantially renovated properties. The new HST (12%) replaces the GST and comes into existence on July 1, 2010. You may be eligible for a new housing rebate after this date.

Here’s a breakdown of how the new tax will work:

  • A rebate will apply to properties up to a maximum price of $525,000.
  • The rebate is equal to 71.43% of the provincial portion (7%) of the HST payable up to a maximum rebate of $26,250
  • Homes above $525,000 will receive a flat rebate of $26,250.
  • HST is only applicable to new or substantially renovated (more than 90%) properties – resale properties are exempt.
  • The new housing rebates will be administered by the Canada Revenue Agency.
  • New Rental Housing will be eligible for a rebate
  • Recreational Property not used as a primary residence will not be eligible for any rebate.

There is a vocal lobby challenging the legality of the new tax but it will likely take months or years for the courts to decide if the tax is here to stay in its initial implementation. Don’t hold your breath waiting for an end to the new tax.

Links to further government information:

Please leave any questions and/or comments below and I’ll get back to you with further information.

(information courtesy of the Real Estate Board of Greater Vancouver, Government of British Columbia and Canada Revenue Agency)