Buyer Closing Costs
Whether you are just considering purchasing a new home, or have recently removed subjects. You should contact your Notary to determine what the final closing costs will be. Having a Notary determine all the taxes and final closing costs will save you time and stress, so you won't have to go back to your lending institution for more funds later.
Costs to Consider
- Property Transfer Tax
- GST
- Legal Fees and Disbursements
- Adjustments
a) Property Transfer Tax
General property transfer tax
The general property transfer tax applies for all taxable transactions. The general property transfer tax rate is:
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1% of the fair market value up to and including $200,000
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2% of the fair market value greater than $200,000 and up to and including $2,000,000
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3% of the fair market value greater than $2,000,000
Further 2% on residential property over $3,000,000
If the property has residential property worth over $3,000,000, a further 2% tax will be applied to the residential property value greater than $3,000,000.
If the property is mixed class (such as residential and commercial), you pay the further 2% tax on only the residential portion of the property.
If the property includes land classed as farm only because it is used for an owner’s or farmer’s dwelling, up to 0.5 hectares will be treated as residential property.
Additional property transfer tax
If you’re a foreign national, foreign corporation or taxable trustee, you must also pay the additional property transfer tax on the fair market value of the residential portion of the property if the property is within a specified area of B.C.
b) GST
Social Services Taxes are paid on new or substantially renovated properties by the first owner of the property. The current tax is set at 5%. It may be added to the purchase price or included in the purchase price. If your contract states the purchase price excluding GST, then you must add 5% of the purchase price to the final price.
c) Legal Fees and Disbursements
Legal Fees are what your Notary charge as their fee to prepare your closing documentation. The closing documentation includes preparing the transfer, and mortgage if applicable.
For example my services would include the following:
- To search title; to discuss charges to remain on title; and to review a copy of the Plan as filed in the Land Title Office;
- To obtain and review municipal tax information specific to the property;
- To prepare or obtain transfer and mortgage documents as well as supporting documents required by the registry or others;
- To attend to or arrange for execution of transfer and mortgage documents;
- To negotiate appropriate closing undertakings with solicitor/notary for Seller;
- To receive and account for trust funds;
- To provide your Lender with its requested security documents;
- To attend to registration of relevant documents at the appropriate Land Title Office;
- To make inquiries as to the residency status of the Seller pursuant to the Income Tax Acts as required;
- To disburse trust funds;
- To report and provide you with a final State of Title Certificate, if applicable.
Disbursements are third party costs that are paid on your behalf to obtain some of the above mentioned items. They may vary from city to city. For a typical purchase with a mortgage in Vancouver, the costs are approximately $800.00 to $1,200.00 for Legal Fees plus taxes, and an additional $750.00 for Disbursements.
d) Adjustments
Adjustments can be more difficult to determine. They include items such as:
- move in fees for Strata properties
- fees to obtain strata forms
- fee to obtain insurance binder for your bank
- survey or title insurance ( May be required by your bank )
- current years property taxes paid by the seller must be reimbursed to them
- current months strata fee paid by seller must be reimbursed
- strata may require the following months strata fee be paid up front.
As you can see these costs can add up unexpectedly. If you, or your Real Estate Professional supply the following documents to a Notary beforehand, these final costs can be very accurately determined.
Please provide :
- The Purchase and Sale Contract
- MLS Listing
- Form B Information Certificate ( Strata Only)
These documents can faxed or emailed for a quote on closing costs.