Completion Guide for Buyers

Adjustments

Adjustments are costs that the buyer incurs to reimburse the seller at the time of possession of the home. Costs might include property taxes (if prepaid; for the portion of the year you will assume ownership), utilities, strata fees and ongoing service contracts. On the adjustment date, as determined in the Contract of Purchase and Sale, the buyer credits the seller by paying the agreed-to amount in full.

Tip: If you are purchasing a condominium, your new strata corporation might charge a fee anytime you move in or out of your unit. Fees generally range from $50 to $100 for each move. Please refer to the strata bylaws for more information.

Appraisal

If your lender requires an appraisal of the home, prior to approving your mortgage, you may need to arrange and pay for a professional appraisal of the property. Appraisal fees vary from $200 and up.

GST

Goods and Services Tax or GST is payable on the purchase of a new or substantially renovated home. The amount payable is 5% of the purchase price of the property

Please note: the New Housing Rebate will reduce the total amount of GST payable by 36% if you intend to make your new home your primary residence along with satisfying these requirements:

• The purchase price must be $349,999 or less to qualify for the entire rebate.
• To qualify for a partial rebate, the purchase price must be between CAD $350,000 and CAD $449,999.

The net amount of GST payable is due at the time of closing.

The Residential Rental Property Rebate will also reduce the amount of GST payable by 36% if you intend to rent your property to tenants in addition to satisfying the following requirements:

• The purchase price must be CAD $349,999 or less to qualify for the entire rebate.
• To qualify for a partial rebate, the purchase price must be between CAD $350,000 and CAD $449,999.
• The rental unit must be a ‘qualifying residential unit’, meaning a self contained unit which includes a private kitchen, bath and living area.
• The unit must be the primary residence of the tenant and rented for at least one year.

You can apply for the Residential Rental Property Rebate after the full amount of GST is paid at closing. In addition, supporting documents will be required which include the Statement of Adjustments, Contract of Purchase and Sale, lease agreement and insurance policy.

The New Housing Rebate and the Residential Rental Property Rebate are not available if the purchase price of the property is $450,000 or more.

The above information is subject to change at any time. For full details visit Canada Revenue Agency.

Home Inspection Fee

A home inspection is an important detail to take care of before closing on a new or resale property. Arrange to have your new home inspected by a certified home inspector in order to make a more informed decision on the quality of your purchase and protect your investment. Allow 2-5 hours for a home inspection and budget from $350 and up, depending on the size and nature of the property.

Insurance

Prior to completion, it’s important to arrange for adequate and appropriate home and content insurance to protect your investment. Consult with your Rennie Sales Associate and/or your Lender in advance to understand what you require. There are various types of insurance to consider:

• Condo/content insurance
  Generally speaking a strata corporation provides insurance for the overall structure and common areas of a condominium building as well as the permanently affixed features inside your unit including kitchen cabinetry, flooring, built-in appliances, etc. However, it is recommended that you carry condominium content insurance to protect the replacement cost of your personal belongings and such as jewelry, coin collections and bicycles. The cost varies depending on the value of your belongings.
• Home insurance
  Standard home insurance policies provide coverage for detached homes and content, including personal belongings. Most lenders require you to carry home insurance as a condition of your mortgage. The cost varies depending on the value of your home and its contents and on your insurer. Be savvy and obtain several quotes from reputable insurance companies prior to purchasing and be sure to have your home insurance in place by the date of completion.
• Mortgage insurance
  When borrowing more than 80% of the purchase price of your home, you need to obtain mortgage insurance from the Canadian Mortgage Housing Corporation or CMHC. For more information and current premiums please visit cmhc.com.
• Property title insurance
  Title insurance is not mandatory but protects buyers/owners against fraud and forgery, encroachments onto neighbouring properties, builders’ liens, zoning restrictions, errors in surveys or other official public records, known and unknown defects, that could affect your ability to sell your property in the future.

Legal Fees

When you hire a lawyer or notary to assist with your transaction, they will process the legal documents required for sale of real estate property. Legal fees generally average $750 and up, plus GST and disbursement costs.

Your lawyer or notary will arrange for the transfer of purchase money to the seller from your lender. He or she will also prepare a Statement of Adjustments which itemizes the costs payable at completion. Finally, disbursement costs such as faxes, phone calls and mailing fees will be itemized and vary from approximately $250 (total) and up.

Property Transfer Tax

Property Transfer Tax or PTT must be paid to the government when real estate is purchased. Please contact the Property Transfer Tax office in Victoria at gov.bc.ca/sbr for full details.

In summary, the amount of tax payable in British Columbia is 1% on the first CAD $200,000 and 2% on the remainder. The tax applies to any real estate, whether residential, commercial or industrial.

For example, to calculate the Property Transfer Tax for a home purchased at $374,000

If you are a First Time Home Buyer, you may be able to apply for an exemption to PTT if the following requirements are met:

• Purchaser is a Canadian citizen or a permanent resident of Canada and resided in B.C. for 12 consecutive months immediately before registering the property or has filed two income tax returns as a B.C. resident during the last 6 years.
• Purchaser has never owned an interest in a property in a principal residence anywhere in the world at anytime.
• Purchaser has never received a first time home buyer exemption or refund.
• Purchaser must move in within 92 days of the date the property is registered and live in the property as the principal residence for 1 year. To keep the exemption, there are additional requirements.
• To obtain full exemption, the fair market value or purchase price of the property must not exceed CAD $425,000. A partial exemption is available for homes priced between CAD $425,000 and CAD $450,000.
• The land is .5 hectares (1.24 acres) or smaller.
• The property will only be used as a principal residence.

Use the following formula to calculate the amount of tax payable on homes purchased between $425,000 and $450,000

For example, a home is purchased for $430,000.00. The partial exemption would be $5,280.00 and the total Property Tax payable is $1,320.00.

Survey Fee

In order to obtain a mortgage, your lender may request to have an up to date survey of your property on file. A property survey confirms the lot size and dimensions and identifies any encroachments. If you did not receive a copy from the seller, you will be responsible for the costs to have a survey completed. Fees range from $150 to $350 and up, depending on the size of the property.

Utilities

Prior to possession day you will need to contact utility companies such as telephone, cablevision, Internet, hydro and gas to arrange for service. There may be fees associated with opening new service accounts and/or transferring existing ones. Contact your service providers in advance of closing to inquire about fees.