Residential Real Estate in British Columbia

Purchaser

Seller

I am buying a property, what are closing costs?

Closing costs are additional monies required to close the purchase transaction over and above the purchase price and include legal fees and disbursements, adjustment for pre-paid property taxes, Property Transfer Tax (if applicable), Title Insurance/Survey (if applicable) pre-paid utilities (if applicable) and pre-paid strata fees (if applicable).

What is the Property Transfer Tax?

Property Transfer Tax is a Provincial tax applied against the purchase of real estate in the Province of British Columbia at the rate of 1% on the first $200,000.00 of the purchase price and 2% on the balance.

As a First Time Home Buyer, am I exempt from paying the Property Transfer Tax?

First Time Homebuyer’s are exempt from paying the Property Transfer Tax if they meet the following criteria:

  1. Buyer must not have owned a principle residence anywhere in the world;
  2. Buyer must be a Canadian Citizen or Permanent Resident of Canada;
  3. Buyer must have resided in BC for at least 12 months or filed income tax returns as a resident of BC for 2 of the 6 taxation years immediately prior to the registration of the transfer;
  4. Buyer must borrow at least 70% of the purchase price for a term of at least one year;
  5. Buyer must not pay off more than $13,000.00 off his/her mortgage in the first year;
  6. Exemption on applies to properties with a purchase price of $350,000.00 or less. A partial exemption is available for properties with a purchase price between $350,000.00 and $400,000.00.

What about GST will I have to pay GST on my purchase of property?

GST will not be payable on pre-owned residential property provided that it has not been substantially renovated, but will apply to new construction property. A buyer can claim a GST rebate on new construction property resulting in up to a maximum of 36% reduction on the GST payable if they meet program guidelines.

Why a lawyer over a Notary?

A lawyer has many more years of formal legal training than a Notary. A lawyer is able to understand the complexities of other areas of the law which may become relevant in a real estate transaction. You obtain all of this knowledge often at a fee charge that will be competitive with that of a Notary.

Selling

What does a lawyer do for a seller on the sale of property?

A lawyer will do the following:

  • review the documents and trust conditions prepared by the buyer’s lawyer;
  • review the Statement of Adjustments to ensure that the Seller is properly credited for prepaid tax and other relevant adjustments;
  • order payout statement from bank and review;
  • make sure that the mortgage on title is paid off on time (if applicable) to stop interest from accruing and to provide proper title to the buyer;
  • Disburse funds to the Seller on the Closing Date.

Is there any special provisions to be done on a sale by a non-resident seller?

Yes, the non-resident seller is required to provide a clearance certificate from Revenue Canada indicating that they have paid the required Canadian taxes on the property disposition. Typically, a 25% hold back of the sale funds is made until a certificate from Revenue Canada is provided. I work with the seller and the seller’s account to ensure that the clearance certificate is obtained as soon as possible.