Representing one of the largest financial investments of your life, buying or selling a home understandably involves many different costs. Unfortunately, we’ve seen many clients in the process of a real estate transaction get hit with tax fees they weren’t expecting nor prepared to pay. While taxes vary depending on your Province, following are several common fees to be aware of when buying or selling a home:
Property Transfer (or Purchase) Tax /Land Transfer Fees
are calculated between 0.5-2% of the property's total value (not applicable in Alberta, rural Nova Scotia or Saskatchewan). They are generally 1% of the first $200,000 of the value and 2% of the remainder. Check with an experience real estate agent, such as one of my fellow Members of the Top 5 in Real Estate Network®, to see if you qualify for certain exemptions pertaining to this tax, such as the Property Transfer Tax (PPT) and the Ontario Provincial Land Transfer Tax.
The typical fees associated with preparing and filing a clearance certificate, paid by the seller, range from $300-$1000, depending on the complexity of the transaction. Capital Gains Tax is not applicable on your principal residence.
Goods and Services Tax (GST)
of 5% is only payable on newly constructed homes and is often included in the quoted sales price. Buyers purchasing homes that are $350,000 or less can apply for a partial rebate of the 5% GST as long as the home will serve as the buyer’s primary residence.
For new homes priced between $350,000 and $450,000 before GST, the GST rebate reduces proportionately. New homes priced $450,000 before GST or higher do not receive a rebate. There is no GST on resale housing unless the home has been substantially renovated, in which case the tax would be applied as if it were a new home.
Provincial Sales Tax (PST)
ranges from 0-10% and is usually included in the quoted sale price.
is an annual fee levied within local communities, therefore, rates vary from province to province. While Property Transfer Tax (PTT) is a one-time provincial tax that comes into effect upon transfer of property, Property Tax is paid annually to the local taxation authorities. The amount can differ each year but, generally speaking, Property Tax falls between 0.5-2.5% of the home's market value.
sale or purchase in their future.
Copyright© 2017 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission.