Types of homes
Single Family Detached Home
A detached home is a traditional home that most people have in mind. Except for some potential easements, as the owner, the land and the structures on it belong to you. It does not share common walls with another residential structure and has its own front, back and side areas.
A duplex includes two separate dwellings that are attached by a common wall (semi-detached) or located above one another. Duplex dwellings may also be subject to monthly maintenance fees for common assets. A single duplex could be a strata.
A manufactured home is a factory-built residential structure that may be movable from one location to another. It is usually kept in a rented space in a manufactured home park. These fall under a different residency act than strata and it is important to know the differences when buying one.
A condo is a single building that contains multiple dwellings usually joined by a common entrance and shared amenities like a parkade, elevator or hallway. Buildings can range from two storeys and upwards. Condo owners are required to make monthly payments, known as strata fees, to maintain the building and shared features such as a pool, gym, playground and club house. The strata fees are determined by the amount of space allocated to an owner and are clearly described in the property listing. For example, a condo in the same complex that is twice the size will pay exactly twice the strata fee.
A townhouse complex is like a condo with the exception they have their own exterior entrance. Most townhouses share walls on one or both sides but it is common to have detached townhomes. Sometimes you will come across a two-storey building with townhouse on each floor. Townhouse owners typically pay monthly strata fees for the upkeep of common areas such as parking lots and landscaping.
Types of ownership
Freehold, also known as fee simple, is the term typically referred to as ownership of a home. In this case, the owner is in full control over the land and buildings on it, subject to any rights of the Crown, local land-use bylaws and other restrictions.
With strata title, an owner retains exclusive use and ownership of a specific unit and shared use of common areas like the pool, gym and club house. With a strata you don’t own any specific portion of the land. You have an undivided interest in the whole property. For example, if a townhouse complex has 100 units that are all the same size then each unit owns 1% of the land but not specifically the land underneath their unit. Most condos and townhouses in our area are strata.
Bare Land Strata
A bare land strata plan pertains to the land only and does not include the structures on the lot. In this instance, the strata corporation has no interest in the buildings on the land, so each individual owner is responsible for all maintenance, repair and insurance for his/her individual lot. However, there are often common properties and shared amenities that are maintained by monthly maintenance fees, such as clubhouses, streetlamps, private roads and on-site services such as power, water and sewer.
This is when an owner purchases the rights to use a residential property for a long but limited period of time. Leaseholds are typically set for a period of 99 years, but only the remaining term is available for purchase.
At the end of the leasehold, the property can be returned to the original owner, which is usually the municipality or the First Nations. The shorter the remaining time left, the less a buyer will be willing to pay if there’s uncertainty about the renewal. Typically, the bank will only finance for the length of the remaining lease. For example, if there’s only 20 years left of the lease you will have to get a 20-year amortization rather than a traditional 25-year.
Shares in Cooperative
This is where each owner owns a share in the cooperative association and each shareholder is assigned a unit for living. Housing co-ops typically have rules that must be followed, and the owners work together to manage the co-op. For example, if a complex has 100 units there will be a corporation with 100 shares and everyone willing there will own one share. This share gives them the right to live in a specific unit although they do not own that unit.
Fees & Taxes
Property Transfer Tax
The BC government imposes a Property Transfer Tax of one to three per cent, depending on the value of the property, which must be paid when a home is transferred to a new owner. Some buyers may be exempt. Your Realtor can advise you about this expense given your specific circumstances. For the most up to date info Property Transfer Tax see the government website https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax
Property Transfer Tax Calculator
There are exemptions for property transfer taxes.
When purchasing a newly constructed home, you may be subject to a Goods and Services Tax (GST). GST can also be payable on resale, bare land and substantially renovated properties. Always get advice on GST if you are unsure.
It is especially important to ensure the real estate you want to purchase is a sound investment. A property inspection by a qualified third-party professional building inspector is strongly advised. It is a comprehensive visual examination of a building’s overall structure, major systems and components, any land, and potential risks and expenses that may arise in the future if you decide to purchase the property. During the offer process, it is common to insert a subject to inspection clause that gives you time to organize a property inspection and minimize your risk. It is not wise to skip this step of your purchase. There is nothing to be gained in making a purchase and then finding out later that you will need a large amount of money to do repairs for property defects.
Mortgage Default Insurance
When you buy a home with less than 20% for down payment the lender will require you to have mortgage default insurance to protect themselves in case you cannot make your payments. The fee ranges from 0.6% to 6.6% depending on how much down payment you have and whether you are self-employed or salaried.
Some lending institutions require an appraisal of the property before approving a mortgage. In some cases, it may be your responsibility to cover the cost.
Additional Tax for Foreign Buyers
When the purchaser is not a Canadian citizen or permanent resident or is a foreign corporation, there is an additional Property Transfer Tax on residential property by as much as 15 per cent. If you are a foreign buyer, you need to discuss the tax that could be charged on your property purchase.
After obtaining an accepted offer, you will need to engage a lawyer or notary public to execute the real estate contract and transfer ownership. Fees vary, so shop around and ask people for references.
Municipal Property Tax
If the previous owner has already paid the annual property taxes, you are required to reimburse them for your portion of the taxes, effective from the closing date. This is typically arranged by a third-party legal professional such as a lawyer or notary and will be reflected on your statement of adjustments when you go to sign.
Rebates & Incentives
RRSP Home Buyer’s Plan
A one-time withdrawal up to $25,000 from a Registered Retirement Savings Plan (RRSP) by first-time buyers to help purchase or build a home. Generally, you must repay all withdrawals from your RRSP within 15 years. For more details, visit CRA’s website.
As a first-time buyer you could qualify for exemption on property transfer tax if you meet the following criteria:
- be a Canadian citizen or permanent resident
- have lived in B.C. for 12 consecutive months immediately before the date you register the property or filed at least 2 income tax returns as a B.C. resident in the last 6 years
- have never owned an interest in a principal residence anywhere in the world at any time
- have never received a first-time home buyers' exemption or refund
and the property must:
See a full list of exemptions here. https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions
Property Transfer Tax Exemption for New Construction
Properties that are brand new could qualify for exemption on the Property Transfer Tax if you mee the following criteria:
- an individual
- a Canadian citizen or permanent resident (you will be asked to provide your Social Insurance Number (SIN) or proof of permanent residency and your birthdate)
and the property must:
- be located in B.C.
- only be used as your principal residence
- have a fair market value of $750,000 or less
- be 0.5 hectares (1.24 acres) or smaller
See full details here. https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/newly-built-home-exemption
GST Rebate on New Homes
A newly constructed home could qualify for a partial rebate on GST. This is usually applied at the time of purchase and most times it is not necessary to send any paperwork in. There are different price thresholds and the definition of ‘new’ property is not always straightforward so always seek professional advice on this. See more info here. https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4028/gst-hst-new-housing-rebate.html