Costs and Taxes

• Legal & Agent Fees
• Property & Title Insurance (Survey)
• Property Transfer Tax
• Property Tax (Municipal Tax)
• Good & Services Tax (GST)
• Non-Resident Tax Issues
• General Tax Issues
• Immigration Issues

1. Legal & Agent Fees

We charge a flat fee per simple transaction, so we will give you a quote well in advance of any work that we may undertake. Real Estate Agents charge a fees depending on the purchase or sale price of the transaction. This amount is negotiable with the agent. The Mortgage Broker also charges a flat fee and depending on the lender chosen there can be other charges. Legal fees can run from $300.00 for a sale to $500.00 for a purchase for a simple transaction.

2. Property & Title Insurance (Survey)

All lenders in British Columbia will require insurance over the property in question. They require both the "Fire Insurance", which covers them for the replacement value of the building in question and "Title Insurance" which covers them for any problems or issues with the title of the property. Some banks will accept a survey, if not too old. The survey will show if there are any problems with the location of the building, thus affecting the title. The costs vary depending on the company that you use. Title Insurance depends on the value of the property but runs from $200.00 to $500.00 and a survey runs from $300.00 to $500.00 depending on the location of the property.

3. Property Transfer Tax (first time homeowners exemption)

Property Transfer Tax is a provincial tax on the transfer of real estate. It is 1% of the first $200,000 of value and 2% on the amount over $200,000. There is the "First Time Home Buyers Program", which provides a tax exemption for individuals buying their first home. Buyers who meet the following conditions may be eligible for the exemption.

The Buyer: Must be a Canadian citizen or permanent resident who has never owned a home anywhere in the world, and has lived in BC for one full year prior to the purchase, or filed two income tax returns as a BC resident within the last six years. The purchasers must also occupy the property as their principle residence for the first year of ownership. If the property is vacant land, the house must be constructed within one year of closing, and the buyer must live in the house for the balance of the year.

The Property:  Must not exceed $425,000. A partial exemption is available for properties that have a value of up to $25,000 above this threshold. The property must be classified as residential. If some of the buildings on the property are not classified as residential, or if the property exceeds 0.5 hectares (1.24 acres) in area, only a partial exemption might be available.

For detailed information, visit the Property Transfer Tax Information website or call their Info Line at (250) 387-0604

4. Property Tax (municipality)

Individual municipalities levy annual property taxes. The value is set as of July 1, each year and is meant to reflect the market value as of that date. Citizens may appeal their assessment if they think it is too high. Municipalities then determine the rate of property tax to be levied based on this assessed value. Included in the annual tax notice are school and other taxes, which are set by the school district and other bodies. The cost of this tax is pro-rated and included in the closing costs. Visit our Links page for links to municipal government sites.

5. Goods and Services Tax (GST)

The purchase of a brand new home, as distinct from a resale home, is usually subject to the federal GST. This tax stands at 5% (Jan 01, 2008) though a partial rebate is normally granted if the buyer plans to live in the home. The Realtor with whom you deal will be able to tell you more about this if it applies. You may also wish to contact Canada Customs and Revenue Agency regarding whether GST would be applicable in your case and whether there are any other issues about which you should be aware

6. Non Resident Tax Issues

There is no requirement in British Columbia that the purchaser of property have residency or citizenship. To occupy residential premises, the non-resident must comply with immigration requirements. These vary depending upon the nationality of the individual involved. Please contact your Canadian Consulate regarding any residency issues that may apply.

• Who is non-resident of Canada, someone is non-resident of Canada if:
• They normally live outside Canada;
• They are not deemed under the Income Tax act to be resident;
• They spend fewer than 183 days in Canada in a year;
• They are not an employee of a Canadian government; and
• They don’t have a “residential tie” with Canada.

Rental:  Under the Income Tax Act a person paying rent to a non-resident is required to withhold 25% of the gross rent paid and remit it to the Receiver General for Canada. It is possible for the non-resident to elect to file Canadian income tax return. A property manager can then become responsible for filing the Canadian income tax returns and is exempt from the withholding requirements. The property manager can withhold and remit 25% of the net income derived from the property in question.

Withholding Tax:  When the non-resident sells property there are further tax issues. The Income Tax Act requires the purchaser of property from a non-resident to withhold a portion of the purchase price and to remit it to Canada Revenue Agency (CRA) within 30 days of the end of the month in which the purchase took place. The amount to be withheld is one quarter of the gross purchase price for non-depreciable property and half of the gross purchase price in the case of depreciable property. In most cases arrangements are made between the legal representatives for the vendor and the purchaser to withhold the appropriate amount of the purchase price until a clearance certificate is obtained, which can take several weeks.

Once the property is sold and the clearance certificate obtained, the vendor may file a Canadian income tax return claiming the cost of sale and a credit for the tax paid at 25% against the actual tax. CRA will eventually issue a refund of the excess tax paid on closing costs.

7. General tax issues

It is recommended that you check with Canada Customs and Revenue Agency and your own taxation authorities as there are significant implications should you earn any income for the property in BC (e.g., through rents during the period that you own the property, or capital gains when the property is sold). It's also important to note that there may be tax implications when a non-resident property owner dies or when a property is transferred from a person to his or her company or relative, despite the fact that there may be no money. Canada Customs and Revenue Agency

8. Immigration

Classes of immigrants, there are several categories in which a person may apply for permanent residence in Canada:

Skilled Workers: includes a person who qualified under a point system, bases on education, work experience and their benefit to Canada and its economy.

Provincial Nominees Class: are persons of skill or a particular business that is in high demand for a particular Province.

Business Class: immigrants are considered based on a selection of criteria. These criteria can change over time and is separate for investors, self employed people and entrepreneurs.

Family Class: immediate family members of a Canadian Citizen or permanent resident.

Refugees: are accepted bases on the possibility of persecution in the home land.

NOTE: This is a very quick overview. Please contact Citizenship and Immigration Canada for more information.