We handle a broad range of sophisticated real estate transactions. We take a practical, business-oriented approach to our clients’ needs and value the many long-term client relationships we have built over the years. We are grateful for the trust our clients place in us and understand the responsibility that comes with that trust.
Whether it’s purchasing a new home, selling an investment property, or consolidating your debt by refinancing a vacation property, our goal is to make the task of managing your real estate transactions as easy and straightforward as possible. We help you understand the process, special considerations, and costs involved in buying, selling, refinancing, and developing property.
Buying a home is a very exciting and sometimes stressful process. For most people it is their largest single investment. We want to make the process as stress-free as possible by helping home buyers understand some of the costs involved in buying a home as well as the process from an accepted contract of purchase and sale and an approved mortgage to becoming the owner and receiving the keys to their new home.
Our number one recommendation to first time home buyers is to make sure you create a knowledgeable team of professional advisors including your realtor, mortgage broker, lender, insurance broker and lawyer or notary.
Property Transfer Tax Exemption: There is a full or partial exemption for “first time home buyers”. There are number of criteria to qualify for the exemption and the purchase price determines whether or not it is a full or partial exemption. The main criteria are that buyers must be Canadian citizens or permanent residents of Canada; have resided in B.C. for a least 12 months or filed income tax returns as a resident of B.C. for 2 of the 6 taxation years immediately prior to registration of the transfer; and never previously owned a principal residence anywhere in the world.
The full exemption is available for properties with a purchase price of $500,000 or less and a partial exemption is available for properties with a purchase price above $500,000 and less than $525,000. There is no exemption on properties with a purchase price equal to or greater than $525,000.
Property Transfer Tax Exemption:There is a full or partial exemption from property transfer tax for buyers of newly-constructed homes (including condos). Buyers of these properties are not required to pay property transfer tax if the fair market value of the property is below $750,000. There is a partial exemption for newly constructed homes under $800,000.
This program is available to most purchasers, including new residents of BC, first-time home buyers and previous property owners. To qualify for the exemption, the property must be 1.24 acres or smaller, you must be a Canadian citizen or permanent resident, you must move into the home within 92 days following registration at the Land Title Office, and you must continue to occupy the property as your principal residence for the remainder of the first year.
When you hear lawyers talking about the closing adjustments, what we’re referring to is the accounting process by which a buyer reimburses a seller for any prepaid expenses relating to the property from which the buyer will ultimately benefit, and a seller reimburses a buyer for any post-paid expenses relating to the property from which the seller ultimately has benefited. Closing adjustments cover a number of items including municipal taxes, municipal water and sewer fees, strata maintenance fees, rent and security deposits.
Strata fees are charged and paid monthly on the first day of each month. The monthly strata fees will be pro rated between the buyer and the seller, with the buyer reimbursing the seller based on the number of days between the date of adjustments agreed to in the Contract of Purchase and Sale and the last day of the month.
Rent paid by a tenant in the subject property is adjusted on a similar basis with the buyer receiving a credit for a portion of the rent. In the case of a continuing tenancy, the buyer will receive a credit for the security deposit with accrued statutory interest as the buyer will be responsible for returning the correct deposit amount to the tenant when the tenancy eventually ends.
Municipal property taxes are paid on the basis of a calendar year and often include the municipality’s utilities, such as sewer, water, and garbage disposal. In Kamloops, the full year’s taxes are usually payable at the beginning of July. The adjustment between buyer and seller will therefore vary depending on the time of year the buyer becomes the property’s owner. The tax adjustment is one of the more complicated adjustments to understand but it is based on the parties being responsible for any property tax costs associated with the property only for the period of time in which they are in possession.
All of the relevant adjustments are set out in a document normally referred to as the Statement of Adjustments. The Statement of Adjustments shows the buyer’s total costs and identifies the sources of funds to pay those costs. The sources of funds will include the initial deposit, any mortgage proceeds, and any credits received from the seller in terms of property tax, strata fees, utilities, tenant rent, or other adjustments. The final line item on the Statement of Adjustments will identify the amount of money required to complete the transaction. The balance required to complete will need to be delivered by certified cheque or bank draft payable in trust to the lawyer or notary firm.
Non-residents of Canada can own property in British Columbia but there are some important considerations.
Mortgage qualifications in Canada are different for non-resident buyers than for resident buyers. If you’re a non-resident buyer you should consult with a lender or mortgage broker to understand how to qualify for a mortgage. You will also need to open a Canadian bank account, in-person with identification acceptable to the lender.
Non-resident buyers should also consult with a Canadian tax professional to discuss tax treatment both during the period of property ownership and on disposition. A non-resident owner of rental property will be subject to a 25% withholding of taxes on the gross rental income. Administrative rules require that the owner or agent remit these amounts to the Canada Revenue Agency. A non-resident owner sometimes can file a special form to have the withholding taxes reduced, which essentially lets the non-resident be treated as a resident with respect to rental income. This form needs to be filed before January 1st of each year. For further information please contact a Canadian tax accountant.
Non-resident buyers should also review the information on non-resident sellers to understand what happens on disposition of the property at a later date.
Step 1 – Retain the services of a lawyer or notary. You should contact your lawyer or notary as early as possible in the process.
Step 2 – Your lawyer or notary will need to gather personal information from you and other information including how you wish to hold title to the property.
Step 3 – Your lawyer or notary conducts a title search, obtains municipal tax information and any additional information necessary to prepare the Statement of Adjustments. The Statement of Adjustments is a balance sheet of the transaction showing the total funds required to complete the purchase after accounting for the deposit and mortgage proceeds.
Step 4 – Your lawyer or notary prepares closing documents including title transfer, mortgage, property transfer tax forms and Statement of Adjustments. Your lawyer or notary will forward the seller’s closing documents to the seller’s lawyer or notary for execution.
Step 5 – 1 to 3 days before closing is when you usually meet with your lawyer or notary to sign documents and deliver the balance of the down payment or equity.
Step 6 – Your lawyer or notary will register the transfer and mortgage documents, arrange for the seller’s lawyer or notary to pick up funds and notify you that the purchase has completed.
Step 7 – Normally you receive the house keys directly from your realtor on the Possession Date as set out in the Contract of Purchase and Sale.
Step 8 – Move in and enjoy your new home!
At closing, there a few closing costs which Sellers need to take into consideration. These costs (if applicable) will come directly from the sale proceeds:
- Realtor Commissions
- The Seller is responsible for paying both realtors commissions. These commission fees for the buying and selling agent are subject to GST.
- Mortgage Payouts
- If there is a mortgage on the property, the mortgage will need to be paid out in full. This mortgage payout will include any prepayment penalties that are applicable under the mortgage terms. Sellers should contact their mortgage broker prior to selling the property to determine how much these prepayment charges will be in order to avoid any unwelcome surprises at closing.
- Deferred or Delinquent Property Taxes
- Any deferred or delinquent property taxes will need to be paid out of the sale proceeds in order for the transfer to occur to the new Buyers.
- Adjustments
- There will be adjustments given as either debits or credits that pro-rate for property taxes, strata fees, municipal utilities, and if the property is tenanted, rental income and security deposits.
- Legal Fees for a sale (including the discharge of one mortgage) usually range from $800-$1,100, regardless of whether you retain the services of a lawyer or notary public.
To avoid liability for non-resident Sellers’ unpaid taxes, purchasers must withhold a portion of the sale proceeds until a non-resident Seller has provided a Clearance Certificate from the Canada Customs and Revenue Agency. The holdback is normally 25% of the purchase price, but could be higher depending on the use of the property.
A non-resident Seller should retain the services of a tax professional to assist in obtaining a Clearance Certificate. This should be done as soon as possible as the process can take six to eight weeks. Under circumstances where the holdback would not leave sufficient funds to payout an existing mortgage at the closing of the sale, a Seller can claim hardship to expedite the issuance of a Clearance Certificate. A Clearance Certificate will only be issued once the tax is paid. Canada Customs and Revenue Agency will review the particular sale transaction to determine whether or not capital gains tax is payable, but will also require payment of any other taxes outstanding or payable by the Seller.A non-resident Seller should retain the services of a tax professional to assist in obtaining a Clearance Certificate. This should be done as soon as possible as the process can take six to eight weeks. Under circumstances where the holdback would not leave sufficient funds to payout an existing mortgage at the closing of the sale, a Seller can claim hardship to expedite the issuance of a Clearance Certificate. A Clearance Certificate will only be issued once the tax is paid. Canada Customs and Revenue Agency will review the particular sale transaction to determine whether or not capital gains tax is payable, but will also require payment of any other taxes outstanding or payable by the Seller.
The Seller can claim certain expenses in determining the adjusted cost base including: Property Transfer Tax, Provincial Sales Tax, legal fees on the original purchase, and any capital improvements made, including strata assessments. The commission, tax and legal fees on the sale are not deductible for purposes of calculating tax owing at the time of the sale. The Seller can claim these expenses by filing a Canadian tax return subsequent to the sale.
Refinancing your home can be a great way to consolidate debt or raise funds for investments or renovations. We will begin to assist you in the process once you have selected from the many mortgage products available on the market. The legal fees will vary depending on the requirements of the Lender and the number of debt payouts.
The Refinance Closing Process To help alleviate the stress of refinancing it is important to understand the closing process step-by-step:
- Step 1 – Retain the services of a lawyer or notary. You should retain your lawyer or notary as soon as you have a mortgage approval and preferably at least 10 days before closing.
- Step 2 – Your lawyer or notary will need to gather information from you including the name of your insurance company and if the property is strata title, the name of the management company. The lawyer or notary will also gather payout information for any existing mortgages or third party creditors to be paid out with the refinancing.
- Step 3 – Your lawyer or notary conducts a title search and obtains tax information and any additional information necessary, and prepares the closing documents including the Mortgage and Order to Pay.
- Step 4 – 1 – 3 days before closing is when you usually meet with your lawyer or notary to sign documents.
- Step 5 – Your lawyer or notary will register the Mortgage, obtain funds from your lender, payout any existing lenders or creditors approved in the Order to Pay and arrange for deposit or pick-up of proceeds.
- Step 6 – Your lawyer or notary will provide a final report to the lender.
Due to changing family and life circumstances, a property transfer may need to occur during a homeowners lifetime. A transfer allows the registered owner to add or remove a person’s name from title. Transfers are common for aging homeowners, newly married couples, or after a spousal separation.
If there is a mortgage on the property being transferred, the existing mortgage will either need to be paid out and the property refinanced, or the lender will need to approve of the transfer.