Investing in a property is one of the biggest investments that people can make in their entire life. It is a choice that will affect your finances either in a good or bad way. Having numerous choices may be hesitating, yet, you can solve this problem by doing a little research. In Canada, if you understand the tax laws that apply to real investments properly, investing in a property can be lucrative. In this article, we will inform you about the costs of investing in a property.
Every time you buy a property, a property tax will be applied. It is a property provincial transfer tax that varies from province to province. Property tax is usually set at one percent on the first $200,000 of value and two percent on the remaining. If this is your first property, some exemptions apply. If the market value of a property is less than $425,000, the First Time Home Buyers Program provides a PTT exemption. Most BC areas additionally provide a proportionate exemption to many first-time homebuyers who have a market value of $25,000 or more over the limits.
Prepaid Property Tax and Utility Bills
Homebuyers are required to compensate sellers for prepaid property taxes and utilities. If you purchased a high-interest mortgage or one that pays less than 20% of the down payment, you will need to acquire mortgage insurance from a private company or the Canadian Mortgage and Housing Corporation (CMHC). If you qualify for a percentage on the down payment, CMHC will charge you an insurance amount equal to 3.25 percent of the entire mortgage. So, if you put down 10-15%, the insurance fees will be reduced to 2 and 1.75, respectively. The premium is charged to the mortgage as well. Homebuyers must additionally pay an application fee. The standard cost is $235 including HST.
The payment will cost you approximately $300. A notary or a lawyer can help you in the process.
The prices are usually between $150-350 plus HST. Appraisals are generally handled before the lender authorizes a specific mortgage.
The Survey Fee
A lender may need a current property survey. If the home seller cannot provide you with a current survey, you are required to do it as soon as possible. The survey fee can cost you around $150 - $350 plus HST.
Lawyer and notary costs vary according to the intricacy of the deal. Essential fees typically range from $650 to $1500 plus HST. If they meet the requirements, first-time buyers can apply for exemptions. The mortgage term is at least one year long. In the first year, the mortgage balance cannot be reduced for more than $11,000 or less than 70% of the total amount borrowed.
The Home Inspection Fee
You can consult a professional home inspector. Their services usually cost around $150-$350 for small homes, but fees rise depending on the size of a home.