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Home Buyers Info


 

Buying a New Condominium

 

Developers often put new condominiums up for sale before their construction has been completed or even begun. You may be selecting your unit from a floor plan. This has advantages — you may be able to ask for changes — and risks — the as-built result may differ from the plan or what you had envisioned and the completion date could be later than promised.

When considering a new condominium, you should have a close look at your unit’s specifications and the building’s plan and other governing documents to ensure that your unit is acceptable and that you’re fully aware of regulations and the corporation’s budget.

You’ll want to find out from the developer what work must still be done on the project and check that your purchase agreement specifies a completion date and under what conditions the developer may change it. The developer should also be able to give you details about the property manager who will hold the key responsibility for the day-to-day running of the condominium.

 

 

Buying a Resale Condominium

 

When you purchase a resale unit you have the advantage of seeing what you’re buying. It’s clear how much space you’ll have, what the layout is like and, where the common elements are. But you’ll also want to find out about less obvious aspects, such as what steps have been taken to limit noise between units and how odors are controlled.

On the financial and legal side, you should review the corporation’s annual operating budget, financial statements and estoppel or status certificate. The estoppel or status certificate is a package of legal documents that may include the declaration, bylaws, rules and information about the corporation’s insurance, reserve fund, property management contract ,and any outstanding judgments. You may have to pay a fee to cover the corporation's costs of providing these documents, but it will be well worth it — so much so that you should make any offer to purchase conditional on a satisfactory review of these documents.

 

 

Buyer's Closing Costs

 

Home buying closing costs are the charges your lawyer asks you to pay on the closing date of your home. Many people don’t know about additional costs, over and above the purchase price of the home. You should have around 1.5% of the purchase price for closing costs.

 

List of Buyer's Closing Costs

 

Below you will find a brief explanation of these costs. (Please note these are some of the closing costs you may encounter depending on your specific situation.  Use this as a guideline then talk with your lawyer who can provide a more realistic estimate for your situation.)

 

1)  Land Transfer Tax

 

When you a buy a house, condo or land in Ontario you are subject to land transfer tax

which is due upon closing.

 

A -  Ontario Land Transfer Tax  

Ontario charges a provincial land transfer tax .This tax is levied on properties

changing owners and has to be paid by the buyer. Land transfer tax is based on the

purchase price and depending on where you live. 

For first time home buyers, there is a maximum $4,000 tax rebate on the Ontario land transfer tax. Based on Ontario’s land transfer tax rates, this refund will cover the full tax for homes up to $368,333. For homes purchased for more than $368,333, buyers will receive the full $4,000 rebate and pay the remaining LTT balance.

For Example:

Purchase price of home Land title transfer tax First-time home buyer rebate Net tax payable
$100,000 $725 $725 $0
$200,000 $1,725 $1,725 $0
$227,500 $2,000 $2,000 $0
$600,000 $8,475 $4,000 $4,475

First-time Eligibility :

  • You must be a Canadian citizen or permanent resident of Canada.
  • You must be 18 years or older.
  • You must occupy the home within 9 months of purchase.
  • You cannot have owned a home or interest in a home anywhere in the world.
  • Your spouse cannot have owned a home while being your spouse (but maybe a previous homeowner).
  • If the home is newly constructed, it must be eligible for a home warranty.
  • Homebuyers must apply for the refund within 18 months of purchase.

 

B - Municipal Land Transfer Tax 

In addition to the Ontario Land Transfer Tax , It will be applied just to purchases on all properties

in the city of Toronto ( you don't need to pay for properties located out of the city of Toronto) .

The first time buyer is entitled to a rebate up to a maximum amount of $3,725.  

 

2) Home Inspection

 

You should have a home inspection before buying a home. An  Inspector examines

both the interior and exterior of your home, and find anything that is wrong, or could

potentially go wrong in the near future. When they are done, they will give you a

detailed report of their findings (with pictures!), as well as potential timelines of when

certain projects may need to be done.. When hiring a home inspector makes sure the

inspector has liability insurance. The cost of a typical home inspection is between

$300 and $600.

 


3 ) CMHC Mortgage Loan Insurance 

 

Mortgage default insurance (CMHC) is mandatory if you are putting less than 20% of

the purchase price as a down payment. Mortgage default insurance protects lenders

if a homeowner defaults on their mortgage.

To get mortgage loan insurance, you’ll need a minimum down payment. The amount

depends on the home’s purchase price:

  • If the home costs $500,000 or less, you’ll need a minimum down payment of 5%.

  • If the home costs more than $500,000, you’ll need a minimum of 5% down on the first $500,000 and 10% on the remainder.

  • If the home costs $1,000,000 or more, mortgage loan insurance is not available.

Your lender pays an insurance premium on mortgage loan insurance. It’s calculated

as a percentage of the mortgage and is based on the size of your down payment.

Your lender will pass this cost on to you. 

( CMHC is not a part of your closing costs that you pay from your pocket and you will pay

it over the term of the mortgage)

 

4)  Mortgage Insurance Tax

 

Those who purchase a residence in Ontario are required to pay a tax on CMHC

insurance. The current rate of insurance tax, as of April 2011, is eight percent that

you may need to pay for with cash and that amount is due on closing day.

For example, if your CMHC insurance amounts is $6,200 and you live in Ontario, the PST on your CMHC insurance would be:

$ 6, 200  x  % 8 =  $ 496

 

5 ) Legal Fees and Disbursements ( Lawyer Fee )

 

A lawyer or notary will charge a fee for their professional services involved in drafting

the title deed, preparing the mortgage, conducting the various searches

and disbursements costs ( lawyer will have to pay on your behalf, such as registration

fees, photocopies, searches, supplies etc., plus G.S.T) ( cost: $1000 to $ 1500 vary

according to the lawyer ).

 

6 )  HST

HST applies to the purchase price of newly constructed homes only. You make sure who pays

HST If you are purchasing a new home.

 

 

Non-Resident Speculation Tax

The NRST is a 15 percent tax on the purchase or acquisition of an interest in residential property located in the Greater Golden Horseshoe Region (GGH) by individuals who are not citizens or permanent residents of Canada or by foreign corporations (foreign entities) and taxable trustees.

The NRST applies in addition to the general LTT in Ontario.

The GGH includes the following geographic areas:

  • City of Barrie

  • County of Brant

  • City of Brantford

  • County of Dufferin

  • Regional Municipality of Durham

  • City of Guelph

  • Haldimand County

  • Regional Municipality of Halton

  • City of Hamilton

  • City of Kawartha Lakes

  • Regional Municipality of Niagara

  • County of Northumberland

  • City of Orillia

  • Regional Municipality of Peel

  • City of Peterborough

  • County of Peterborough

  • County of Simcoe

  • City of Toronto

  • Regional Municipality of Waterloo

  • County of Wellington, and

  • Regional Municipality of York.

Refer to the map and the FAQs at the end of this page for more information.

The NRST took effect on April 21, 2017.

Binding agreements of purchase and sale signed on or before April 20, 2017, and not assigned to another person after April 20, 2017, are not subject to the NRST.

 

Entities subject to the NRST

 

The NRST applies to foreign entities or taxable trustees who purchase or acquire residential property in the GGH.

foreign entity is either a foreign corporation or a foreign national.

foreign corporation is a corporation that is one of the following:

  1. A corporation that is not incorporated in Canada.

  2. A corporation, the shares of which are not listed on a stock exchange in Canada, that is incorporated in Canada and is controlled, directly or indirectly in any manner whatever, within the meaning of section 256 of the Income Tax Act (Canada), by one or more of the following:

  • a foreign national

  • a corporation that is not incorporated in Canada

  • a corporation that would, if each share of the corporation's capital stock that is owned by a foreign national or by a corporation described in paragraph 1 were owned by a particular person, be controlled, directly or indirectly in any manner whatsoever, within the meaning of section 256 of the Income Tax Act (Canada), by the particular person.

foreign national, as defined in the Immigration and Refugee Protection Act (Canada), is an individual who is not a Canadian citizen or permanent resident of Canada.

A permanent resident means a person who has acquired permanent resident status and has not subsequently lost that status under section 46 of the Immigration and Refugee Protection Act (Canada).

taxable trustee means a trustee of:

  •  trust with at least one trustee that is a foreign entity, or

  • a trust with no foreign entity trustees if a beneficiary of the trust is a foreign entity.

Taxable trustee does not include a trustee acting for the following types of trusts:

  1. A mutual fund trust within the meaning of subsection 132 (6) of the Income Tax Act (Canada).

  2. A real estate investment trust as defined in subsection 122.1 (1) of the Income Tax Act (Canada).

  3. A SIFT trust as defined in subsection 122.1 (1) of the Income Tax Act (Canada).

Types of property subject to the NRST

The NRST applies to the transfer of land which contains at least one and not more than six single family residences. Examples of land containing one single family residence include land containing a detached house, a semi‑detached house, a townhouse or a condominium unit. In a situation involving the purchase of multiple condominium units, each unit would be considered land containing one single family residence. Examples of land containing more than one single family residence that  is subject to the tax include land containing duplexes, triplexes, fourplexes, fiveplexes and sixplexes.

The NRST does not apply to other types of land such as land containing multi‑residential rental apartment buildings with more than six units, agricultural land, commercial land or industrial land.

The NRST applies on the value of the consideration for the residential property. If the land transferred includes both residential property and another type of property, the NRST applies on the portion of the value of the consideration attributable to the residential property. For example, if the purchase price of the transaction is $1,000,000 and contains one single family residence with a value of the consideration of $400,000, and commercial land with a value of the consideration of $600,000, the 15 percent NRST would apply to only the $400,000 portion.

General application

The 15 percent NRST applies to the value of the consideration for a transfer of residential property if any one of the transferees is a foreign entity or taxable trustee.

For example, if a transfer of residential property is made to four transferees, one of whom is a foreign entity that acquires a 25 percent share in the land, the NRST would apply to 100 percent of the value of the consideration for the transfer.

Each transferee is jointly and severally liable for any NRST payable. If a foreign entity or taxable trustee does not pay the NRST, the other transferees will be required to pay the tax. This applies even if the other transferees are Canadian citizens or permanent residents of Canada.

The NRST does not apply when a person purchases or acquires residential property as a trustee of a mutual fund trust, real estate investment trust or specified investment flow‑through trust.

The NRST applies to unregistered dispositions of a beneficial interest in residential property. This includes purchases and acquisitions of residential property where section 3 of the Land Transfer Tax Act is applicable.

Exemptions

An exemption from the NRST may be available in the following situations:

  • Nominee – A foreign national who is nominated under the Ontario Immigrant Nominee Program (nominee) at the time of the purchase or acquisition, and the foreign national has applied or certifies that they will apply to become a permanent resident of Canada

  • Protected person – A foreign national on whom refugee protection is conferred (protected person) under section 95 of the Immigration and Refugee Protection Act (Canada) at the time of the purchase or acquisition, or

  • Spouse – A foreign national who jointly purchases residential property with a spouse, who is a Canadian citizen, permanent resident of Canada, nominee or protected person.
    Under the Land Transfer Tax Act, spouse means “spouse” as defined in section 29 of the Family Law Act. This includes either of two persons who are married to each other, or who are not married to each other and who have cohabited,

  1. continuously for a period of not less than three years, or

  2. in a relationship of some permanence, if they are the natural or adoptive parents of a child.

To qualify for an exemption, the foreign national (and if applicable their spouse) must certify they will occupy the property as their principal residence.

The exemption applies if the Canadian citizen, permanent resident of Canada, nominee or protected person and his or her foreign national spouse purchased the property with other individuals who are Canadian citizens, permanent residents of Canada, nominees, or protected persons.

For the spousal exemption, multiple spousal units may also hold title, so long as one spouse is a Canadian citizen, permanent resident of Canada, nominee or protected person.

All transferees in the conveyance must also certify that they will occupy the property as their principal residence.

However, the exemption does not apply if the Canadian citizen, permanent resident of Canada, nominee, or protected person and his or her foreign national spouse purchased the property with another foreign national who is not a nominee or protected person. For example, if three parties purchase a property as follows:

  • one Canadian citizen and his or her foreign national spouse, and

  • a third party who is a foreign national (other than a nominee or protected person),

the exemption would not apply and NRST would be payable.

Exemptions in the Act and its regulations that apply to LTT will also apply to the NRST. The deferral and cancellation of LTT for intercorporate transfers between affiliated corporations will also apply to the NRST.

 

Rebates

A rebate of the NRST may be available in the following situations:

  • Foreign national who becomes a permanent resident of Canada – The foreign national becomes a permanent resident of Canada within four years of the date of the purchase or acquisition

  • International student – The foreign national is a student who has been enrolled full-time for a continuous period of at least two years from the date of purchase or acquisition in an “approved institution” (under section 8 of Ontario Regulation 70/17 of the Ministry of Training, Colleges, and Universities Act) at a campus located in Ontario. Full-time means enrolled in at least 60 percent (if the individual does not have a disability) or 40 percent (if the individual has a disability) of what the approved institution considers to be a full course load for the academic year, or

  • Foreign national working in Ontario – The foreign national has legally worked full-time under a valid work permit in Ontario for a continuous period of at least one year since the date of purchase or acquisition. Full-time means an employment position that requires no fewer than 30 hours of paid work per week over a 12 months period and no fewer than a total of 1,560 hours of paid work over that period.
    To qualify for a rebate, the foreign national must exclusively hold the property, or hold the property exclusively with his or her spouse. The property must also have been occupied as the foreign national's (and if applicable his or her spouse's) principal residence for the duration of the period that begins within 60 days after the date of the purchase or acquisition.

Rebates must be applied for within four years after the day on which the NRST became payable, except for the rebate for a foreign national who becomes a permanent resident of Canada. The rebate for a foreign national who becomes a permanent resident of Canada must be applied for within 90 days of the foreign national becoming a permanent resident, and no application may be made more than four years and 90 days from the date the NRST became payable.

All rebate applications must be made using the Ontario Land Transfer Tax Refund/Rebate form for NRST.

Supporting documentation will be required to substantiate all applications for rebates