2) Appraisal fee. Lenders may ask you to have a home appraised to confirm its market value. Fees vary depending on a property’s value and complexity, but are typically around $275 – $400.

3) Legal fees. A lawyer or notary will help protect your interests by reviewing your purchase agreement, searching the property title, and ensuring that all documents are completed properly. Basic legal fees start between $500 and $800, plus disbursements, with added services as needed. When requesting quotes, ask for an all in price so you can compare apples to apples.

4) Home inspection. An inspection can help make you aware of issues related to a house’s structure and systems, such as plumbing and electrical, and recommended or necessary repairs. Fees range from about $350 to $450.

5) Home/fire insurance. Your lender will require proof that the property is insured in case of fire and other damage. Insurance costs vary, depending on the coverage needed, but budget for at least $500 a year.

6) Costs for newly constructed homes (GST). The following are the questions that we are most often asked by our clients, and the answers that we provide. If your question is not answered below, please give us a call or email mark@notapennydown.com

When is G.S.T. paid?

Goods and Services Tax (“G.S.T.”) is payable on the purchase of a new or substantially renovated home.
What is a substantial renovation? A substantial renovation is defined in the legislation as the removal or replacement of most of the house construction components except for the foundation, external walls, interior supporting walls, floor, roof and staircase.
How much must be paid? The amount payable is equal to 5% of the purchase price of the property.
Do I qualify for a rebate? In certain situations, a rebate is available to reduce the amount of G.S.T. payable. These rebates are set out below.
What is the rebate if I am moving to the new home? For purchasers who intend to make their new home their “primary place of residence”, a rebate is available which reduces the amount of G.S.T. paid to the federal government. This is called the New Housing Rebate and it reduces the G.S.T. paid by 36%.
For example, assume the purchase price of the new home is $300,000.00. G.S.T. is 5% of $300,000.00, which equals $15,000.00. The rebate is 36% of $15,000.00, which is $5,400.00. The net G.S.T. payable would be $9,600.00, which equals $15,000.00 less $5,400.00. In order to qualify for this New Housing Rebate, the purchaser must certify that they will be moving into the property and using the property as their primary place of residence. Further, the purchase price must be under $350,000.00 to qualify for the entire New Housing Rebate. A partial rebate is available for homes between $350,000.00 and $450,000.00 as set out below.
The New Housing Rebate is generally given at closing which means the purchaser usually pays the net G.S.T. to the Vendor.
What is the rebate if I am not moving to the new home and am renting the home to a tenant? For purchasers who intend to make their new home a rental unit, the Residential Rental Property Rebate allows for the net G.S.T. to be paid, but with a few differences from the New Housing Rebate. In order to claim this rebate, certain conditions must be met. These include:

• The purchaser must not be entitled to claim input tax credits in respect of any part of the tax payable on the acquisition of the property.
• The rental unit must be a “qualifying residential unit” which means the person applying for the rebate must be the owner of the unit and the unit must be a self contained residence as defined in the Excise Tax Act.
• The unit must be held by the owner for the purpose of making exempt supplies (for example, a residential lease).
• The unit must be used as a primary place of residence by the tenants and must be so used for at least one year.

The Residential Rental Property Rebate must be applied for after closing so the Purchaser must pay the full G.S.T. on closing. Supporting documentation will be required when applying for the rebate from the federal government, and includes the Statement of Adjustments, the Contract of Purchase and Sale, the lease/rental agreement and the insurance policy that the purchaser has on the property.

In order to claim the full Residential Rental Property Rebate, the value of the qualifying unit must be under $350,000.00. A partial rebate is available for rental units with a fair market value between $350,000.00 and $450,000.00 as set out below.

What is the rebate if my home is priced between $350,000.00 and $450,000.00?

For homes valued between $350,000.00 and $450,000.00, the rebate is gradually reduced and is calculated by using the following formula (get ready to brush up your high school math):

$6,300.00 X ($450,000.00 – B) / $100,000.00

“B” is the fair market value of the home being purchased.

For example, assume the value of the home is $400,000.00. The rebate would equal:

$6,300.00 X ($450,000.00 – $400,000.00) / $100,000.00

Assuming our math is correct, the rebate would equal $3,150.00.

The G.S.T. payable would be $20,000.00 (5% of $400,000.00) less $3,150.00 which would equal $16,850.00.

What is the rebate if my home is priced over $450,000.00?

No rebate is available and the full G.S.T. is paid for homes over $450,000.00.

What is the transitional rebate and how do I apply for this rebate?

G.S.T. was reduced effective January 1, 2008 from 6% to 5%. For the reduced rate to apply, two conditions must be met. The first is that the contract of purchase and sale must have been entered into after October 30, 2007 and second is both the completion and possession date must be after January 1, 2008.

Where the contract is entered into before October 30, 2007 and the completion and possession occur after January 1, 2008, G.S.T. at the rate of 6% will apply. There is a Transitional Rebate available to the purchaser to account for the rate reduction. This Transitional Rebate is separate from the New Housing Rebate. Therefore, even if the purchaser is not eligible for the New Housing Rebate because the purchase price is over $450,000.00, the purchaser can still apply for the Transitional Rebate.

In order to ensure the reduction in savings is being given to the consumer, the government is requiring that the full G.S.T. be paid on closing, and the buyer apply for the Transitional Rebate after closing. This is done through a government form that The Spagnuolo Group of Real Estate Law Firms will provide to the purchaser at their closing appointment.

7) Prepaid costs. If the seller has paid property taxes, water bills, or utilities in advance, you’ll need to reimburse these at closing. This can add hundreds to your upfront costs, but means these bills will be paid for your first months in your new home.

Tax on mortgage insurance. If you have less than a 20% down payment, your lender will require that you obtain mortgage default insurance. The cost is typically rolled into your mortgage payments, but the PST is due at closing. For example, if your mortgage insurance is $5,000 and the PST is 5%, you’ll pay $250.

9) Title insurance. Title insurance can safeguard you against fraud and problems with your property title or survey. Fees range from $150 to $350.

10) Moving-in costs. Before the big day, budget for all those last minute things: $100 or more to rent a van or a few hundred for professional movers, $50 to $60 for a locksmith to rekey your locks, and cleaning supplies. Such incidentals can easily come to $500 or more.

As your ByReferralOnly mortgage consultant, I’m here to help you feel financially prepared for owning a home — I’m always available to answer your questions.