I've Sold My House - What Other Closing Costs are Involved?

You've sold your home - You know what the sale price is and what the Real Estate commission is, but what other costs will affect your bottom line? Know you additional costs so that you are not surprised when you arrive at the Lawyers to go over your Statement of Adjustments. People are often shocked and not usually because there is MORE money there then they thought!

1. Property Transfer Tax: This tax is payable on the purchase of all real property in BC. The calculation is based on 1% of the purchase price up to $200,000 and 2% of any amount above $200,000. Most first time buyers are exempt from this if they meet certain criteria. The main criteria are; a) borrower has never owned a principal residence anywhere; b) maximum purchase price of $275,000 in most areas; c) borrow at least 70% of purchase price; d) be a Canadian citizen or permanent resident and residing in BC for a minimum of 12 months. Online Calculator.

2. H.S.T. Harmonized Sales Tax - Online Calculator - British Columbia harmonized its provincial sales tax (Social Services Tax, aka PST) with the Federal goods and services tax (GST) effective July 1, 2010.

Note H.S.T. is only payable on Newly Constructed Homes. There is a new housing rebate for new homes purchased as a primary residence - a partial rebate (71.43%) of the provincial portion of the HST for new housing to ensure that new homes up to $525,000 (increased from $400,000) bear no more tax than under the previous PST system, while homes above $525,000 receive a flat rebate of $26,250.

3. Legal Fees: Legal representation will cost you approximately $750 for a purchase and a mortgage, add approximately another $450 if you are selling a property at the same time. The legal fees to only register a mortgage will be in the $350 range. Phone for all-inclusive estimates (taxes, disbursements and courier fees included) - note Notary fees are not always cheaper that Lawyer fees.

4. Interest Adjustment: This is the interest you will pay for receiving your mortgage money before the official start of your mortgage (ie: if your "completion" were on the 23rd of a 30 day month, your interest adjustment would be 8 days interest).

5. Property Tax Adjustment: Generally, property taxes for the calendar year are paid at the beginning of July for the full calendar year. If you purchase a property before July 1st, the seller will be paying you for the days they owned a home from January 1st to completion day. You then are responsible for the entire amount to be paid to the municipality on July 1st. If you purchase a property after July 1st you will pay the seller for the days you own the property from completion day to December 31st, as they will already have paid the entire amount to the municipality on July 1st. To calculate this amount: one days' taxes on owner occupied properties is the annual taxes, less $470 homeowner grant, divided by 365.

6. Strata Cost Adjustments & Form A Certificate: For those purchasing a strata property, the adjustment works similar to the property tax adjustment explained in item 4. The difference is that strata fees are paid monthly not annually, so the adjustment will be based on the number of days in your completion month that you have ownership. A Form A Certificate is required only on strata purchases and is issued by the strata corporation in order to confirm that the seller does not owe the strata corporation any money. This certificate will range in price up to approximately $50.

7. CMHC Application Fee: This is a $75 underwriting fee paid to CMHC for processing a high ratio mortgage application and initiating the mortgage loan insurance. This fee is usually deducted from the mortgage proceeds. (Note: This fee may be applicable if you have less then 15% down on the purchase). If you are funding a "High-Ratio" Mortgage CMHC will be charging you a fee - please check with them for their fee schedule.

8. Property Appraisal: The property is evaluated by a professional appraiser to determine the market value of the property. This is done to ensure that; a) the lending institution is not over lending on the property and; b) to protect the borrower from over-paying. Generally, a standard residential appraisal will cost approximately $250-300. It is usually your financial institution that arranges for the appraisal - and the report will go to the financial institution -but you will be charged.

9. Property Inspection: An inspection is a thorough evaluation of the structure, systems and components of a home. The inspection report is usually multi-paged, and comments on the condition of, but not limited to: foundations, electrical, plumbing, heating, water heaters, appliances, fireplaces, drainage, roof, walls, floors, attic, crawl spaces, patios... The inspection is usually performed a day or two before the market value is determined by the property appraisal. This property inspection is your responsibility and will usually cost somewhere in the range of $450-550.

10. Survey Certificate: A bank will require a survey to confirm that the house and/or any outbuildings do not encroach or cross over the property lines. The seller will often already have a survey, especially if the seller also had a mortgage on the property. Otherwise, you may want to call to get estimates on a new survey. CMHC requires a survey on all properties insured by a high ratio mortgage. Keep in mind, however, that surveys can be replaced by title insurance and that new surveys are not required on strata properties. Title Insurance is significantly cheaper and usually costs less than $200.

11.Insurance Binder: This is a requirement by the bank to ensure that the borrower has arranged sufficient insurance to cover any losses that may be incurred on the purchase. Proof of coverage by way of an insurance binder supplied by the insurance agent is necessary and usually costs $35 (this is not applicable for a strata property).

*This information is being provided to assist in the planning of a home purchase. It is not intended to be legal advice and the information set out may not be applicable in all cases. In some situations, a purchaser may be required to pay for other additional expenses such as a second mortgage, an assignment of rents, power of attorney, or independent legal advice.

If you or someone you know is thinking of Buying or Selling property in Chilliwack's Garrison Crossing, Cultus Lake, Hope, Abbotsford, Langley or anywhere in the Fraser Valley Area of B.C. - or if you would like more information please give Chilliwack Realtor Liz Moras of Landmark Realty a call at- 604-799-0459 or e-mail at lizmoras@gmail.com.

Copyright © 2011 By Liz Moras, All Rights Reserved. Please do not use without permission. Information provided by this author is only an opinion, it is not guaranteed, may be based on information collected from several sources, and may be time sensitive. It is not necessarily representative of the opinions of Landmark Realty Chwk. Ltd.