- The GST only applies to “new” residential housing: used (i.e., resale) residential housing is not subject to GST.
- BC will provide a rebate for new housing purchased as a primary residence to ensure that, on average, purchasers of new homes up to $525,000 do not pay any additional tax due to harmonization. The rebate is available whether the new housing is to be owner occupied or rented.
- The rebate will be 71.43% of the provincial portion of the GST, up to a maximum rebate of $26,250. Purchasers of eligible new homes above $525,000 will be eligible for a rebate of $26,250 (i.e. a rebate on the first $525,000 of value).
- The GST only applies to new housing, so the rebate is only available for new housing.
- The BC new housing rebate will be available for all types of housing currently eligible for the federal GST new housing rebate and will be subject to the same eligibility conditions. Qualifying housing generally includes newly constructed and substantially renovated homes used as a primary place of residence by an individual (or qualifying relation of the individual).
- To support affordable rental housing in the province, BC will also provide a new rental housing rebate of 71.43% of the provincial portion of the HST, up to a maximum rebate of $26,250 per unit.
- The new rental housing rebate will be provided to landlords who construct or substantially renovate their own rental housing and, as a result, are required to self-assess and pay GST under the self-supply rules. The rebate will also be provided to landlords who purchase newly constructed or substantially renovated rental housing in BC and pay GST on the purchase.
- The new rental housing rebate will be available for all types of new or substantially renovated rental housing currently eligible for the federal GST rebate for new residential rental properties, and will be subject to the same eligibility conditions.
- The new housing rebates will be administered by the Canada Revenue Agency.
The disposition of Canadian real estate poses more significant income tax issues to a US resident. Unlike the United States, Canada imposes tax on the basis of residency, not citizenship. However, non-residents of Canada may be subject to income tax on incomes from employment exercised in Canada, incomes from businesses carried on in Canada, and gains realized on dispositions of ‘taxable Canadian properties’. Canada also imposes tax on certain types of passive income (including renting, royalties, and interest) paid by Canadian residents to non-residents of Canada. A US purchaser of Canadian real estate will eventually be subject to Canadian income tax on the disposition of direct or indirect interests in real estate that are ‘taxable Canadian property’. Real property or real estate situated in Canada is the most common example of ‘taxable Canadian property’. Shares of Canadian corporations or interests in resident or non-resident partnerships or trusts that derive most of their value from Canadian real estate will also be considered taxable Canadian property. Shares of US corporations deriving greater than 50% of their value from Canadian real estate are also considered to be taxable Canadian property. Capital gains are subject to a preferred rate of taxation in Canada. A capital gain is determined by deducting from the proceeds of disposition, the taxpayer’s ACB (tax cost) in the property, and any outlays or expenses made or incurred in connection with the sale. One-half of the capital gains (referred to as ‘taxable capital gains’) is included in the calculation of income for Canadian tax purposes. Assuming they had no other income subject to Canadian income tax, US-resident individuals would pay Canadian federal tax on taxable capital gains realized in 2004 at marginal rates ranging from 20.5% (on the portion of taxable capital gains below $30,000) and 43.7% (on the portion of the taxable capital gain exceeding $100,000). At top marginal rate, the effective rate of tax imposed by Canada on the capital gain would be 21.85% (43.7% times 1/2). With some limitations, US residents should be able to deduct the Canadian income taxes as a credit against their US federal tax liability in respect of the gain realized on sale. The same may not hold true for any state taxes that may be payable by the US individual on the gain, as some states, such as California, do not grant foreign tax credit relief to their residents for the purposes of computing state income taxes.
British Columbia imposes a Property Transfer Tax (‘PTT’) on the purchaser of real property situated in the province. The PTT becomes payable upon application for registration of a taxable transaction at a land title office. The PTT is computed at the rate of 1% of the first $200,000 CDN of the fair market value of the transferred property and 2% of the remaining fair market value. The acquisition of ‘real property’ in British Columbia may also be subject to the 13% Harmonized Sales Tax (‘HST’). ‘Real property’, generally, includes land, any permanent structures thereon, a mobile home (but not including travel trailers, motor homes, camping trailers, or other recreational vehicles), and floating homes. Generally, used residential units are exempt from the HST. Vacant land will generally be subject to HST regardless of the intended use of the land by the purchaser. US residents will be subject to Canadian income tax on any capital gains realized on the eventual disposition of the property. A purchaser of Canadian real estate should keep appropriate documentation to support the tax cost (adjusted cost base, or ‘ACB’) of the property for use in computing any capital gain or loss on the eventual disposition of the property. Any PTT or HST payable in respect of the acquisition will form part of the ACB of the property to the purchaser, as will as any legal expenses and/or commissions paid in respect of the acquisition. It should be noted that, when the vendor of the property is another non-resident of Canada, the purchaser, regardless of his residence, must ensure that specific withholding and compliance requirements are adhered to in order to prevent the purchaser from becoming liable for the vendor’s Canadian tax liability in respect of the sale of the property to the purchaser. This is discussed in greater detail below.
ENERGY EFFICIENCY FEATURES
With fossil fuel prices headed skyward, buyers now want homes that will save them money on energy bills every day. Buyers these days are getting excited about unsexy features like tankless water heaters, solar panels, and low emissivity, argon-filled windows.
PRE LISTING HOME INSPECTION
Arranging for a home inspection prior to listing makes your home more appealing in several ways. You can show buyers you’ve addressed any defects the inspector found, and add weight to your disclosure statement. A pre-listing inspection suggests you have little to hide, alleviating buyers’ concerns and suspicions. It may even encourage them to waive the inspection condition in an offer. Finally, it should help you price your home more realistically, which always attracts buyers.
Coveted bathroom features include: whirlpool tubs, separate shower enclosures, multiple shower heads, generous linen closets, dressing areas, and double sinks. Buyers also expect multiple bathrooms and Jack-and-Jill bathrooms are popular with families.
The living room is practically passé, but mention a well-outfitted media room/home theatre and buyers’ wallets start to pop open. Exercise rooms are also a trendy feature. And, in certain neighbourhoods, a dedicated yoga/meditation space could seal the deal.
Hardwood floors are perennially popular, but some buyers prefer eco-friendly alternatives to traditional hardwoods. Bamboo is one of the trendiest new flooring options, because it’s considered a renewable and sustainable resource. Cork and natural linoleum are also appealing, and heritage hardwood reclaimed from old building offers both patina and eco-panache.
Each year there are more techno-gadgets and appliances we just can’t live without. Buyers expect a house to have plenty of well-located phone jacks, electrical outlets, and cable/internet connections. They want flexibility and portability, so a house that’s wired for maximum connectivity is a hot property.
Glass tiles, upgraded cabinet hardware, solid-surface kitchen and bathroom countertops, classy lighting, and upgraded fixtures will make buyers look twice. Luxurious materials and fittings need not break the bank: shop carefully and install them where they will have the most impact.
A beautiful open house is easy to achieve using this handy checklist.
This can’t be overemphasized. A cluttered home is a turnoff to most buyers. It’s also potentially dangerous: you don’t want people to be injured as they try to navigate your junk. Remember, it’s not enough to simply stuff everything into cabinets and closets; people will be looking inside these areas to assess storage capacity. Either get rid of it or store it offsite.
The white glove test
Clean up! Not just everyday cleaning like dusting, sweeping and scrubbing the bathtub – that should be obvious. You’ve got to deep clean: carpets should be steam cleaned, drapes washed/dry cleaned, upholstery thoroughly vacuumed and shampooed if necessary. Attend to areas that are often ignored – the top of the fridge, cobwebby corners, cabinet interiors, and the oven. The bathroom and kitchen should be spotless. Can’t manage to make your home immaculate? A maid service is a worthy investment in getting the best offer.
Get a check up
Consider having a pre-listing home inspection report prepared. Potential buyers can examine it, noting repairs you’ve made since and easing their mind about your property.
Revive and repair
A fresh coat of light, neutral paint is practically obligatory. If you have decent hardwood under grungy or outdated carpet, consider trashing the carpet and refinishing the floors. Take care of scuffed hardwood, ripped wallpaper, water damage and exposed wiring. Half-finished home improvement projects deter buyers; complete any such projects if at all possible.
Enhance curb appeal
Most buyers form conclusions about a property from the curb. Cast the same critical eye on your home’s exterior. Does the roofing need repair? Are the gutters overflowing with debris? Does the front lawn look like a missile site? Does the driveway need sealing? make any necessary exterior improvements. Try buying a fresh new doormat and decorate with some container plants.
Lawn and order
If you haven’t paid attention to landscaping; it’s too late to start planting trees. Young ones will have no impact and mature ones are expensive. Prune, trim and weed whatever you have. For a few hundred dollars, consider having a professional landscape plan done. An appealing landscape plan may help buyers envision the potential for the home. Don’t forget interior landscaping: if you have no healthy house plants inside your home, buy a few attractive specimens and locate them strategically around the house. Dump any dead or dying plants.
Put away family photos, children’s artwork, trophies, pet toys, etc., to help buyers imagine themselves in your home. Clear all the junk off the fridge; the kitchen will look bigger and cleaner.
The sniff test
To check for off-putting odours that can cost you a sale, ask your real estate agent (or a trusted friend or neighbour) to help you identify bad smells in your home. Common culprits include smoking, laundry, bathroom mould and mildew, garbage cans, musty basements, cooking smells, litter boxes and other pet paraphernalia. Don’t attempt to cover bad smells with deodorizers and air fresheners – address the problem.
Light up your life
Check that every single fixture in the house has a working light bulb of the maximum safe wattage. Clean all the windows so that the buyers can appreciate how bright the rooms really are.
Out of sight
Before allowing strangers to tour your home, stash all valuables in safe places. Jewellery, cameras, credit cards, ID, medications and other small, easily pocketed items should be locked away. While you’re at it, remove fragile items from harm’s way. Ensure your insurance policy is up-to-date.
As Soon As Possible
Start early. Investigate and research moving companies and/or truck rental companies.
Hire a moving company or if you are doing it yourself, reserve a moving truck. Be sure to get written confirmation of all your costs and details of your move for your records. TIP: Weekends and holiday long weekends are busy times for movers and truck rental companies. Book far in advance (at least 2 to 3 months) to ensure you get the moving company or truck rental you want for the day you need to move.
2 Months Before Moving Day
No sense moving what you don’t want to keep. Go through your home and determine what you want to keep and what you want to throw out or donate. TIP: If moving in spring or summer, earn some extra cash and hold a moving sale to help get rid of items you don’t need or want for your new space.
Make a list of items that need extra attention while moving or special packing instructions (i.e. computers, televisions, fine china, etc.)
If you have children and you are moving to a new school district, start arranging the school transferring process.
Order boxes and moving supplies (packing tape, bubble wrap, tissue paper, stock up on newspaper, etc.) required for your move.
1 Month Before Moving Day
Time to start packing! To make it easier, begin with the items in your home you do not use regularly. Be sure to clearly label or number your boxes to make the unpacking easier.
As you pack, make note of items of significant value (i.e. stereo systems, flat screen televisions). Depending on your insurance agreement with your moving company, you will need to declare items of value in case items are lost or damaged.
At your local postal office, fill out a change of address form with your new address. TIP: For convenience Canada Post now offers this service online.
Inform the following companies and institutions about your new address:
Cable and phone provider
Hydro and utility company
Credit card company
Doctor and dentist office
Any subscriptions you may have
TIP: Many companies now offer the convenience of changing address information
2 Weeks Before Moving Day
Confirm your reservations with your movers or truck rental company
If required, cancel or transfer your newspaper delivery service.
1 Week Before Moving Day
Most of your packing should be done one week prior to moving day.
Set aside the items or importance you wish to transport to your new home yourself (i.e. jewelry and passports).
A Few Days Before Moving Day
Re-confirm arrival time of your moving truck. If moving yourself, re-confirm your reservations with the truck rental company.
Prepare a detailed map and directions for your movers including a cell phone number you can be reached at on moving day.
Pack a travel bag with items your family may need on moving day such as tooth brushes, change of clothing, medications, hair brushes, soap, toilet paper, paper plates and cups, aspirin, etc.
If you are moving yourself, start dismantling beds and other large furniture.
Make a note of all utility metre readings (new and old home).
It’s important to be present when the truck is being loaded and unloaded just in case your movers have questions.
Before the movers leave, check your belongings and note on the inventory paperwork any damaged items.
For any property purchase in British Columbia, a purchaser is required to retain the services of a lawyer or notary to perform the purchase conveyance. Here is a list of local providers:
McEwan Law Corporation: 250-368-8211
Thompson LeRose & Brown: 250-368-3327
Karen Siemens Notary Public: 250-364-1241
Kathleen Plaa Notary Public: 250-368-6886
Judy Griffiths Notary Public: 250-362-6803
Protect your way of life In British Columbia, you will be required by the bank or financial institution that is providing your mortgage to have insurance in place on your new property as of the completion date. For strata properties, insurance on the building is the responsibility of the strata corporation and, therefore, is already looked after; the buyer is responsible for insurance on contents and significant finishing upgrades. For single family homes, you will need to contact an insurance broker and provide them with details on your property prior to completion date. Note that insurance for properties that remain unoccupied is more expensive to insure than those that are occupied. Sometimes it can be beneficial to have a tenant. Here is a list of providers:
RHC Insurance Brokers: 250-364-1285
Whitlock Insurance: 250-368-9188
Kootenay Insurance Services: 250-368-9174
Legal fees (Conveyance) and disbursements associated with a real estate purchase are about $1,000 Cdn, assuming a typical purchase conveyance and a conventional mortgage. Legal fees may be higher for out-of-country buyers or non-conventional financing situations. Property Transfer Tax The rate is 1% on the first $200,000 of the purchase price and 2% on the balance. Some buyers may qualify for an exemption on the property purchase tax if they meet the following criteria: 1. The buyer has never owned property; 2. The buyer is a British Columbia resident; and 3. The buyer has resided in Canada for the past 12 months.
The Canadian Income Tax Act contains rules which are intended to ensure compliance by non-residents who dispose of taxable Canadian property. These rules potentially shift the vendor’s tax burden to the purchaser by imposing a withholding obligation on the purchaser based on the gross purchase price payable for the taxable Canadian property. The non-resident vendor must then apply for a Clearance Certificate to reduce the withholdings and ultimately file an income tax return to obtain credit for any costs (legal fees, etc.) associated with the sale. Generally, any person (including another non-resident) who is purchasing a taxable Canadian property from a non-resident is required to withhold 33 1/3% of the gross purchase price and remit this to the Canadian government in respect of the non-resident vendors tax liability. The vendor may apply for a Clearance Certificate in advance of the closing date, which would permit the purchaser’s withholdings to be based upon 33 1/3% of the vendor’s estimated capital gains (determined before commissions and other costs of sale). If the sale of taxable Canadian property is not reported in advance of the transaction, the non-resident vendor is required to notify the Tax Department, by registered mail, within ten days after the date of sale. This notice will usually be made in the form of a Clearance Certificate application (form T2062). In these ‘post-closing’ Clearance Certificate applications, the purchaser withholds on closing 33 1/3% of the gross purchase price and then releases to the vendor any excess of the amount withheld over the ‘Certificate Amount’ (being one-third of the vendor’s estimated gain before selling expenses). A six to ten week delay in processing Clearance Certificates is not unusual. In computing the estimated capital gain on form T2062, outlays and expenses related to the sale, including real estate commissions and legal fees may not be claimed. These amounts may be claimed when the non-resident vendor files a Canadian income tax return for the calendar year that includes the disposition date. These filings generally result in a refund of tax to the non-resident vendors. Generally, the Canadian income tax return for an individual is due April 30th of the following year. Unlike the United States, extensions to file returns are not available. Late-filed returns are subject to penalties and interest on any amount unpaid by the filing deadline.