The Budget
NEW CONSTRUCTION/FREEHOLDThe question most people ask prospective lawyers is “How much do you charge?” The question you should be asking is “How much money do I need to budget for my purchase?”
Our aim is to provide you with clarity regarding your legal expenses and other costs in the beginning so you can properly budget for your purchase. Moving is stressful enough without finding out on closing that the costs are higher than anticipated.
There are 3 main categories of expenses to budget:
ONE
LEGAL FEES AND EXPENSES
The variance in legal costs from law firm to law firm is actually fairly small and our legal costs are competitive with other law firms. Give us a call and we will be pleased to provide you with both the total legal costs (fees, all expenses and HST) as well as a breakdown so you can properly budget for your purchase and avoid nasty surprises on closing.
TWO
LAND TRANSFER TAX
Land Transfer Tax is a provincial tax that is applicable on the purchase price of the property.
PRICE
FORMULA
$55k – $250k
1% of price – $275 = LTT
$250k to $400k
1.5% of price – $1,525 = LTT
$400k to $2M
2% of price – $3,525 = LTT
over $2M (for single family home or duplex)
2.5% of price – $13,525 = LTT
First Time Buyers are eligible for a rebate (reduction) of up to $4,000. There is a great deal of misunderstanding as to who qualifies as a “First Time Buyer”. To qualify:
- you have never owned a home before anywhere in the world; AND
- If you are legally married, your spouse has never owned real property anywhere in the world during the time of marriage
In some cases (eg. unmarried or common law couples), one of you qualifies for a rebate but the other does not. Partial rebates apply in those cases and we can explain your options to you.
THREE
OTHER EXPENSES
Municipal Property Taxes: You share the year’s tax assessment with the sellers pro-rata. On closing, the seller will have already paid the municipality either more or less than their share of the year’s taxes. The difference is the adjustment and it is paid on closing.- Oil / Propane: Where the house is heated with oil or propane, the fuel is not included in the price. The sellers fill the tank and charge the you for the cost of a full tank.
- Misc. Builder Charges (when buying brand new): Tarion enrolment, builder’s lawyer’s fee, utility meter installation costs, etc. You need to read the fine print in your purchase contract or have us explain it to you.
- Lender deductions: From your gross loan, lenders may deduct any applicable CMHC premiums, retail sales tax on those premiums, a holdback for municipal property taxes if they are to be paid through your mortgage, commitment fees in some cases, etc. The amount you are borrowing and the amount the lender advances to us are not always the same. We recommend you have your lender advise you what the net advance to us so you can budget accordingly.