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Some FAQs for Buyers

And How I Can Help You Find Your Next Home

As a Vancouver local I specialize in providing my services in downtown Vancouver including Vancouver West and Vancouver East. However, my services and market knowledge is not limited to local areas within Vancouver. I focus my services and marketing in all areas within Metro Vancouver as I have helped my clients move to other cities.

I grew up in Coquitlam so I am very familiar with the area and keep up-to-date with the local market and surrounding neighbourhoods. As an agent, I believe it’s imperative to be knowledgeable about local markets and communities.  Find out more about who I am and what I do.

Costs vary dramatically depending on which type of property you intend to purchase. Resale or pre-sale and what are some pros and cons for both?

If you intend to buy a RESALE home:

PROS:

    • You’ll save the most costs if you buy a resale home. Most importantly, the price of the property will reflect the current market value whereas a pre-sale home is priced on anticipated future market value. That’s a significant difference!!
    • The neighbourhood/community will be already established. With just a bit of diligence, you’ll know exactly what it’s like to live in the area and who your neighbours are 🙂
    • If you find a resale property in need of updates, it’s likely you can get a deal.
    • You can negotiate any terms. ie. you can choose the move-in date so things will be much easier to plan.
    • There’s no GST on a resale home! So that’s another big cost savings.

CONS:

    • The property might need (major) repairs in addition to the updates that you plan to do. Make sure to do your due diligence during the Inspection of the property.
    • In a tough market, bidding wars are common and you might find prices are higher than you can afford.

If you intend to buy a PRE-SALE home:

PROS:

    • If you dislike renos, you’ll love buying pre-sale! For the first year of ownership, the builder takes care of deficiencies. Basically the property is turnkey and all you need to do is move-in.
    • You’ll have more time to save money regardless if you’re buying to live in or rent out! Depending on the size of the project, a typical condo development can take over 2 years to complete. So you’ll have time to save for the upcoming deposits.
    • If you’re buying an investment property, you can rent out the unit as soon as you receive keys (no need to allow time for repairs/updates) and also rent the unit for the highest rates since it’s brand new.
    • Over time as an original owner, you will see the greatest gains in property value (after holding the property for some time) although you might have bought at a higher premium during presales.
    • Assigning your unit before completion (nothing to do with shadow flipping) can be profitable but it depends on the current market conditions.

CONS:

    • Possible construction delays… it’s likely it will happen so be prepared. Some developers/builders are better than others.
    • Since the builder is selling the property at an anticipated future value,  you’re paying more today for a comparable resale property.
    • Terms are typically fixed with a pre-sale. Especially in a hot market, you cannot negotiate the Purchase Price, Deposit or upgrades.
    • The actual floorplan/layout could be different from the original marketing plan that you received.
    • Presales cost more than buying a resale property. Expect to pay 20% deposit prior to completion and also Property Transfer Tax (PTT) and GST. Calculating the taxes and deposits are easy to figure out so be prepared for final purchase price.
    • With most presales, construction can take up to 2 or more years to complete so financing can be an issue. The developer/builder is well aware of this issue so they work with a bank that can hold rates until completion.

Basically, buying a presale property comes with risks. If you buy from reputable builder/developer, you’ll reduce those risks and enjoy the benefits.

Yes, of course I do! I’ve helped several of my clients buy their first property. Almost all of them have purchased another property. Once you’ve bought your first place, it won’t take long to make the move to buy another 🙂

As a First-Time Buyer, I’m sure you have lots of questions regarding the Buying Process and what it entails. Fortunately, I’ve written a Buying Process that will help you figure out the steps you need to take when buying a property.

Goods and Services Tax or GST is payable on newly constructed (and never been occupied) homes. Regardless of whether you intend to live in the home or rent it out, if it’s a brand new home, you must pay this tax..

There was a brief time (July 2010 to March 2013) when Harmonized Sales Tax or HST came into effect but it was voted down and the tax system RETURNED to GST instead.

As of April 1, 2013 the current tax rate (GST) is charged at 5% of the purchase price. We’re currently in a transitional period (additional 2% for a total of 7% tax payable) until April 1, 2015.  To clarify the technical facts about this transitional period: if you purchase a new home on or after April 1, 2013 and before April 1, 2015 and the construction was at least 10% completed before April 1, 2013 then you must pay the 2% tax.

The good news is that there is a GST New Housing Rebate for buyers who intend to live in their new home or rent it out. Here are the facts to get the GST New Home Rebate:

The purchase price must be $350,000 or less. There’s a partial rebate for homes priced from$350,000 to $450,000. You’re out of luck if the purchase price is $450,000 or higher.

Example #1 Purchase Price BELOW $350,000:

Purchase Price = $325,000
GST Payable = $16,250 OR 5% * $325,000
GST Rebate = $5,850  OR 36% * $16,250

GST Payable = $10,400 OR $16,250 – $5,850

Example #2 Purchase Price btw $350,000 – $450,000:
Needs to use the following formula:
$6,300 ($450,000 – Purchase Price) / $100.000

Purchase Price = $425,000

$6,300 ($450,000 – $425,000) / $100,000 = $1,575

Gross GST = $21,250
GST Payable = $19,675 OR $21,250 – $1,575

For details regarding the GST and HST payable on new homes, please click here.

Property Transfer Tax (PTT) should not be confused with GST or ‘Property Tax’ because it is a one-time tax payable to the Provincial Government when you purchase any type of real estate. PTT is calculated at 1% on the first $200,000 and 2% on the remainder.

Example:
If the purchase price of your home is $459,000, the PTT = $7,180.

1% on the first $200,000=$2,000
2% on the remainder =$5,180
Total PTT=$7,180

For further details regarding the PTT, click here.

There are a number of EXEMPTIONS that are available to purchasers from paying the full PTT amount. The most common exemption is called the First-Time Home Buyer’s Program (HBP). To qualify for the HBP, all of the following requirements must be met:

As a Purchaser:

  • You are a permanent resident of Canada and lived in British Columbia (BC) for at least one year before the purchase or filed two income tax returns as a BC resident within the last 6 years.
  • You have never owned an interest in a principal residence anywhere in the world at anytime
  • You have never received a First-Time Home Buyer’s exemption or refund.

Property Requirements:

  • The fair market value for the residential property is $475,000 (as of February 19, 2014) or less.
  • The land is 0.5 hectares (1.24 acres) or smaller

For residential properties valued between $475,000 and $500,000, a partial exemption is available using the following calculation:

(($500,000 – Purchase Price) / $25,000) * PTT)= PTT Partial Rebate

Example:
Purchase Price = $485,000

($500,000-$485,000) / $25,000 * $7,700 (recall it’s 1% of 1st $200K and 2% of remainder) = $4,620

To find the PTT partial rebate amount: subtract $4,620 from $7,700 = $3,080

There are further requirements to keep the exemption. Please view them here.