Buying a home is one of the most exciting things in your life but there is a lot to know about when it comes to taxes. While this is just a part of your home purchase, here is a little you need to know about real estate taxes when buying a home and how you may be able to save money.
Some of the taxes you will have to pay depending on which region you are in and if you are a resident or non-resident. For instance, if you are purchasing a home in the Toronto area, there are four taxes that you have to take care of as a non-resident: Income taxes, property taxes, non-resident speculation tax, and land transfer tax.
Non-Resident Speculation Tax
If you are a non-resident of Canada, there is the non-resident speculation tax. This tax is equal to 15% of the amount of the property and has to be taken care of at the closing.
Property taxes are typical for homeowners pretty much no matter where you live. The amount is going to depend on what area you live in. For instance, if you live in the Toronto area then there is a calculator you can use that determines the taxes based on the current value assessment of your property. For instance, if your home is worth $425K then your taxes are estimated at $2923, of which $799 goes to education, $2112.37 goes to the city, and $12.51 goes to the transit expansion.
Land Transfer Tax
When you obtain land or even a beneficial interest on land, there is a charge known as a Land Transfer Tax. This is paid to the province during the time the transaction closes. While the Land Transfer Tax is typically paid on the amount remaining on a debt or mortgage taken as part of the arrangement and based on what you paid for the land, there have been recent changes and the Land Transfer Tax has a different calculation. Land transfer taxes are based on a sliding scale dependent on the price of the property.
Non-Resident Speculation Tax
If you are a non-resident who is buying a home in Canada, then there is something called non-resident speculation tax. This is a 15% tax on the purchase or acquisition of an interest in residential property located in the Greater Golden Horseshoe Region (GGH) by individuals who are not citizens or permanent residents of Canada or by foreign corporations (foreign entities) and taxable trustees. This includes all types of property such as a townhouse, condo, single-family residence, and detached house.
This is simply something to keep in mind. If you are moving from the United States, for instance, income tax is something you are already aware of so just keep in mind that Canada has it as well. If you are already a resident then you know about income tax payments or refunds.
The good news is that a claim for $5000.00 can be made for the Home Buyers Amount (HBA) if you qualify. Some of the qualifications include that you purchase a qualifying home, you did not live in a qualifying home that was owned by you in the year of acquisition or any of the four prior years for first time buyers, and the home has to qualify itself by being a single family house, mobile home, semi-detached house, condominium, apartment in a duplex, triplex, apartment building, or fourplex, or a townhouse.
If you have questions about how a real estate lawyer can help with real estate taxes, Oakville Real Estate Law is one of the top firms in Canada for real estate transactions. The firm’s team led by Robert Rose has worked on thousands of transactions the years and have the knowledge and experience you need. For more information on what you need to know about being able to afford a home, please contact us and we will be glad to help.