Minimum Down Payment
As of February 15, 2016, the federal government changed the minimum down payment requirement on homes valued over $500,000 that require insurance.
The minimum down payment requirement will remain at 5% for homes under 500,000. Any amount between $500,000 - $1,000,000 will require a 10% payment. Homes valued at $1 million+ require a minimum down payment of 20%. Mortgage insurance is not available for homes in this price range.
For example, a $700,000 home will require a $45,000 down payment: 5% x $500,000 = $25,000 + 10% x $200,00 = $20,000 = $45,000
This new measure applies only to new insured mortgage loans. It does not apply to an existing mortgage or to home owners renewing insured mortgages.
Currently, home buyers with a down payment of less than 20 per cent must buy mortgage insurance.
Canada Mortgage and Housing Corporation (CMHC), a federal Crown corporation, Genworth Financial Mortgage Insurance Company Canada, and Canada Guaranty Mortgage Insurance Company provide mortgage insurance in Canada
The Property Transfer Tax is a one time tax paid to the Provincial Government by purchasers of real estate. The tax applies to all types of real estate, whether residential, commercial or industrial, new or resale.
Property Transfer Tax
The amount of the Property Transfer Tax is 1% on the first $200,000, 2% on the amount over $200,000 up to $2,000,000 and 3% on the amount $2,000,000 and above. This amount is paid at completion.
Qualified buyers of newly build homes may be exempt from paying the PTT on a new homes priced up to $750,000, saving buyers up to $13,000. There is a partial exepmption on newly built homes priced $750,000 to $800,000.
Click here to see if you qualify for an exemption to the Property Purchase Tax as a First Time Home Buyer.
For more details and up to date information on the Property Tax Guidelines click here and select the appropriate information link.
Goods and Services Tax
GST is 5% and is payable on the purchase of any new home or any home that has been substantially renovated. New home buyers can apply for a rebate of the 5% GST if the purchase price is $350,000 or less. The rebate is equal to 36% of the GST to a maximum rebate of $6,300. There is a proportional GST rebate for new homes costing between $350,000 and $450,000. There is no rebate for homes priced at $450,000 and above.
For Buyers who are purchasing a new home or substantially renovated home for an investment/rental property there is a GST New Residential Rental rebate (GST NRR Rebate) The new residential rental property rebate now allows a recovery of the same rebate as above which is 36% of 5% for properties priced upto $350,000 and a gradual rebate for properties priced between $350,000 - $450,000. In order to claim this rebate, certain conditions must be met.
Please remember that the rules regarding GST/HST frequently change. Use the information above as a guideline and you may want to reconfirm with your account or lawyer. Click here to go to the Goods and Services Tax website.