Every purchase will have some one time costs and then ongoing monthly costs to consider. All of these costs should be considered prior to purchasing so you know what’s expected of you and can feel comfortable going forward. I have a simple but useful spreadsheet that you can use to calculate your monthly costs if you’re interested in using a simple calculator.
Keep in mind, I am not an accountant, nor is this list comprehensive and/or correct for every situation. If you’re looking for exact numbers, please contact the professional offering the service for a quote. Also, always ensure you’re in communication with your accountant and financial advisor if you plan on buying or selling, especially with investment properties.
One Time Purchase Costs
- Home Inspection: ~$450 to $1000 – I’ll always suggestion a home inspection, whether it’s for old properties or brand new builds, so you can have a professional run through the big and little items you need to know about the current state of the house and how to properly maintain it in the future. It’s worthwhile to spend a few hundred dollars in order to avoid a bill for a few thousand later on.
- Appraisal: ~$300 – Your mortgage lender may require a third party review of the property to ascertain value before they approve the loan. Some mortgager brokers or banks cover this cost.
- Survey: ~$1500 – Similar to an appraisal, a survey is only necessary for detached homes, and may or may not be required by your mortgage lender.
- Legal Fees: ~$2000 to $2500 – Every purchase requires a Lawyer or Notary to complete the official transfer of ownership at the Land Title Office. The lawyer will prepare a statement indicating the final total of what you owe the Seller (this would include the purchase price, any adjustments for property tax, etc). Lawyer’s Fees are likely $1500 + $500 land title fees + any document costs + any adjustments for property tax and strata fees (you’ll pay a pro-rated amount of property tax and strata fees, calculated to start on your possession date).
- Title Insurance: ~$225 to $500 – Every detached buyer should purchase title insurance. This one time cost protects against fraud and a number of other potential issues you may learn about after a purchase. Let your Lawyer know that you would like to purchase title insurance. For strata buyers, do some research and chat with your lawyer about if it’s necessary.
- Property Transfer Tax (PTT): just under 2% of the purchase price – The BC Government imposes a tax called Property Transfer Tax, paid on the Completion Date. First-time buyers may be exempt if they will be living in the property, are a Canadian Citizen or Resident, and purchase property under $500,000. For more information about Property Transfer Tax: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax. The tax is calculated as follows:
1% of the Purchase Price on the first $200,000;
2% of the Purchase Price that exceeds $200,000 but does not exceed $2,000,000;
3% of the Purchase Price that exceeds $2,000,000 but does not exceed $3,000,000;
5% of the Purchase Price that exceeds $3,000,000; plus
plus an additional amount equal to 20% of the Purchase Price if the Buyer is not a Canadian Citizen or Resident
- Goods & Services Tax (GST): 5%, on newly constructed homes and substantially renovated homes – The Government charges an extra 5% GST on all new homes, payable on the Completion Date. What constitutes as “new” is a bit of a grey area but generally anything you’re purchasing directly from the Developer or anything that has not been lived in or barely been lived in.
- Move In Fees, typically ~$100 for strata properties – Some condo buildings charge move in fees to cover for potential damage or work required by the Property Management Company change ownership information.
- Real Estate Fees – Typically, Buyers don’t have to pay anything as the Seller pays the real estate commission. There are rare occasions where properties are being sold off market or by the Seller themselves with no commission involved, so your agent will negotiate with you an appropriate commission.
- Other Costs – Some other costs to consider include moving costs, which can vary significantly, renovation or upgrade costs, connection fees (for new TV/Internet connections, etc) and of course, the costs to buy new furniture and host your house warming party!
Ongoing Home Ownership Costs
- Home Insurance: varies, every year – Most mortgage lenders require Buyers to have a home insurance policy in place upon the Completion Date. Regardless, this is something that should be done to ensure you’re protected for unexpected issues or mistakes. Shop around for different quotes and ensure any upgrades to the home are covered by the insurance policy.
- Mortgage Costs: varies, monthly – This will vary depending on your interest rate, amortization, terms and down payment.
- Property Tax: varies – Every property owner pays property tax. The amount will change every year. Some mortgage lenders pay the property tax on your behalf and then include the amount in your monthly mortgage cost.
- Extra Municipal Taxes, varies – Some municipalities, in addition to property taxes, charge a separate fee for Garbage, Recycling, Utilities, etc. These charges may be monthly or yearly, and can change every year. Visit the City website or call the municipality to verify. Some cities with these charges include Squamish, Burnaby, Port Moody. Note: these fees apply to owners in both houses and strata units.
- Vancouver Empty Homes Tax – Every year you have to declare whether your property is occupied or has been vacant for a period of time. If your home is left empty for more than 6 months every year, you’ll be charged the Vancouver Empty Homes Tax. For more information: https://vancouver.ca/home-property-development/empty-homes-tax.aspx
- BC Speculation and Vacancy Tax – Similar to the Vancouver Empty Homes Tax, this tax is levied on home owners who do not live in or rent out their home for a certain amount of time each year. Owners must declare the property status every year. For more information: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/speculation-and-vacancy-tax
- Strata Fees: varies, monthly – This is only required for strata properties, and typically covers strata insurance, hot water, heat (if it’s supplied via hot water heating), gardening, property management, city services, Strata insurance, and amenities.
- BC Hydro: varies, bi-monthly – BC Hydro controls your electricity, which covers your lights and in many homes, your heat as well. You’ll need to set up an account with BC Hydro.
- FortisBC: varies, bi-monthly – Not every property has a gas line, but if so, plan to set up an account with Fortis BC.
- Internet/TV: varies, monthly – Internet is a must these days, and having cable is up to you. Shop around and see what kind of deals you can get from the different providers.
- Personal Health Insurance: varies, monthly – Once your a property owner, it’s generally a good idea to increase the amount of personal insurance you have with regards to Disability, Critical Care and Life Insurance so that your living expenses and mortgage can be paid in the event of a personal emergency. Speak with a financial advisor about your options – this could add a few hundred dollars to your monthly costs, but there are great benefits to having insurance.
Don’t forget to include your other personal expenses when it comes to determining your monthly budget. Other expenses include costs relating to your cell phone, Spotify/Netflix/Crave/HBO/Amazon/etc accounts, groceries, vehicle costs, personal investments, travel, and more. If you’re moving to a different space, think about any potential new furniture or small upgrades you’d like in your home.
If you’re looking for a great tool to track your current spending habits to better understand your budget, check out Wave Accounting. This is a free website that allows you to connect all of your bank accounts and track your spending with categories. You can be really detailed with your categories (i.e. a “mani/pedi” category) or really broad (i.e. all things “beauty”). I use the website and find it really helpful!