A rise in the amount of exemptions to the property transfer tax (PTT) that came into effect on Feb. 17 can result in considerable savings for first time purchasers of new homes.
Principal residents buying a house priced up to $750,000 that plan to live there for at least one year may be exempt from the PTT. That can save purchasers between $8,000 and $13,000, said Kristy Martin of Farley Martin Notaries Public in Langford.
Partial exemptions are also available for new housing valued up to $800,000, while full or partial exemptions may apply for buying an older home, providing at least one of the buyers is purchasing for the first time.
Martin said the change in the PTT is one of the most significant changes for people making home purchases in a long time, and has a positive ripple effect on the West Shore. Residential construction is booming in Langford in Westhills and other areas, and lots of homes are being built in the Royal Bay and in the Latoria Road area in Colwood, she added.
“This is making a lot of first time and previous homeowners come to the West Shore,” Martin said. “Price is definitely a factor.” The bidding wars going on in Gordon Head and Oak Bay are making people take a look at the West Shore as a more affordable option.”
Martin believes one factor driving the recent influx of purchasers from Vancouver and other parts of the Lower Mainland to look at options on the West Shore is the lack of inventory in Victoria, especially now compared to the past few years.
Considering the amount of new home construction going on, more young families are drawn to the West Shore by a combination of the lower prices, the natural surroundings and amenities such as recreation, she added.
“It’s not limited to first-time buyers,” she noted. “We’re seeing more retirees, people looking to relocate and people looking to buy larger homes for their growing families because of that exemption. The exemptions now available are a fantastic option for people to purchase new homes out here. Savings of $8,000 to $13,000 can be the difference between buying now or having to wait a few years.”
Martin said, on a personal level, it’s rewarding to assist people purchasing a new home. “Buying a new home can be one of the most significant decisions a young family makes,” she noted. “It’s a nice feeling to know you played a part in helping someone make the right decisions throughout the process.”
The exemptions are available to purchasers regardless of how long they have lived in B.C., which opens the door for people who move here to take jobs or start companies, for example.
First-time home buyers may also qualify for the federal government’s First-Time Home Buyers’ Tax Credit.
The Society of Notaries Public of B.C. conducted an internal online survey of members on key real estate topics at the end of 2015. More than 133 notaries participated in the survey.
Results indicate more than 57 per cent of notaries said in their experience first-time home buyer clients are getting help with their down payment from their parents, while about 30 per cent said clients are funding the down payment on their own.
Frequently asked questions and more about notaries
Notaries handle roughly half of new home sales in B.C. They perform a range of functions for homebuyers, including preparing mortgage documents related to borrowing and securing funding from a lender.
They also do title searches to ensure the property is owned by the seller, insurance documents and strata documents and forms to determine if there are any special assessments. Notaries also arrange and secure deposits and transfer funds to the lender and/or the purchaser, and property transfers and confirmations.
Home buyers should anticipate other costs that may be include in a property, such as a site survey, home inspection, adjustments for city or municipal property taxes, adjustments for local utilities such as water and sewer, strata fees adjustments, property transfer tax, title insurance and GST.
The difference between the completion date and the possession date is that the completion date in a real estate contract is the date the property is transferred and the money for the purchase is transferred from the buyer to the seller. The possession date is the date the buyer has the right to take possession of the property.