CMHC Mortgage Insurance
If you plan to buy a home with a down payment of less than 20%, you must buy CMHC Insurance. The closing cost associated with CMHC all depends on where you live. If you live in Manitoba, Québec, Ontario, or Saskatchewan you must pay a provincial sales tax on the CMHC premium at the HST/PST/GST rate applicable to your province.
Non-resident Speculation Tax (NSRT)
If you are not a citizen or perminant resident of Canada but are purchasing a home, Non-resident speculation tax may apply to you. The most significant taxes can be found in Ontario and British Columbia. If you decide to buy a home in the Greater Golden Horseshoe Region near Toronto, Ontario, you must pay the non-resident speculation tax (NRST). This tax is equal to 15% of the value of the property. You can obtain a full rebate of the NRST if you stay in Canada by becoming a permanent resident within four years of purchase, enrolling full-time as an international student for two years after purchase, or working as a foreign national in Ontario for one year after purchase.
A similar 20% foreign-buyers tax is also applied to foreign buyers in British Columbia: if the home buyer is a foreign national, foreign corporation, or a taxable trustee, a 20% Property Transfer Tax must be paid. In rare cases, if the property was transfered prior to February 20th, 2018 the PPT fee only amounts to 15%. The areas in BC that require the additional tax are:
- Capital Regional District
- Fraser Valley Regional District
- Metro Vancouver Regional District
- Regional District of Central Okanagan
- Regional District of Nanaimo
However, foreign nationals who have work permits from the BC Provincial Nominee Program are exempt from this additional tax.
GST/HST on New Construction Housing
When you purchase newly built or heavily renovated housing, you would have to pay a sales tax on top of the purchase price which consists of a federal portion and a provincial portion that in some provinces are kept separate while in others are combined to be called the Harmonized Sales Tax (HST). However, this cost does not always apply to the homebuyer. The GST/HST almost always applies to new constructions but the cost may not have to be paid by the home buyer as the builder may cover the cost. If you are unsure, contact your seller or lawyer to determine whether GST/HST applies to you.
If the price of your new home is less than $450,000, you may be eligible for the GST/HST New Housing Rebate which allows you to take back some of the federal portion of the tax (GST) and in select provinces the provincial part of the tax. The rebate consists of two types available with differing rates: rebate for owner-built houses and rebate for housing purchased from builders. You can ask your lawyer for details regarding the full conditions of eligibility.
You may have to pay an interest adjustment depending on the day of the month on which you close your purchase. For example, the closing date of your purchase is August 2nd, so your lender advances your mortgage on that day to the selling party. But your first mortgage payment is not due until August 15th. From August 2nd to August 15th, interest accrues on your mortgage. The interest accrued over those 13 days will be the interest adjustment that you will need to pay as closing costs to your lender. The amount will depend on your mortgage terms and the length of time remaining in the month before your first mortgage payment; you can contact your lender for specific details.
Property Tax Adjustments
If you are buying a resale home, the previous owner will likely have already paid property tax for the year. You may need to reimburse a portion of the tax to the previous property owner. The amount repaid will depend on the property tax amount and the length of time remaining until the end of the year. You can calculate the home’s property tax using WOWA Property Tax Calculator, but please contact your lawyer for specific details.