Transaction costs are usually low
Taxation Researcher | March 30, 2020
How high are realtors´ and lawyers´ fees in the Canada? What about other property purchase costs?
|Land Transfer Tax||0.50% - 2.0%||buyer|
|Goods and Services Tax (GST)||6.0%||buyer|
|Estoppel Certificate Fee||CA$100 (US$89)||buyer|
|Legal Fees|| 0.50% - 1.0%
0.50% - 1.0%
|Real Estate Agent´s Fee||3% - 7%||seller|
|Costs paid by buyer||1.0% - 3.0%|
|Costs paid by seller||3.68% - 8.42%|
|ROUNDTRIP TRANSACTION COSTS||4.68% - 11.42%|
| See Footnotes
Source: Global Property Guide
How difficult is the property purchase process in the Canada?
There are virtually no restrictions on foreigners buying properties in Canada. The process is relatively simple.
- The real estate representative or agent, preferably with the lawyer, helps prepare the Offer to Purchase to the seller. The Offer of Purchase is presented to the seller with a deposit usually no more than 10% of the purchase price. The seller will accept, reject or make a counteroffer.
- The buyer and the seller agree on the price.
- A copy of the signed agreement is sent to the lawyer who will examine any conditions of sale and note the closing date. The lawyer must be informed on how the buyer, and any other co-buyers if any, will be registered in the title to the property.
- During closing, all conditions in the Offer to Purchase, such as home inspection, must be satisfied by the stated date.
- Have an up-to-date land survey done on the property.
- The lawyer searches the title to ensure the seller has a clean title. The lawyer must also check government regulations and other legalities. This includes ensuring property taxes are paid, and that there are no liens.
- The lawyer prepares a Statement of Adjustment, which will confirm the selling price, the amount the buyer has to pay the seller, the balance of the down payment and adjustments. A certified cheque for this total should be made payable to the lawyer in trust.
- Finally, the lawyer pays the seller, registers the home in the buyer´s name and provides a deed and the keys to the new house.
Footnotes to Transaction Costs Table
The round trip transaction costs include all costs of buying and then re-selling a property - lawyers´ fees, notaries´ fees, registration fees, taxes, agents´ fees, etc.
Exchange rate as of 30 June 2007: 1 US$ = 1.06340 CA$.
Land Transfer Tax:
Land transfer taxes (property transfer tax or purchase tax in other provinces) are calculated between 0.5-2% of the property´s total value. This is not imposed in Alberta, rural Nova Scotia and Saskatchewan.
LAND TRANSFER TAX
|PROPERTY VALUE (CA$)||TAX RATE|
|Up to 200,000 (US$148,148)||1.0%|
|Over 200,000 (US$148,148)||2.0%|
|Up to 30,000 (US$22,222)||nil|
|30,000 - 90,000 (US$66,667)||0.5%|
|90,000 - 150,000 (US$111,111)||1.0%|
|Over 150,000 (US$111,111)||2.0%|
|Up to 55,000 (US$40,741)||0.5%|
|55,000 - 250,000 (US$185,185)||1.0%|
|250,000 - 400,000 (US$296,296)||1.5%|
|Over 400,000 (US$296,296)||2%|
|Up to 50,000 (US$37,037)||0.5%|
|50,000 - 250,000 (US$185,185)||1.0%|
|Over 250,000 (US$185,185)||1.5%|
|Outside Halifax County||Check with
|Source: Canada Revenue Authority|
Negotiable; generally at PHP20,000 and up. In some instances, legal fees can reach up to 10% of property value.
Goods and Service Tax:
For newly constructed and substantially renovated homes, 5% Goods and Services Tax (GST) is applied on the purchase price. GST is often included in the quoted sales price. New home buyers can apply for a partial rebate of the GST if the property bought is going to be the primary place of residence. GST rebate reduces proportionately with more expensive homes.
Estoppel Certificate Fee (for condominiums or strata units only):
An Estoppel Certificate outlines a condominium corporation´s legal and financial state of affairs and costs up to CAD100 (US$74). This fee is not applicable in Quebec.
Legal/Notary Fees and Disbursements:
Lawyers (or notaries in Quebec) review the Offer to Purchase, search the title and draw up mortgage documents and oversees the closing details. Legal fees are generally negotiable subject to a minimum of CAD500 or US$370, plus GST/HST), depending upon the province, the complexity of the sale-purchase process and the value of the property. Each party pays for their own lawyer. Disbursements are costs that the lawyer pays in behalf of the buyer, such as registration fees (electronic registration; CAD71.30 or US$53 per document, manual registration: CAD60 or US$44 per document, photocopies, etc.)
Real Estate Agent´s Fee:
Real estate agent´s fees are negotiable between 3% and 7% of the property value, plus 6% GST. Typically, realtors charge 7% on the first CAD100,000 (US$74,074) of the sales price and 3% on the remainder. The vendor normally pays for the agent´s fees but in certain cases there are two agents involved, the seller´s agent and the buyer´s agent.
REAL ESTATE AGENT´S FEE
|PROPERTY VALUE, CAD (US$)||RATE|
|Up to 100,000 (US$74,074)||7%|
|Over 100,000 (US$74,074)||3% on all value over US$74,074|
|Source: Global Property Guide|