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Buying Real Estate |
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TAX INCENTIVES
There are various tax incentives to buying property in B.C. Not all may apply to each case, but generally, they include the RRSP contribution tax grant in which you may redirect funds from your retirement savings to use toward a deposit on a home. This has a dual advantage because you are entitled to use a portion of the RRSP toward your home and also can claim a tax credit on your annual income tax. Some rules and restrictions apply. The federal government also has a mortgage insurance under the CMHC enabling buyers to buy a home with as little as 5% deposit. At the provincial level, there is the Home Owner's Grant, a tax credit applied to a first home purchase under a certain price limit. On the municipal level, there is the annual tax credit for home owners that live in their home. Again, there are regulations and specific details for each program and may not apply to your circumstances.
TYPE OF PROPERTY IN B.C.
In B.C. there are the following types of land ownership:
Freehold
This is what we ordinarily refer to as simple ownership and it means the owner has full use of the land and buildings, subject to any rights by the Crown or local by-laws.
Leasehold
This refers to land that belongs to natives or to the federal government, or other owners. A purchaser simply has the right to use the residential property on the land, for a predetermined amount of time, usually 99 years. This type of property becomes less and less valuable as the lease nears expiration and because you cannot own the lands, this type of purchase does not appreciate in value to the same extent as freehold.
Strata (Condominium)
In B.C., under strata ownership, the owner has exclusive use and ownership of a specific housing unit, plus a shared interest in the common property. This is the fastest growing area of home development in Vancouver and Whistler. Strata-titled homes are subject to the new Strate Property Act.
Cooperative
A cooperative ownership means you are buying a share in a company or cooperative enterprise and you are allocated a unit to use but do not own that unit outright. There are liabilities associated with coop ownership and this is the least popular type of housing.
NON-RESIDENT CONSIDERATIONS IN BUYING PROPERTY
To buy property in B.C. from outside the country, an investor must have a minimum of 35% deposit if mortgaging is required. Mortgages in B.C. are for fixed terms, established in number of years, and unlike mortgages elsewhere there are no provisions to buy out a mortgage in Canada. Generally, the home owner is required to be present when the transfer of ownership occurs, although that is not always necessary and arrangements for notarizing documents can be made.
HOME INSPECTIONS
It is always recommended that you have a home inspected before agreeing to purchase. Generally, that means you offer to purchase a home, subject to an inspection. In B.C., that allows you to have an independent third party perform an unbiased professional inspection of the home. Inspectors should climb on the roof for a visual inspection, enter crawl spaces and gutters, inspect the electrical, plumbing and heating, check windows, cabinets, garages, decks, patios, exterior and common areas of a property. They should not look inside walls, move any furniture or personal belongings to inspect, perform destructive testing, recommend buying a property or offering a price for possible renovations or confirm whether the home complies to code. Ensure the inspector you choose in B.C. is a member of an accredited inspection organization, such as the Canadian Association of Home Inspectors.
BUYING PROPERTY
Strata title purchases are popular in Vancouver for many reasons, the two most important being affordability and lifestyle. This type of ownership, however, is the most difficult when writing contracts for purchase, because there are so many variables to ensure the buyer is protected. For example, the Property Disclosure must be completed properly for the buyer's interest, strata title reviewed, fixtures and chattels established, minutes of strata corporations reviewed, and the list goes on. In this type of purchase, a buyer not using a qualified realtor is proceeding at their own risk.
When buying Freehold property, buyers should be concerned with some of the same issues with strata title ownership, but should pay closer attention to the condition of the structure as you won't have the benefit of minutes from a strata corporation to review and assess. Lot size, usage, and site situation are important considerations as well. As with any home purchase, it's important to review all the qualities that may impact your investment in the years to come and it is recommended you use a professional realtor to assist you with all these matters.
If you are thinking of buying or selling real estate in
Vancouver, please contact Mitchell.
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