Property Virgins

Property VirginsIf you are a first time home buyer there are many programs and important information you should know about and consider before making a purchase. Below you will find information on the following items:

Are you among the thousands of people who pay rent each month, knowing full well that you will never see that money again? For many, this need not be the case. Instead, why not take that money and build it into an investment that can last a lifetime? As a buyer you don't pay the real estate commission, the Seller does, so working with a Buyer's Agent is free to you! Team Clarke has 2 full time Buyer's Agents, Brooke Clarke & Adriano Cusano, that are dedicated to finding buyers the home they are looking for. As a first time home buyer, our agents can be a source of information for you and will guide you through the home buying process, step by step. For more information on our Buyer's Agents click here or call Team Clarke today to speak to a Realtor, 604-220-2020. What kind of home do you need and want? Buying a home is a balance of many requirements such as family size, location, income and lifestyle. REALTORS® are excellent sources of advice and help in these matters. Not only do they have the experience and knowledge to make sure the choice you make will be the right one, but with access to the Multiple Listing Service® (MLS®), they can seek out suitable properties for you and provide you with a customized list of homes that meet your needs, wants and budget. Ask yourself exactly what you need in a home. How many bedrooms? How close to schools or shopping centres? Do you plan to have children? Do you need a garage or a finished basement? Next decide on a preferred location. While the North Shore is a sought after location, some areas within North and West Vancouver are more popular, and thus more expensive, than others. What are you looking for in your home's location - is it close proximity to transportation, amenities or recreation; top schools; quiet neighbourhood or something more urban; waterfront or view? For more information on North Vancouver's neighbourhoods click here. Land on the Vancouver's North Shore is at a premium as we are bordered by the mountains on one side and the ocean on the other. In order to construct new homes, in most cases, people and builders must tear down older homes. Historically, single family detached home ownership has performed the best as an investment in North and West Vancouver. However, Vancouver is one of the most expensive places to live (and consistently voted the BEST place to live!), making the dream of a house with a picket fence out of the reach of many. Townhomes and condos are ideal for particular lifestyles or budgets. Townhome or condo living offers convenience and often means sharing common areas such as parking, hallways and landscaping. For more information on strata ownership click here. What can you afford? Once you have determined what it is you want and need, you'll have to find out what you can afford. A REALTOR® or your financial institution can help you determine the amount of the mortgage you can carry by calculating your debt-service ratio. The rule of thumb is that the sum of all your current loan payments (car, personal, credit card, etc.) plus your mortgage should not exceed 40 per cent of your gross income. In addition, mortgage payments and property taxes should not be more than 30 per cent of gross income. Recently, Vancouver displaced Sydney as second most-expensive housing market after Hong Kong. For many, home ownership in Vancouver means a much higher portion of your gross income being allocated to your mortgage. In 2011, The Globe and Mail wrote that "Housing costs for the average two-storey home in Vancouver today eat up the equivalent of 80 per cent of a typical family's annual pretax income, according to new research, putting ownership out of reach for most." How do buyers afford these prices? There are several different ways of becoming home owners in Vancouver. Many buyers start with a condo and take gradual steps buying and selling more expensive homes that have appreciated in value while they have owned them. Others take advantage of having tax free gains over time on their primary residence, or putting some "sweat equity" into an older home and selling it once renovated can have a substantial profit. Many buyers are able to get approved to buy a house with the contingency that they must have a rental suite in their house to supplement their mortgage. For more information on secondary suites click here (link to secondary suites page). Most of the buyers we work with find that they have to make sacrifices in their lifestyle in order to afford the home they want, or else make sacrifices on the home they want in order to afford their lifestyle. Buyer FAQ When do I have to pay GST? You pay GST on the purchase of a new construction property. New home buyers can apply for a rebate of the 5% GST if the purchase price is $350,000 or less. The rebate is equal to 36% of the GST to a maximum rebate of $6,300. There is a proportional GST rebate for new homes costing between $350,000 and $450,000. There is no rebate for homes priced at $450,000 and above. GST is payable on the real estate commission, lawyers and notary’s fees on all real estate transactions. How much is a typical deposit? 5% is average, though a higher deposit can be attractive to the sellers in certain situations When is the deposit due & how is it payable? Your deposit is due usually within 24 or 48 hours of subject removal and payable to the Buyer's realtor's brokerage's trust account; however, these can both vary depending on what is written in the contract. Team Clarke writes all of our contracts with deposits payable by bank draft and they are payable to RE/Max Crest In Trust. How long is a typical subject period? Anywhere from 5-7 days What is FINTRAC? The Financial Transactions and Reports Analysis Centre of Canada For more information click here. Does the property have an oil tank? If the home owner has not removed an oil tank (with documentation), the only way to know whether or not the property has an oil tank is to have the property scanned by a professional oil tank removal company. If the seller has not done this (with proof in writing) then it is advisable to have any property built before the mid 1970's scanned. For more information on oil tanks click here. What is Designated Agency? When a REALTOR® or REALTORS® work solely on your behalf in real estate transactions, the REALTOR® and brokerage are bound by ethics and the law to be honest and thorough in representing you. The brokerage must account for all money and property placed in its hands while acting for you. The REALTOR® must:
  • Provide undivided loyalty to you (Client) by protecting your negotiating position at all times, and disclose to you all known facts which may affect or influence your decisions;
  • Obey all lawful instructions which you give the REALTOR® to act on your behalf;
  • Maintain the confidentiality of your information (financial, legal, personal, etc.)
  • Use reasonable care and skill in performing all assigned duties in the role as agent.
What is Limited Dual Agency? Limited Dual Agency occurs when the Designated Agent represents both the buyer/tenant and seller/landlord in the same transaction or two buyers competing for the same property. In this arrangement, the REALTOR® cannot be concerned exclusively with your interests in the transaction, since they are acting on behalf of the other party as well. Both the seller and the buyer or the competing buyers should fully consent to a limited dual agency arrangement in writing.

A REALTOR® who has consent to work as a limited dual agent must adhere to the following restrictions: A. Deal with both parties impartially; B. Have a duty of disclosure to both clients, except that:

i. REALTOR® must not disclose that the buyer/tenant is willing to pay a price or agree to terms other than those contained in the offer, nor disclose that the seller/landlord is willing to accept a price or terms other than those contained in the listing; ii. in the case of competing buyers, the REALTOR® must not disclose the amount or terms of any offer to purchase or lease made or contemplated by either buyer/tenant; iii. REALTOR® must not disclose the motivation of one Client to the other Client, unless one of the Clients has authorized such disclosure themselves; iv. REALTOR® must not disclose buyer/tenant’s or seller/ landlord’s personal information to the other Client, unless authorized in writing. (This refers to information not otherwise disclosed in the transaction documents.)

C. Must disclose to the buyer/tenant any defects about the physical condition of the property that are known to the REALTOR®.

What is a Subject to Sale Offer? An offer that is subject to the buyer selling their home before removing all subjects on their purchase to buy your home. What is a Subject to Sale Offer? An offer that is subject to the buyer selling their home before removing all subjects on their purchase to buy your home. What items are included with the sale of a home? Any fixture is included with the sale of a home unless otherwise specified in writing on the contract of purchase and sale. A fixture is something securely fixed in place. Typically buyers will ask sellers to include the appliances and window coverings in the contract. If you want anything else included you must tell your Realtor® and have them write it in the contract. What are the Completion, Adjustment and Possession dates?
  • Completion Date: this is the date when the Buyer's money is transferred to the Seller and ownership of the property transfers to the Buyer.
  • Adjustment Date: this the date which a lawyer or notary will use to adjust the property taxes paid and owing between the buyer and seller. It is usually the same date as the Possession Date.
  • Possession Date: the Possession day is move in day! This is date when the Buyer is officially allowed to move in. This date is often day or a couple of days after the Completion Date, but it can be any date the Buyer and Seller agree on. Most of the time the Buyer takes possession of the property at 12 Noon, but this is negotiable.
When should I call a mortgage broker? It is best to call a mortgage broker as soon as you decide to purchase a property. What is a Working With A Realtor form? It is a form that is used to explain the relationship between you and a realtor and of the collection, and use and disclosure of personal information. What is CMHC Mortgage Loan Insurance? Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment starting at 5%* — with interest rates comparable to those with a 20% down payment. To obtain mortgage loan insurance, lenders pay an insurance premium. Typically, your lender will pass this cost on to you. The premium payable is based on a percentage of the home’s purchase price that is financed by a mortgage. The premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments. Mortgage loan insurance is not to be confused with mortgage life insurance which guarantees that your remaining mortgage at the time of your death will not be a burden to your estate. * The minimum down payment requirement for mortgage loan insurance depends on the purchase price of the home. For a purchase price of $500,000 or less, the minimum down payment is 5%. When the purchase price is above $500,000, the minimum down payment is 5% for the first $500,000 and 10% for the remaining portion. Mortgage loan insurance is available only for properties with a purchase price or as-improved/renovated value below $1,000,000. Noun: The charging of real (or personal) property by a debtor to a creditor as security for a debt (esp. one incurred by the purchase of the property), on the condition that it shall be returned on payment of the debt within a certain period. Bi-weekly and Weekly Payments Most mortgages have the option to allow payments to be made on a weekly or bi-weekly basis. This option may be desirable for two reasons. The first is it can save you money as you can expect to pay off your mortgage about four years sooner. This can save you dramatically over the life of your mortgage. The other reason why these options are so popular is that if your employer pays you on a weekly or bi-weekly basis, you can simplify your budgeting by making the payment line up with the way you are paid. Making Extra Payments Paying extra amounts on your mortgage can make a big interest saving over time. When you select a mortgage company, privilege payments options are something to look for. A 20% privilege payment will allow you to pay off up to $20,000 per year on a $100 000 mortgage. It is important that the privilege payment also be flexible to allow you to pay smaller payments on the mortgage and as often as you wish. An extra $1000 periodically paid on a mortgage can help you become mortgage free faster. Reducing the CMHC Fees on Your Purchase When you require a mortgage for more than 75% of the purchase price of a property, that mortgage must be insured by Canada Mortgage and Housing (CMHC) or GE Mortgage insurance. The premium charged by these company's decreases as the down payment increases. When you finance your property at 95%, a premium of 2.75% is added to the mortgage. By increasing the down payment to 10% of the purchase price the premium can be reduced to 2.5%. If you can put down 20%*, you can avoid any additional insurance fee. Depending on your situation there are ways that you can structure this financing to avoid the CMHC or GE insurance premium. Advantages of Bigger Down Payments As mentioned above, when you put a 20%* down payment on your purchase you can avoid the CMHC premium. More importantly the larger the down payment, the lower the amount of interest you will pay over the life of your mortgage. It is important to note that it may not be wise to stretch yourself to increase your down payment and end up borrowing on credit cards or a line of credit at a higher rate. Short Term Rates vs. Long Term Rates The options for mortgages available can be very confusing for most mortgage shoppers. Terms for mortgages vary between variable and fixed rate, six-month terms to 10 year terms. Taking a variable or floating rate mortgage can have savings. Typically the shorter the term or guarantee of the rate, the lower the rate will be. This does not always happen, depending on the market place and the economy, but history has shown that short-term rates tend to be lower than long-term rates. The up side of variable rate is the strong potential for interest rate savings. The down side is the fact that you are accepting the interest rate risk without a guarantee. If you are considering a variable rate mortgage you need to look at your own risk tolerance, and your cash flow available to deal with potential increased payment. Considering projections of rates and where we see interest rates heading can also be important in this decision. Make sure you talk to an expert when you are making this decision. *Based on 25 year amortization. Premiums charged on amortization over 25 years. Property Transfer Tax The First Time Home Buyers' (FTHB) Program provides a property transfer tax exemption at the time title to property is transferred to an eligible first time home buyer. If you are purchasing your first home, you may qualify for this exemption if you are a first time home buyer and your property meets certain requirements. These requirements are outlined below. First Time Home Buyer Qualifications You qualify as a first time home buyer if:
  • you are a Canadian citizen, or a permanent resident as defined by the Immigration and Refugee Protection Act (Canada),
  • you have lived in British Columbia for 12 consecutive months immediately before the date you register the property, or you have filed 2 income tax returns as a British Columbia resident during the 6 years before the date you register the property,
  • you have never owned an interest in a principal residence anywhere in the world at any time (a principal residence is the usual place where an individual lives), and
  • you have never received a first time home buyers' exemption or refund.
Please note: You cannot re-qualify as a first time home buyer. This rule may be different from other federal programs for first time home buyers (e.g. the Canada Revenue Agency Home Buyers' Plan). Property Requirements You qualify for a full exemption if:
  • the fair market value of the property (land plus improvements) is not more than the qualifying value of $425,000 (only if purchasing an existing home),
  • the land is 0.5 hectares (1.24 acres) or smaller, and
  • the property will only be used as your principal residence.
Please note: If there is more than one purchaser and not all purchasers qualify for the exemption, only the percentage interest acquired by the first time home buyer(s) is eligible. Partial Exemptions You qualify for a partial exemption if:
  • the property has a fair market value of up to $25,000 more than the qualifying value of $475,000 (only if purchasing an existing home),
  • the land is larger than 0.5 hectares (only 0.5 hectares of the land are eligible), or
  • a portion of the improvements on the land is used for commercial purposes or there is a separate dwelling on your land (only the principle residence portion is eligible).
How do I Apply for the Exemption or Refund? You apply for the exemption by submitting a First Time Home Buyers' Property Transfer Tax Return (FIN 269) and other required land title documents when you register your property at the land title office. Generally, a lawyer or notary public registers your property and applies for the exemption on your behalf. The land title office then sends your application to the ministry to verify your eligibility. Penalty for False Declaration To ensure you are eligible, your application for the exemption or refund is reviewed to verify eligibility. If you are claiming an exemption or refund, you may be charged an amount equal to double the tax (the tax you owe plus a penalty equal to the exemption or refund you claimed) if you falsely declare: that you have never owned an interest in a principal residence anywhere in the world at any time, or that you have never received a BC first time home buyers' tax exemption or refund. Requirements During the First Year the Property is Owned The ministry will send you a letter at the end of the first year you own the property to confirm that you meet the requirements for occupancy and property value (if building a new home), as set out below. Occupancy If you purchase an existing home, you must move into the home within 92 days of the date you register title to the property. If you purchase vacant land, you must build and move into your new home within 1 year of the date you register title to the land. You must continue to use the property as your principal residence for the remainder of the first year. You may retain part of the exemption if you move before the end of the first year. Exceptions Two exceptions to the occupancy requirement are:
  1. if your death occurs before the end of the first year you own the property, or
  2. if your property is transferred as a result of a separation agreement or a court order under the Family Relations Act.
Need more info? Property transfer tax website click here. Telephone (Vancouver): 604 660-2421 Telephone (Victoria): 250 387-0604 Toll free in British Columbia: 1 800 663-7867 (request a transfer to 250 387-0604) Fax: 250 953-3094 E-mail: PTTENQ@gov.bc.ca Guide to the First Time Home Buyer's Program under the Property Transfer Tax Act Property Transfer Tax Calculator Property Transfer Tax When your application for exemption from property transfer tax under the First Time Homebuyers' program is received, a letter is sent to you confirming receipt of your application. This confirmation letter outlines requirements that must be met during the first year after you register the transfer at the Land Title Office. If your property purchase was registered on, or after, February 20, 2008, you are no longer required to meet any financing requirements to qualify for the First Time Home Buyers' Exemption, or provide financing information in your year-end follow-up letter. If your property purchase was registered before February 20, 2008, you must meet the financing requirements that were in place when you purchased the property. However, effective February 20, 2008, you are free to pay down any amount owing on your mortgage. For more information click here. RRSPs The Home Buyers' Plan (HBP) is a program that allows you to withdraw funds from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. You can withdraw up to $25,000 in a calendar year. Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP, or they may not be deductible for any year. Generally, you have to repay all withdrawals to your RRSPs within a period of no more than 15 years. You will have to repay an amount to your RRSPs each year until your HBP balance is zero. If you do not repay the amount due for a year, it will have to be included in your income for that year. When a withdrawal is made you must meet the following conditions:
  • Neither you nor your spouse or common-law partner or the related person with a disability you help buy or build the qualifying home can own the qualifying home more than 30 days before the withdrawal is made.
  • You have to be a resident of Canada.
  • You have to complete Form T1036 for each eligible withdrawal.
  • You have to receive all withdrawals in the same calendar year.
  • You cannot withdraw more than $25,000.
After all your withdrawals have been made you must meet the following condition:
  • You have to buy or build the qualifying home for yourself, for a related person with a disability, or to help a related person with a disability buy or build a qualifying home before October 1 of the year after the year of the withdrawal.
What happens if you do not meet all the HBP conditions? You are responsible for making sure that all HBP conditions that apply to your situation are met. If a condition is not met while you are participating in the plan, your RRSP withdrawal will not be considered eligible. You will have to include the RRSP withdrawal as income on your income tax return for the year you received the funds. If we have already assessed your return for that year, we will reassess it to include the withdrawals. If you do not meet the conditions to participate in the HBP in the current year, you may be able to participate at a later year. Qualifying home A qualifying home is a housing unit located in Canada. This includes existing homes and those being constructed. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings all qualify. A share in a co-operative housing corporation that entitles you to possess, and gives you an equity interest in a housing unit located in Canada, also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify. Person with disability You are considered a person with a disability if you are entitled to the disability amount. For purposes of the HBP, a person with a disability includes you or a person related to you by blood, marriage, common-law partnership or adoption. A related person with a disability does not have to reside with you in the same home. We consider a person to be entitled to the disability amount if one of the following situations applies:
  • the person was entitled to the disability amount on line 316 of his or her tax return for the year before the HBP withdrawal, and still meets the eligibility requirements for the disability amount when the HBP withdrawal is made; or
  • the person was not entitled to the disability amount for any year before the HBP withdrawal, but a Form T2201, Disability Tax Credit Certificate, certified by a medical doctor or appropriate medical practitioner (that is, an optometrist, audiologist, psycholo gist, physiotherapist, occupational therapist or speech language pathologist), is filed for the person for the year of the HBP with drawal. If Form T2201 is not approved, your withdrawals will not be considered eligible withdrawals under the HBP, and will have to be included in your income for the year you receive them.
If all other eligibility requirements are met, we consider a person to be entitled to the disability amount even if costs for an attendant or for care in a nursing home were claimed as a medical expense by or on behalf of that person. Information provided by Canada Revenue Agency www.cra.gc.ca For more information on the Home Buyer's Plan Property Taxes Since 1957, the BC Government has helped reduce the amount of property taxes you pay to your local government. To be eligible for the grant, the property owner must be:
  • A Canadian citizen or landed immigrant and reside in British Columbia.
  • The registered owner or eligible occupant of the home located within the province.
  • Living in the home as your principal residence. The grant doesn't apply to summer cottages, second homes or rental properties.
Spouses who live together, who are married or live together in a marriage-like relationship, including same-gender partners, can qualify for a grant on one residence in the province in a calendar year. Spouses who live apart can each claim a grant on their principal residence if they have a written separation agreement or a court order recognizing the separation. Eligible home owners must apply for their grant each year before your tax due date. How much is the grant? For 2011, the basic grant reduces taxes for home owners under the age of 65 by up to $570. The additional grant for home owners aged 65+ and eligible veterans and disabled home owners is $275, for up to a total of $845. The basic grant is reduced by $5 for each $1,000 of assessed value over $1,150,000 and is eliminated on homes assessed at $1,264,000 and above. The additional grant is reduced by $5 for each $1,000 of assessed value over $1,150,000 and is eliminated on homes assessed at $1,319,000 and above. New initiatives in 2011 The Industrial Property Tax Credit increased to 60 per cent of school property taxes payable by light and major industrial properties. There is a new credit of 50 per cent of school property taxes for land classified as 'farm'. Multiple owners, multiple grants? If you own a property with others, decide which owner will pay the taxes so you don't pay twice. If, for example, there are three owners living in a dwelling as a principal residence, only one Home Owner Grant can be claimed. You may qualify for the Home Owner Grant if you're a shareholder of a corporation, or a member of a housing cooperative or housing society that owns:
  • an apartment building
  • housing cooperative buildings
  • housing society buildings
The corporation or cooperative or society applies for grants for all eligible property or units in the building and passes the grant benefit to qualifying occupants. An eligible property includes:
  • land shown as a separate taxable parcel on a tax roll that has a taxable improvement
  • a building containing at least two apartment units, each occupied by an eligible occupant
  • eligible land cooperative residences
  • a multi-dwelling leased parcel with two or more residences on it
For more information click here Home Owner Grant Frequently Asked Questions click here: Understanding Real Estate "Agency" REALTORS® work within a legal relationship called agency. The agency relationship is established through a contract between you, the client, and your agent, the company under which the REALTOR® is licensed. Most REALTOR® use a blue brochure titled Working with a Real Estate Agent to disclose the nature of the agency relationship with their client. A REALTOR® can act for a seller or a buyer, or to a limited degree, both. Whomever they represent, REALTORS® have a legal obligation to uphold the integrity of their clients, while protecting and promoting their interests. What is Designated Agency? When a REALTOR® or REALTORS® work solely on your behalf in real estate transactions, the REALTOR® and brokerage are bound by ethics and the law to be honest and thorough in representing you. The brokerage must account for all money and property placed in its hands while acting for you. The REALTOR® must:
  • Provide undivided loyalty to you (Client) by protecting your negotiating position at all times, and disclose to you all known facts which may affect or influence your decisions;
  • Obey all lawful instructions which you give the REALTOR® to act on your behalf;
  • Maintain the confidentiality of your information (financial, legal, personal, etc.)
  • Use reasonable care and skill in performing all assigned duties in the role as agent.
What is Limited Dual Agency? Limited Dual Agency occurs when the Designated Agent represents both the buyer/tenant and seller/landlord in the same transaction or two buyers competing for the same property. In this arrangement, the REALTOR® cannot be concerned exclusively with your interests in the transaction, since they are acting on behalf of the other party as well. Both the seller and the buyer or the competing buyers should fully consent to a limited dual agency arrangement in writing.

A REALTOR® who has consent to work as a limited dual agent must adhere to the following restrictions: A. Deal with both parties impartially; B. Have a duty of disclosure to both clients, except that:

i. REALTOR® must not disclose that the buyer/tenant is willing to pay a price or agree to terms other than those contained in the offer, nor disclose that the seller/landlord is willing to accept a price or terms other than those contained in the listing; ii. in the case of competing buyers, the REALTOR® must not disclose the amount or terms of any offer to purchase or lease made or contemplated by either buyer/tenant; iii. REALTOR® must not disclose the motivation of one Client to the other Client, unless one of the Clients has authorized such disclosure themselves; iv. REALTOR® must not disclose buyer/tenant’s or seller/ landlord’s personal information to the other Client, unless authorized in writing. (This refers to information not otherwise disclosed in the transaction documents.)

C. Must disclose to the buyer/tenant any defects about the physical condition of the property that are known to the REALTOR®.