Condo Closing Costs
What to Budget for the Completion Day
Written By: Mariko Baerg, REALTOR of Bridgewell Real Estate Group
If you’re looking for a realtor to help you purchase a property, call me today!
Closing costs are fees, disbursements, and costs that are paid at the time of completion when purchasing a home.
Condos often involve more strata specific costs, and it’s important to know about these before completion so you can budget for what is needed to purchase.
This blog goes through condo closing costs so that you can prepare comfortably for closing.
Read for all you need to know on condo closing costs!
What You Need to Pay For on the Completion Day
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THE BALANCE OF YOUR DOWN PAYMENT
By the time you’re coming up to the closing date, you’ll already have put down your deposit. (typically 5% of the purchase price) At the time of closing, you’ll be asked to pay any additional funds that you are putting towards your down payment.
If you’re looking for information on minimum down payments, check out this blog: Minimum Down Payment BC
LEGAL FEES
The amount charged for legal fees varies from the professional you choose to hire, as well as the additional costs incurred by your notary/lawyer. This should also include acts such as ordering a title search and registering title. It is safe to estimate about $1,300-$2,100.
GST
If you are purchasing a new construction/presale condo then you’ll have to factor in the 5% Goods and Services Tax (GST) in BC.
If you purchasing a new build property under $350,000, then you may be eligible for a GST rebate equivalent to 36% of the 5% GST paid. There is also a partial rebate for new homes priced above $350,000 but less than $450,000. You have to apply for a GST rebate. For more information on GST and when you need to pay it, read this blog post: Gross Services Tax (GST) in Real Estate
Many of the services such as an appraisal, inspection, or legal services also have GST added on to the cost of service.
Provincial Sales Tax doesn’t apply to most services except legal and notary fees.
MOVE IN FEES
This amount is charged at completion and paid back to the strata. You will find out the amount in the bylaws within the strata documents. It is often around $100-250, but we’ve seen up to $500 and as low as nothing!
Your realtor will be able to tell you how much the exact strata move in fee for the property is when they receive all of the strata documents during the subject removal process.
MAINTENANCE FEE ADJUSTMENTS
When purchasing a condo, you’ll need to factor in maintenance fee adjustments at closing.
Because strata fees are usually due on the 1st of the month, if your purchase closes after this (ie. The middle of the month) then you’ll need to reimburse the seller for their unused portion of that month’s strata fees.
Keep in mind that the strata may also require a hold back for an extra month of fees if they haven’t done their books yet by the time you close. Once they confirm it’s been paid, they will reimburse you – but you should be saving for minimum 2 months worth of strata fees for closing just in case.
PROPERTY TAX ADJUSTMENT
Property taxes are paid on July 1st for a full calendar year. If your move is post July 1, you will likely have to reimburse the seller the amount of their unused property taxes beyond the closing date.
In the event that the seller has not yet paid the taxes and/or your completion date falls before July 1st, then you may be credited the amount by the seller for their time in the unit prior to moving out.
ADDITIONAL ADJUSTMENTS
Adjustments for Rentals and Security deposits – If the home has a rental portion, or you are taking over a rental, the security deposit should be credited to the buyer from the seller. Additionally, if the move in date is past the monthly rental payment date, the seller should credit the buyer for a portion of that month’s rent.
Adjustments for Utilities– Reimbursement to Seller for prepaid utilities, water fees, etc. (amount varies)
PROPERTY TRANSFER TAX
The property transfer tax is a major closing cost that is charged on the fair market value of a property at a rate of 1% on the 1st 200K/2% on the balance up to and including $2,000,000 and 3% on the balance greater than $2,000,000.
If you are a first time home buyer you may be exempt from this fully if your purchase is less than $835,000. Partial exemptions apply for a purchase price up to $860,000. For more information on property transfer tax, read our blog post here: Property Transfer Tax Information in BC
If you are a foreign entity, (not a Canadian citizien or permanent resident) then you’ll also be subject to an additional 15% of the fair market value at the time of closing.
HOME INSURANCE FOR THE UNIT + STRATA UPGRADES
When you get a mortgage on a property, the lender will require you to obtain home/fire insurance – this cost varies.
While the strata does have insurance, you will still need to get home/fire insurance for your unit and also for anything that the strata has upgraded over the years. The insurance covered by the strata does not cover additional upgrades made over the years.
Even if your condo is a new home under 2-5-10 warranty, you will still need to obtain home/fire insurance if you are purchasing with a mortgage.
MORTGAGE INSURANCE PREMIUM
An insurance premium is charged if you have a less than 20% down payment. This can be paid as a lump sum fee at the time of closing, or it can be included in your monthly mortgage payment. This amount depends on how much you put down, as it works on a sliding scale.
STRATA DOCUMENTS
Your lawyer or notary may have to purchase additional strata documents or an updated Form B. It is common that they ask the listing/buyers agent for documents, but if you have a quick closing they may get charged a rush fee which they will charge back to you or if you have a long closing they may need an updated document.
This is typically not more than a couple hundred dollars.
MOVING COSTS
If you’d like to hire a mover (which we recommend!) then hire professionals, or alternatively you can rent a truck and recruit friends and family.
You may also want to budget for a storage locker if you feel that you’ll need extra space to complete the move slowly and comfortably.
These costs are totally up to you, and will depend on what you decide to do and who you hire.
NEW LOCKS
For peace of mind, we always recommend budgeting for putting new locks on your home. For a condo, you’ll only need to update the unit doors and get a new padlock for your strata storage locker if one is included with the unit. The fob remote is strata related, and will not change from owner to owner.
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If you’re looking to purchase a property and would like guidance on how to get the ball rolling, then give us a call. We’re happy to walk you through the process so that you have a clear idea of how to purchase a condo from the start. Start a conversation by calling or texting 604-319-0200 or email [email protected] to start a conversation. We’re here to help.
