BoC hike this month a dead certainty - observer

BoC hike this month a dead certainty - observer

If you have a variable rate mortgage, home equity line of credit, credit cards or personal loans, this affects you.

Understanding the Real Estate details in the B.C. Budget 2018

ADDITIONAL PROPERTY TAX FOR FOREIGN ENTITIES AND TAXABLE TRUSTEES
1.Has gone from 15% to 20%, effective today.
2.Contracts written before Feb. 20, 2018 with a closing on or before May, 2018 are exempted, but only for Capital Regional District, Fraser Valley Regional District, Regional District of Central Okanagan or Nanaimo Regional District. Note this exemption does not apply in Greater Vancouver.
3.Transfers pursuant to court order, order nisi of foreclosure, separation agreement, transfer from personal rep of deceased’s estate to beneficiary or transfer to surviving joint tenant are also exempt, provided the triggering event occurred before Feb. 20, 2018.
4.This tax applies to the Capital Regional District, Fraser Valley Regional District, Regional District of Central Okanagan, Nanaimo Regional District and Greater Vancouver. The areas for each region can be found at https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand/additional-property-transfer-tax/bc-areas
5.Only on residential property; if property is farmland or commercial with a residential component, tax applies on the residential component.
6.Exemption for BC Provincial Nominee Program still applies.

SPECULATION TAX

1.Tax is meant to target foreign and domestic homeowners who do not pay income tax in B.C.
2.Tax will apply to same areas as foreign buyers tax apart from Okanagan, where it only applies to Kelowna and West Kelowna.
3.Starts in 2018 at $5.00 per $1,000.00 of assessed value, goes up to $20 in 2019.
4.Not sure how this will affect vacation homes, nor when this tax is payable.

PROPERTY TRANSFER TAX

1.Tax rises from 3% to 5% on value of homes over $3,000,000.00.
2.Remains at 1% on first $200,000.00, 2% on amounts between $200,000.00 and $2,000,000; 3% on amounts between $2,000,000.00 and $3,000,000.00 and 5% on amounts over $3,000,000.00.

PRE-SALE CONDO ASSIGNMENTS

1.Developers will collect and report information about pre-sale condo purchases; nothing else in budget about pre-sale contracts or assignments that we have seen.

B.C. HOME OWNER SECOND MORTGAGES 

1.    This program is now cancelled.

 

Stay tuned as there will be more to come. 

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A helping hand to get a foot in the door 

It is no secret that it is getting tougher for younger generations to buy a home, especially in Vancouver where the cost of living can make it exceptionally difficult to save the minimum down payment. If used correctly, one program which may help struggling first timers get into the market is the B.C. Home Owner Mortgage and Equity Partnership Program a.k.a. BC Home Partnership.

 

This program is available to eligible first-time homebuyers by providing repayable down payment assistance loans.

 

Here is how it works:

 

The B.C. Home Partnership program will meet the buyer’s contribution up to 5% of the home’s

purchase price, to a maximum purchase price of $750,000.

 

·       Maximum loan amount is $37,500.

·       After five years, buyers can either repay their loan or enter into monthly payments at current interest rates.

·       Loans through the program are amortized over 25 years which is the same length as most mortgages.

·       The applicant needs to be a Canadian citizen or permanent resident for five years, live in BC, have a household income under $150,000 per year and be pre-approved for a high-ratio mortgage, among other requirements.

 

For a first-time home buyer that has good earning potential but has not had adequate time to save a down payment, this program allows entry into the market with as little as 2.5% down. It also provides an adequate amount of time to increase earning power to pay off the loan upon renewal or to afford the associated payments by renewing the loan.

 

There are important details to know before opting for this program:

 

·       The home being purchased must be used as the principal residence of all individuals on the title for the five years after purchasing. Any changes to the title will trigger the loan to become due and payable, except in the instance of divorce or new marriage and homeowner(s) qualifies to retain the loan.

·       Borrowers incur extra legal costs of approximately $560 for the second mortgage registration, these fees are deducted from the mortgage proceeds.

·       The minimum equity component from the borrower can be gifted from immediate family member.

·       Mortgage cannot be transferred to a new lender upon renewal if the B.C. Home Partnership loan remains outstanding. This can mean a higher renewal rate if the existing mortgage holder does not offer the lowest market rate.

 

Other programs are available to help first-time buyers save on property transfer tax (PTT). The First Time Home Buyers Program can save first-time buyers up to $7,500 when purchasing a home valued up to $475,000.

 

Or, first-time buyers can access the Newly Built Homes Exemption, which can save buyers up to $13,000 in PTT when purchasing a newly constructed or subdivided home worth up to $750,000.

 

The most effective way to buy a home remains to be with a 20% minimum down payment which avoids costly insurer fees. However, if the choice between renting and home ownership which is reliant on getting the down payment, the BC Home Partnership is a viable option.

 

For more details and to see if you qualify: https://www2.gov.bc.ca/gov/content/home/featured-services/services/bc-home-owner-mortgage-and-equity-partnership-program

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