Ben (Bahman) Taghavi Sutton Group West Coast Realty

Cell 778-317-7490 | EMAIL btaghavi@sutton.com |

Market Update - October 2018

B.C. Home Owner Mortgage and Equity partnership

Through the B.C. HOME Partnership program, the Province is helping first-time home buyers by contributing to the amount they have already saved for a down payment with a loan that is interest-free and payment-free for the first five years.

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.
  • After five years, buyers can either repay their loan or enter into monthly payments at current interest rates.
  • Loans through the program become due after 25 years – the same length as most mortgages.

The B.C. HOME Partnership program will start accepting applications Jan. 16, 2017.

Eligibility

The B.C. Home Owner Mortgage and Equity (HOME) Partnership supports eligible first-time homebuyers. To qualify for the program, all individuals with a registered interest on title must reside in the home and:

  •   Have been a Canadian citizen or permanent resident for at least five years
  •   Have resided in British Columbia for at least one year immediately preceeding the date of application
  •   Be a first-time buyer who has not owned an interest in a residence anywhere in the world at any time
  •   Use the property as their principal residence for the first five years
  •   Purchase a home that has a purchase price of $750,000 or less (excluding taxes and fees)
  •   Obtain a high-ratio insured first mortgage on the property for at least 80% of the purchase price
  •   Have a combined, gross household income of all individuals on title not exceeding $150,000
  •   Have saved a down payment amount at least equal to the loan amount for which the buyer applied

How to apply

Step 1: Get preapproval for an insured first mortgage from your financial lending institution.
Step 2: Apply to BC Housing for the Home Owner Mortgage and Equity (HOME) partnership loan. If you are eligible, you will receive confirmation of eligibility and Homebuyer’s Kit which includes information for your Lender, Real Estate Agent, and Lawyer/Notary Public.
Step 3: Find your home and provide the details of your planned purchase to BC Housing for approval.

Applications for the program will be accepted starting Jan. 16, 2017, for purchases that will close on or after Feb. 15, 2017.

B.C. to lift foreign buyers tax for people with work permits

B.C.’s premier has announced the province is lifting the 15 per cent foreign buyers tax for anyone living in Metro Vancouver with a work permit.

The move is an effort to encourage people to come to the province. Those who live, work and pay B.C. taxes will now be exempt from the additional property transfer tax.

First Time Home Buyers' Program for Property Transfer Tax

The First Time Home Buyers' Program reduces or eliminates the amount of property transfer tax you pay when you purchase your first home. If you qualify for the program, you may be eligible for either a full or partial exemption from the tax.

If one or more of the purchasers don’t qualify, only the percentage of interest that the first time home buyer(s) have in the property is eligible.

For example, if you qualify and purchase a property with a fair market value of $400,000 with a person who doesn’t qualify you would still qualify. If you owned a 60% interest in the property, 60% of the tax amount would be eligible for the exemption.

Do I Qualify?

To qualify for a full exemption, at the time the property is registered you must:

  • be a Canadian citizen or permanent resident
  • have lived in B.C. for 12 consecutive months immediately before the date you register the property or filed at least 2 income tax returns as a B.C. resident in the last 6 years
  • have never owned an interest in a principal residence anywhere in the world at any time 
  • have never received a first time home buyers' exemption or refund 
  • and the property must:

    • be located in B.C.
    • only be used as your principal residence
    • have a fair market value of $475,000 or less. You may qualify for a partial exemption from the tax if the property has a fair market value less than $500,000
       

New mortgage rules will affect first-time buyers:

Those with less than 20% down will qualify for a lot less


Ottawa moved to tighten mortgage lending rules that will limit the amount many Canadians can borrow to help ensure that when interest rates rise, they’ll still be able to make their payments.

Under the new rules, a stress test that had only applied to borrowers who opted for variable rate mortgages or fixed rate mortgages with terms less than five years will now be used for all home buyers with less than a 20 per cent down payment.

That means borrowers must be able to qualify for their mortgage using a higher interest rate than they will actually be paying on their mortgage.

The advertised special offer rates for a five-year fixed rate mortgage at Canada’s big banks are around 2.5 per cent. However, the Bank of Canada-posted rate used in the stress test is 4.64 per cent based on the posted rate at the big banks.



Newly Built Home Exemption:

The Newly Built Home Exemption reduces or eliminates the amount of property transfer tax you pay when you purchase a newly built home.

A newly built home includes:

  • a house constructed and affixed on a parcel of vacant land
  • a new apartment in a newly built condominium building
  • a manufactured home that is placed and affixed on a parcel of vacant land
  • an already constructed house that is removed from one parcel of land and affixed to another parcel of vacant land, as long as the house hasn’t been occupied since it was placed on the new parcel of vacant land
  • a house resulting from the division of an existing improvement affixed to a parcel of land that was also subdivided, as long as this house hasn’t been occupied since the subdivision of the parcel
  • a house converted from an existing improvement on the land. The previous improvement couldn’t have been used as residential (e.g. a warehouse converted into apartments).

If you qualify for the exemption, you may be eligible for either a full or partial exemption from the tax.

If you paid property transfer tax when you purchased vacant land and you now have a newly built home on the land, you may be eligible for a refund of the property transfer tax you paid.

The exemption doesn’t apply to the additional property transfer tax on residential transfers to foreign nationals or foreign corporations.

Do I Qualify?

To qualify, the property (land and improvement) must be registered at the land title office after February 16, 2016 and you must be:

and the property must:

  • be located in B.C.
  • only be used as your principal residence
  • have a fair market value of $750,000 or less
  • be 0.5 hectares (1.24 acres) or smaller

You may qualify for a partial exemption, if the property:

B.C. introduces 15% real estate tax targeting foreign homebuyers

Foreign nationals who buy real estate in Metro Vancouver would pay an additional property transfer tax of 15 per cent under legislation introduced by the British Columbia government.

Finance Minister Mike de Jong unveiled the tax as part of legislation aimed at addressing low vacancy rates and high real estate prices in southern B.C.

"For example, the additional tax on the purchase of a home selling for $2 million to a foreign national will amount to an additional $300,000," de Jong told members of the legislature.

The additional tax took effect Aug02,2016 and apply to foreign buyers registering the purchase of residential homes in Metro Vancouver, excluding treaty lands in the Tsawwassen First Nation.

All B.C. residents currently pay a one per cent tax on the first $200,000 of their purchase, two per cent on the remaining value up to $2 million and three per cent on the portion above that.

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