Another fantastic change to the Property Transfer Tax is the elimination of the tax on new construction houses, townhouses and apartments up to $1,100,000 from the original $750,000.
This is a great change. New construction has GST added to the purchase price which is already a large extra expense, so not having to pay the property transfer tax is a great incentive to look at buying or building a new house.
What I personally really like about this new change is that GST can be added to the purchase price and included in the mortgage but property transfer tax is paid out of your pocket at the lawyer. For you, this means that you don’t have to have as much cash on hand to purchase a new build as long as you have the down payment and can qualify for the mortgage amount required.
Here is an example:
$900,000 purchase price plus GST of $45,000 for a total purchase price of $945,000
Down payment is 5% on first $500,000 and 10% on remaining $445,000 = $69,500
Savings in Property transfer tax = $16,000
I often find the government's incentives to get into housing to be too little, too late, too complicated or just plain stupid. This time I actually agree with these changes and feel they are timely, reasonable and will be utilised.