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Real Estate Q&A

Everything you wanted to know about real estate but were afraid to ask

Before you buy or sell, it's important to ask the right questions and get the right answers from a professional realtor and financial advisor. 

Q What is the difference between a REALTOR® and a real estate agent?

A Before you get ready to buy or sell your home, it is important to know that all real estate licensees are not the same. There is a difference between a REALTOR® and a real estate agent. Both are licensed by the Real Estate Council of Ontario, but only real estate licensees who are members of the Canadian Real Estate Association are properly called REALTORS®.
A REALTOR® has taken extra steps to become a member of an association of real estate professionals that adheres to a strict Code of Ethics. REALTORS® are expected to maintain a higher level of knowledge of the process of buying and selling real estate.

Q What are the rebates/refunds for first-time home buyers?

A First-time homebuyers may be eligible for a land transfer tax refund of all or part of the tax. The maximum amount of the refund is $2,000. If the refund is claimed at the time of registration, it may offset the land transfer tax ordinarily payable. If not claimed at registration, the refund may be claimed directly from the Ministry of Revenue.
First-time home buyers’ tax credit will assist first time home buyers with closing costs relating to the purchase of a home. Fifteen per cent credit will be applied to a $5,000 limit and will provide up to $750 to assist in paying the closing costs associated with first time purchases.

Q How much of my RRSP’s can I borrow to buy a home?

A The withdrawal limit for the RRSP Home Buyers Plan is $25,000, providing first-time home buyers with additional access to savings to purchase their first home.

Q What extra costs can I expect to pay other than the purchase of a home?

ALand transfer tax Payable by anyone who purchases property in Ontario, this tax is calculated on the property’s purchase price and varies from .5 to 2 per cent.
 • Appraisal fee Before lending you any money, most finance companies will require a property appraisal at your expense.  The cost of a basic appraisal for mortgage purposes may range from $200 to $275.
Land survey fee or Title insurance fee Many lenders require an up-to-date survey of the property you intend to purchase.   Some lenders will accept a survey that was done within the past five or 10 years.  Survey costs vary.  Most lenders will accept title insurance in lieu of a survey, at a much lower cost ranging from $200 to $300.
Inspection fee Before issuing a mortgage, some lenders require a professional inspection of the home.  It is the benefit of the buyer to hire a home inspector and well worth the cost.  Home inspections range from $300 to $400.
Mortgage insurance There are many types of insurance that may be required when buying a home.  If you are purchasing your home with less than 25% down, you will be required to purchase mortgage insurance.  The cost to you ranges from 1.25 to 3.75 per cent of the mortgage amount and is added to the mortgage principal.
Mortgage life insurance This is a form of term life insurance that pays off the balance owing on your mortgage if you or your co-borrower dies.  Most lenders offer you the option of buying this insurance and adding it to your monthly payments.  Cost depends on the lender or insurance company.
Fire and liability insurance Lenders require that you carry fire and extended coverage insurance that exceeds the outstanding balance on the value of the home.  You will want to have fire and weather-related damage protection.  Public liability is often included in home insurance coverage and you may want to include this in your policy.  Check with your insurance agent for cost options.
Legal Fees You can expect to pay all legal fees required to arrange your mortgage and disbursements.  Disbursements include the title search, drawing up the title deed and preparing and registering the mortgage.    Lawyers’ fees can vary widely, so shop around before deciding on a lawyer.
Other costs These include the cost of adjustments to property taxes, utility bills, heating, electricity and so on, which the vendor has pre-paid beyond the closing date.  Ask your REALTOR® to explain each cost you’re likely to incur.
Maintenance and utility costs In addition to your monthly mortgage and property tax payments, you will want to budget for the monthly cost of heating, electricity and other expenses related to your new home.

Q How can I avoid carrying two mortgages when buying and selling a home at the same time?

A Bridge financing is a good short-term solution.  A bridge loan can be expensive to carry for many months. 

Here are a few tips to help you avoid becoming a dual homeowner.
• Sell first Determine whether it’s best to sell your current home before buying a new one, or vice versa.
• List at fair market value Make sure you price your current home accurately when you first list, especially if you’ve already purchased a new house.
• Request a long close If you’re buying a home prior to selling your current home, ask the seller for a long closing date to give you as much time as possible to sell your home.
•  Make a conditional offer  Consider inserting a clause into your offer to purchase stating that the deal is subject to selling your current home.  Be aware; some sellers may be put off by this clause.

Q How does a REALTOR® help sell my home?

A There are many ways a REALTOR® can help you when you decide to sell your home.
• Advice A REALTOR® will give you a step-by-step explanation about the home selling process – from beginning to end.
• Negotiation A REALTOR® will negotiate the sales contract and professionally close the deal for you.
• Resources A REALTOR® will share information about your property through the Multiple Listing Service® System (MLS®) and on the Internet.  This provides maximum exposure of your home to other REALTORS® and their clients – a powerful marketing tool.
• Legwork/Marketing
A REALTOR® will place advertisements for your home and field phone calls about the property.  This is less hassle and faster results for you.
• Qualifies the Buyers A REALTOR® will qualify potential buyers to ensure that they are financially able to buy your property.

Q What are the requirements to qualify for the refund of land transfer tax for first-time homebuyers?

A The requirements are as follows:

  • The purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
  • If the purchaser has a spouse, the spouse cannot have owned a home, or had any ownership interest in a home, anywhere in the world, while he or she was the purchaser's spouse. If this is the case, no refund is available to either spouse.
  • The purchaser must be at least 18 years of age.
  • The application for a refund must be made within 18 months after the date on which the conveyance or disposition occurred. (Note that an application for the refund can be completed upon the electronic registration of the conveyance).
  • The purchaser must occupy the home as his or her principal residence no later than nine months after the date of the conveyance or disposition.
  • The purchaser cannot have previously received an Ontario Home Ownership Savings Plan (OHOSP) based refund of land transfer tax.
  • If the agreement of purchase and sale is entered into before December 14, 2007, the home must be newly constructed.

Q If a parent is also on title to a child's property at the insistence of the bank, is the child eligible for the Land Transfer Refund as long as all of the other conditions are met?

A In this situation, it will be necessary to pay land transfer tax at the time of registration and apply for a refund from the ministry.

If the parent did not acquire a beneficial interest in the property as a result of the conveyance:

  • the ministry will accept the fact that the parent was on title as a trustee for the child, and
  • the child would qualify for the newly constructed home refund, provided that evidence of the trust is submitted (e.g., a letter from the bank confirming that the parent is on title for mortgage purposes).

Q How do I apply for the refund of land transfer tax for first-time homebuyers?

A Normally, upon registration, your lawyer will complete the appropriate tax statements in the electronic land registration system, and the refund will be deducted automatically from the land transfer tax that would otherwise be payable.

If this did not occur, after registration you can apply for the refund by submitting an application to the ministry consisting of the following documentation:

  • completed Land Transfer Tax Refund Affidavit For First-time Purchasers;
  • copy of the registered conveyance;
  • evidence of the amount of tax paid on registration;
  • copy of the Agreement of Purchase and Sale (including all schedules and amendments);
  • copy of the Statement of Adjustments; and,
  • copy of the Tarion new home warranty certificate (if applicable).

Q My spouse and I are buying our first home together. I have owned a home before, but sold it before we became spouses. My spouse has never owned a home. Does she qualify for the First-time Homebuyers Land Transfer Tax Refund?

A Yes, even though you are not a first-time homebuyer, your spouse may claim a refund up to the maximum, as long as you did not own a home while you were each others "spouse."

Where a husband who is not a first-time purchaser and a wife who is a first-time purchaser, purchase a home together, the wife may claim the land transfer tax refund with respect to her interest and her husband's interest, if he sold his interest in all homes that he previously owned before becoming her spouse.

For land transfer tax purposes, "spouse" means either of two persons who are married to each other, or who are not married to each other and who have cohabited:

  • continuously for a period of not less than three years; or
  • in a relationship of some permanence, if they are the natural or adoptive parents of a child.

Q My partner and I are buying a home together. I have owned a home, but he has not. Does he qualify for the First-time Homebuyers Land Trasfer Tax Refund?

A Your partner's eligibility for a refund depends on whether you are "spouses" as defined in section 29 of the Family Law Act.

For land transfer tax purposes, "spouse" means either of two persons who are married to each other, or who are not married to each other and who have cohabited:

  • continuously for a period of not less than three years; or
  • in a relationship of some permanence, if they are the natural or adoptive parents of a child.
    If you are not spouses, then your partner may claim a refund based on his/her interest acquired in the home.

If you are "spouses", your partner may claim a refund up to the maximum, as long as you did not own a home while you were each other's "spouse." If you did own the home while you were each other's "spouse", then your partner does not qualify for a refund even if you did not live in the house together.