purchasing a home will need to budget for the taxes involved.
The taxes cannot be rolled into the mortgage, so the purchaser
will need to have them set aside.
GST and Home Purchase
GST is only charged on new homes and not on resale properties.
The government offers a GST rebate; the lower the price
of the home, the greater the percentage of the rebate. There
is no rebate on luxury homes (at this point, the median
home price in some Canadian real estate markets is above
the federal government’s cutoff for a GST rebate).
The person selling the home is responsible for paying GST
on the service fees of the realtors involved in the transaction.
Land and Property Transfer Taxes
Each province and territory has a different policy on transfer
of ownership taxes, ranging from .5% to 3%. A transfer tax
of 1.5% on a home costing $200,000 would amount to $3,000—cash
that the purchaser must have on hand on the day that ownership
In most cases, the previous owner of a property will have
paid the municipal property taxes for the year. When the
title deed is transferred to the new owner, he or she will
have to pay the previous owner the remaining portion of
the property taxes. For example, if the annual property
taxes are $2,400 and the title changes 2/3 of the way through
the year, the new owner will have to pay back $800 to the
Other Home Purchase Tax Issues
For the most part, the interest paid on home mortgages is
not tax deductible. But when home equity is used for investment
purposes it is possible to deduct mortgage interest. Also,
different municipalities, provinces, and federal programs
offer tax rebates depending on various criteria. Consult
with an Ottawa mortgages specialist or tax lawyer for information
on tax break programs and grants specific to Ottawa.
If you have additional questions or would like to see if
you can prequalify for a mortgage
in Ottawa, please call Chad Robinson at (613) 288-5836
or use our Ottawa
Mortgages Directory to find a mortgage
broker or mortgage
bank specialist to help you.