Costs of Buying a Home in Calgary

One thing I generally go through with my buyers before we start looking is the costs to buying a home here in Calgary. Of course this will vary depending on the type of home you are buying but this is what you can expect:

Condo/Townhome

1. Deposit (this is part of your down payment and the usual is $5000)
2. Home Inspection ~$500-$600
3. Condo Document Review (this is someone who reviews the condo board documents provided from the seller to put the information in context so you can evaluate the risks, rules, management style and expectations while living in the condo you are considering)~$400-$500
4. Appraisal (some lenders do require an appraisal done depending on the type of loan) `$300-$400
5. Tax Adjustments (please see below)
6. Down Payment (minimum is 5% but please check with your mortgage broker to confirm- you will bring the remaining amount of down payment to your lawyer appointment)
7. Realtor Fees $0 
8. Lawyer Fees (click here to check out pricing)
9. Moving Fees (these will vary depending if you rent a U-Haul or professional movers)
10. Home Insurance (you will need to show proof of this when you meet with the lawyers at least a week before your possession date)


Single Family Home

1. Deposit (depends on price range but can vary from $5,000-20,000 and is part of your down payment)
2. Home Inspection $500-$700 
3. Realtor Fees $0
4. Appraisal (some lenders do require an appraisal done depending on the type of loan) `$300-$400
5. Down Payment (minimum is 5% but please check with your mortgage broker to confirm- you will bring the remaining amount of down payment to your lawyer appointment)
6. Lawyer Fees (click here to check out pricing) 
7. Tax adjustments (please see below)
8. Moving fees (these will vary depending if you rent a U-Haul or professional movers) 
9.Home Insurance (you will need to show proof of this when you meet with the lawyers at least a week before your possession date)


Country Residential Property (Or Acreage)

1. Deposit (depends on price range but can vary from $5,000-20,000 and is part of your down payment)
2. Home Inspection $500-$700
3.Water and Septic Inspection ~$1,000
4. Realtor Fees $0 
4.Appraisal (price is depending on the type of loan, size of acreage, and location-speak to your mortgage broker about pricing)
5. Down Payment (minimum is 5% but please check with your mortgage broker to confirm- you will bring the remaining amount of down payment to your lawyer appointment)
6. Lawyer Fees (click here to check out pricing) 
7. Tax adjustments (please see below)
8. Moving Fees (these will vary depending if you rent a U-Haul or professional movers)
9. Home Insurance (you will need to show proof of this when you meet with the lawyers at least a week before your possession date)

**Pro tip** Most lenders will require an appraisal to happen on the acreage to assess the value but will only appraise on 2 buildings (so if there's a shop along with the garage they will only appraise on one-typically the garage and no shop) which means that your accepted offer and appraisal will be much different amounts and the lender will ask you to come up with the difference on your own. There are a few lenders who will appraise on more than 2 properties including ATB and most credit unions. If you are having issues with financing an acreage these are the lenders you'll want to speak to. 


Property Tax Adjustments 

Property tax adjustments are for the purpose of ensuring that the buyer and seller are only paying for the property taxes for the time that they own the property. Real estate purchase contracts include clauses that note that property taxes will be adjusted to credit the buyer or seller, to ensure that the parties are aware.

Property taxes are calculated according to the Adjustment Date, which may or may not be the same as the possession date. The Adjustment Date is when the buyer begins to assume responsibility for the property taxes.The City does not adjust taxes between the seller and buyer.  This is done by the lawyers on the closing of the real estate transaction.When calculating the adjustment, the first thing to understand is that taxes are assessed for the period of Jan 1 to Dec 31 of each year. This means that, for example, 2019 taxes are for the period of Jan 1, 2019 to Dec 31, 2019. (Note: This is the period used by the City of Calgary and surrounding municipalities – not all municipalities use this assessment period.)

Paying Property Taxes


There are three ways to pay property taxes:
1. Through a lump sum payment to the city
2. Through monthly payments to the city
3. Through monthly payments with the mortgage payment


Lump Sum Payment to the City

If you pay the City annually through a lump sum payment, the payment is due June 30th of the assessment year.  The payment is for the period of January 1st to December 31st of the assessment year.

Monthly Payments to the City

If you pay the City monthly, your payments start in January and end in December for the assessment period.You can sign up for monthly payments online. When charged monthly by the city, for the first 6 months of the year you will be charged according to the property tax amount of the previous year. For the next 6 months, the amount is adjusted to reflect the current tax amount.
For City of Calgary enrolment information click here
 Choosing monthly payments directly to the city are a good way to avoid incurring late payment penalties because the property tax is automatically withdrawn from your bank account each month.

With your Mortgage Payments

If you pay your property tax with your mortgage payments, the lender collects a tax amount with your regular mortgage payment.  The tax payment is calculated using the yearly estimated tax levy divided by the number of mortgage payments due during one mortgage year. The tax payment is allocated to a tax account attached to your mortgage.  Taxes will be paid from the tax account when taxes are due by the mortgage lender.  Taxes are due in the middle of the year – June 30. This means that the lender has to collect for 6 months into the previous year in order to have collected 1 full year worth of taxes by the time taxes are due. I.e. To pay the City the total taxes due June 2020, the lender starts collecting in June 2019. 

Examples


Example #1 – Closing Date/Adjustment Date is May 1, 2019In this example, property taxes are paid annually. The property tax for this year has not been paid by the seller because they are not due until June 30, 2019 for the period of Jan 1, 2019 to Dec 31, 2019.On closing, the seller provides a credit to the buyer (amount deducted from the purchase price) for their share of the taxes being Jan 1, 2019 to May 1, 2019.   The buyer is then responsible for paying the total 2019 property tax when due.If the annual tax is $10,000, the seller provides a deduction to the purchase price of $3,278.69*.*$10,000 / 366 days in 2019 = 27.32 * 120 days of seller ownership (Jan 1 to May 1) = 3,278.69

Example #2 – Closing Date/Adjustment Date is August 1, 2019In this example, property taxes are paid annually. Property taxes were paid by the seller when due on June 30, 2019 for the period of Jan 1, 2019 to Dec 31, 2019.On closing, the buyer provides a credit to the seller (amount added to the purchase price) for their share of the taxes being Aug 1, 2019 to Dec 31, 2019.  If the annual tax is $10,000, the buyer provides a credit of $4,180.33*.*$10,000 / 366 days in 2019 = 27.32 * 153 days of buyer ownership (Aug 1 to Dec 31) = 4,180.33

Example # 3 – Seller pays taxes monthly to the City – Closing Date is June 1, 2019Here the amount of tax that the seller is responsible for is calculated (Jan 1 to June 1) and adjusted against the actual amount of taxes that the seller has paid to the City for the current year.  As stated earlier, when the owner pays the property tax monthly to the city, for the first six months, the buyer is charged according to the property tax amount of the previous year and for the remaining six months, the value of the tax is adjusted to reflect the present year’s tax amount.If the closing date is June 1st, the seller has paid $1,250 towards the 2019 property tax, as the value of the property tax was $2,500 in the previous year. However, the seller’s actual share of the 2019 tax for January 1st to June 1st is $1,041.00. In this case, the seller has overpaid the City by $208.90 for their share. On closing the buyer must pay the seller $208.90. The buyer is then responsible for the payment of the balance of the 2019 property tax.

We know that taxes can be confusing so please call to speak to your Real Estate Lawyer who can clarify the adjustment for your particular property closing.