 |
| |
Information Provided Courtesy of Steve Turner, Ardaugh, Hunter,
Turner.
Property Transfer Tax (PTT)
A Provincial Government Tax which applies on all transfers of Real
Estate and is payable on the completion date. The rate of tax is
one percent (1%) on the first $200,000.00 of the purchase price
and two percent (2%) on the balance of the purchase price over
$200,000.00.
Legal Fees and Disbursements
These are the closing costs paid to a lawyer or notary to complete
the transaction on your behalf. Fees are paid for completing the
conveyance and preparing and registering the mortgage.
Disbursements are the costs for out-of-pocket expenses such as
government registration charges, property and tax information
searches, courier costs, long-distance calls plus PST and GST. The
exact amount of these charges will vary depending on the
transaction but they generally range from approximately $600.00 to
$1,000.00. Most lawyers and notaries will provide quotes as to
charges, it is important to ask whether the quote includes all
expenses to complete the transaction.
Goods and Services Tax
GST is a seven percent (7%) tax which applies on the purchase of
new construction and on the resale of accommodations which have
been rented out for short-term/nightly rentals. The payment of GST
can be deferred if the new intends to offer the property available
for short-term/nightly rental for ninety percent (90%) of the time
and becomes a GST registrant. Becoming a GST registrant is a
relatively straightforward procedure of completing approximately
four forms. Once you are a GST registrant, you are entitled to
claim credits for the GST that you pay, for example, on legal
fees, property management fees, hydro, cable, telephone. You are
then required to charge, collect and remit GST on the nightly
rentals, which in some instances may be done through your property
manager. You will be required to annually file a GST Return.
Whistler Association Fees
These are quarterly fees payable to the Whistler Resort
Association and are calculated based on the number of bed units
(one bedroom equals two bed units) present in the accommodations,
and is dependent on the use of the property. Should you be using
the property for only personal use and not have it available for
rental more than 14 days per year, you may file a Declaration with
the Whistler Resort Association to pay a lower rate of fees. The
lower rate of fees is not available to fractional interest
(quarter interest) or properties that are subject to a phase one
covenant in the town center. For more detailed information about
bed units contact Whistler Resort Association at (604) 932-3928.
Insurance
Purchasers will be required to arrange insurance on single-family
residential accommodations. With respect to strata-titled
properties, Purchasers should maintain liability and contents
insurance.
Condominiums
Purchasers will be responsible for paying monthly maintenance
charges. The Strata Corporation is also entitled to levy special
assessments for extraordinary expenses, should there not be
sufficient money in the contingency reserve fund. Purchasers
should determine what rights they have to use the common areas
such as parking stalls and lockers, if applicable.
Phase One and Phase Two Covenants
Properties covered by the phase one covenant require that when the
property is not being utilized for personal use it be available
for a rental through a bonafide property management. Phase two
covenant restrict the owners personal use of the property to 28
days in the summer 28 days in the winter and requires that the
property is available for rentals through a property manager for
the remaining days of the year.
Should I Buy in My Name or in the Name of
the Company?
The answer to this question is usually tax driven and therefore
you should obtain some accounting advice. There can be some draw
backs to purchasing in the name of a company including the
following:
A. Corporations may pay tax on income received from the property
at significantly higher rates than individuals (depending on the
individuals marginal tax rates);
B. Corporations can pay higher capital gains tax as well;
C. Should you incorporate a company specifically for the purposes
of acquiring a property you will have additional legal cost of
incorporating the company for approximately a $1,000.00 plus
additional costs associated in maintaining the company annually
such as filing annual reports, registered and records office
charges and accounting charges;
D. If the company is from a jurisdiction outside of British
Columbia, your mortgage lender may require that the company be
registered within British Columbia prior to agreeing to lend money
(the cost associated with doing so would be roughly as outlined in
the proceeding paragraph);
E. In the event that the company was not required to register
within British Columbia prior to completing the transaction, a
Certificate of Good Standing would be required from the
incorporating jurisdiction and an Opinion Letter from a solicitor
from the incorporating jurisdiction would be required in
conjunction with any mortgage financing;
F. Prior to any sale of the property a further certificate of Good
Standing would be required from the incorporating jurisdiction and
it will be necessary to maintain the company in the incorporating
jurisdiction as long as the property is owned;
G. Personal guarantees of the principals of the company will
usually be required by the mortgage lender even though the
property is owned by a limited company.
The advantages of having the property held by an incorporated
entity would include the following:
A. In the event of the death of the principals of the company
there would be no change of ownership of the property in the
British Columbia Land Title system, and if the shares are held
outside of British Columbia there would not be any probate fees
payable in conjunction with the shares;
B. If the only asset that the company owns is the property, it may
be possible to sell to a Purchaser the shares in the Company
thereby avoiding the payment of Property Transfer Tax and GST on a
sale of the property (Purchasers may be reluctant to purchase
shares as they would inherit any liabilities in the company
including any monies owing to Revenue Canada).
Of A Particular Note to Non-Residents
of Canada
Withholding Tax on Rental Income
Revenue Canada Taxation requires nonresidents to pay twenty-five
percent (25%) of the gross rental income from the property to
Revenue Canada. You may obtain exemption from such withholding tax
if you complete a government form called an NR6 setting out that
the projected income is less than the anticipated expenses
associated with the property. Most property managers will assist
in the completion of the NR6 return. Upon having filed an NR6
return, you are obligated to file an annual tax return with
respect to the property with Revenue Canada. Revenue Canada will
only allow expenses to be claimed if the returns are filed and
will disallow any expenses incurred more than two years prior to
the time of filing the return, it is therefore important that the
returns are kept current to avoid expenses being disallowed and
tax being paid on the gross rental income.
Mortgages
Mortgages in British Columbia differ from those available in the
United States in several significant ways, including the
following:
(A) The Mortgage is for a fixed term, typically between six months
and five years. At the end of the fixed term, the interest rate is
renegotiated.
(B) During the fixed term, there are limited rights to repayment,
typically ranging from 10 to 20 percent.
(C) In the event that you wish to prepay more than the permitted
amount, and in the event of a sale of the property, penalties
would apply and typically are the greater of three (3) months'
interest or the interest rate differential.
Execution of Mortgage Documents
Once the borrower has signed a commitment letter with the lender,
the lender will instruct a lawyer or notary to draw the mortgage
security. These documents must then be couriered to the borrower
for their execution in the presence of a notary public. The Land
Title Office does not accept faxed documents; therefore sufficient
time must be allowed for the documents to be couriered, executed
originally, couriered back and filed in the Land Title Office
prior to the completion date.
Methods of Payment
The balance of the purchase price must be paid by certified cheque
or bank draft in Canadian funds. Exchange rates may fluctuate and
lending institutions in Canada and the United States may give
different rates of exchange or quote different rates of exchange
for both buying and selling Canadian dollars and will offer
different rates of exchange depending on the dollar amounts
involved.This is an issue that should be addressed in advance of
the actual completion date.
It is possible to wire funds directly to the solicitor's trust
account; however, because of the routing of funds, it can
sometimes take several working days before funds wired will
actually appear in the solicitor's trust account for the closing.
It is recommended that the Buyer open a bank account with a bank
in Whistler to facilitate the payment in Canadian funds of ongoing
expenses and the receipt of revenues from the property.
Our firm has Swift numbers which can be of assistance ensuring a
speedy transmittal of funds.
Time is of the Essence
Completing transactions on the designated completion date in
British Columbia is critical. The Vendor has the option of
canceling the contract of Purchase and Sale should the funds not
be paid on the stipulated completion date and is entitled to
retain the deposit. It is not uncommon for Vendors who wish to
continue with the transaction to demand interest or additional
charges for extensions for late completion.
|
|
|
 |
 |
Whistler/Blackcomb Facts
• Whistler Blackcomb has a total terrain of 8,171 acres/3,036
hectares, 33 lifts & over 200 trails! |
|
|
