Pre-sale developments are great investment choices for multiple reasons.
- The deposit structure makes it so that you are not required to pay the full amount upfront and even the deposit is paid over increments.
- Pre-sales are priced based on the current market at the time of selling rather than at the time of completion. This provides buyers with an investment opportunity. For example, during a hot market, the value of the property can increase decently during its construction period.
- Depending on its price, some pre-sales have the advantage of qualifying for the Newly Built Home Exemption for exemptions on the Property Transfer Tax (PTT).
Similar to our tips on closing costs and financial considerations associated with a home purchase, pre-sales also have their own financial considerations.
Here are a few pointers we want to give our buyers:
- Price Per Square Footage:
Unlike with houses where its affordability varies immensely depending on location, lot size, age, condition of the building, and so on, there is a more clear-cut way of determining the affordability of condos. For this, you have to calculate its price per square footage, which you can then use to compare with other similar condos in the area.
- GST:
The payment of 5% GST is required for new consumer goods, and pre-sale condos are no exception. When considering the price of a pre-sale unit, be sure to allot 5% in addition to the purchase price.
- Property Transfer Tax (PTT):Property Transfer tax is required every time the interest of a property is transferred via the land title office. The advantages of pre-sale developments however, is that depending on the price, you may qualify for a full or partial exemption under the Newly Built Home Exemption. In BC, if one meets the qualifications, the exemption could be as follows:
Full Exemption:
Property has a fair market value of $750,000 or less
Partial Exemption:
Property has a fair market value greater than $750,000 and less than $800,000
For more information on the exemption, please visit:
https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/newly-built-home-exemption
- Maintenance/Strata Fees:
Maintenance fees are fees you are required to pay monthly to the strata, and this can apply to condos, town houses and duplexes alike. This fee is calculated based on the square footage of your unit, and therefore can differ from homeowner to homeowner.
This fee can cover aspects such as garbage disposal, landscaping, amenities, and the insurance policy. Some features cost more than others, and this is what affects the cost of each development’s maintenance fees. For example, more expensive features can include water amenities such as pools, saunas and hot tubs, and gas appliances. High rises in comparison to low rises could also affect the maintenance cost of the building and likewise their insurance.
If you are looking for that perfect agent to join your home searching journey, give us a shout!
Rachel Van: 778-960-2202 / [email protected]
Arthur Van: 778-822-8219 / [email protected]
