Buying a home is one of the bigger milestones in your adult life. It is a scary process that needs to be handled with care but when all is said and done you have a home that you can proudly call your own. It takes a team of people to make sure that the process goes smoothly, from realtors to attorneys. PEI is a great place to set down roots and call home. Before you start house hunting you should be aware of the real cost of buying a home in PEI.
There are a variety of fees and taxes that go with any real estate transaction in the province, let’s take a look at them so you don’t buy your house unprepared for the money you will need to close the deal.
The legal costs of the transaction can vary and this is something you will need to talk about with a local attorney. They will sit down and explain their fees along with the actions they take on your behalf, that can include things like search fees, admin fees and the cost of filing paperwork. Most of them time an attorney will charge a flat fee for their services.
Deed and Mortgage Registration
Both your deed and mortgage need to be registered when you buy a new house. Both of these costs are paid to the province and they are based on the price of the property. If you pay cash for your home then you don’t need to register the mortgage.
Anyone buying property in PEI is subject to property transfer taxes however there are some exceptions. Typically the tax rate is 1% of the purchase price or the assessed value, you will pay at the higher value. As far as exemptions go, here are some situations where you won’t have to pay.
- First time homebuyers can be exempted under certain circumstances. They must have lived in the province for at least six months prior to buying their home. They also must not have previously owned property in another province they must be a genuine first time buyer. They also need to continue to live in PEI for six months after the closing of the transaction. The tax must be paid at the time of purchase but you can apply to have it refunded to you.
- Transactions between family members can also be exempted as well. This is when one family member effectively gifts a house to another or sells the home at a $1 price tag.
- Low cost transfers where the property is valued at and sold at less than $30,000.
There may be other costs that are associated with buying a home, these are things like the cost of inspection and what it will cost to connect utilities and any repair costs the home may need.