An assignment is the transference, or any further additions, of a contract to another name before a deal is completed. There are 2 common forms of assignments. One would be assignment without profit, which is transferring the existing contract into a company name or to another person(s).
For instance, a buyer may decide to assign their existing contract into another person(s) name because they can no longer to meet the required agreements.
The other way would be assignment for profit. During construction of a property, the ownership of the property can be transferred, along with the existing contract, to another person(s) before completion. Thus the new owner may now complete the sale when the development is ready.
** Not all Presale contract allow assignments, and those that do will usually have restrictions and fees
associated with them.
Warranty Protection – Every brand new constructed property in BC comes with the 2/5/10 Warranty when the property completes. The investor gets a property with a full 2/5/10 Warranty which in most cases means low cost and low hassle ownership during the life of the warranty.
GST and New Homes
When you buy a newly constructed home, condominium or townhouse, the entire purchase price including land is taxable. If the property is to be rented to tenants, the full 7% GST is charged on the purchase price. However, if the home is going to be your primary place of residence, it may qualify for a partial GST rebate, depending upon the sale price.
For primary residences costing $350,000 or less, you will receive a rebate of 36% of the GST paid, to a maximum of $8,750. That means you pay approximately 4.5% GST (not 7%) on the purchase price.
You buy a new home for $250,000. The 7% GST is $17,500, less a 36% rebate of $6,300. So, you pay $11,200 in GST.
The maximum rebate is $8,750. The rebate for new homes costing between $350,000 and $450,000 declines to zero on a proportional basis. Here is how it works.
For each $1,000 of purchase price above $350,000 the maximum rebate of $8,750 is reduced by 1%
Therefore if your purchase price is $370,000 you are $20,000 over and must reduce the maximum rebate by 20%. As such the maximum rebate of $8,750 reduced by 20% equals $7,000.
For a home priced at $370,000 the GST payable, at 7%, is $25,900.
The adjusted maximum rebate is $7,000 so the GST payable is $18,900.
Adjusting the maximum rebate continues until the rebate is reduced by 100%, there is no rebate, which occurs at homes priced at or above $450,000. New homes selling for $450,000 or more do not qualify for a GST rebate.
BC Property Transfer Tax
Property Transfer Tax is a provincial tax that is payable upon the purchase of real estate in British Columbia. The tax is equal to 1 % on the first $200,000 and 2 % percent on the remaining balance. For example if a property is purchased at $500,000 you would pay 1% on the first $200,000 & 2 % on the remaining $300,000 which is $2000 + $6000 = $8000 for the PTT. There currently is an exemption for first time buyers but there are a number of requirements to qualify, including:
Must be the purchase of a principal residence;
The purchaser must be a Canadian citizen or permanent resident of Canada;
The purchaser must have resided in the province of British Columbia for at least one year immediately prior to the application to register the purchase of the principal residence;
The purchaser must not have previously owned an interest in a principal residence anywhere in the world;
The fair market value of the land and improvements must not exceed $425,000 and partial exemptions for homes between $425,000 - $450,000.
The amount borrowed to finance the purchase, and registered against title, must be 70% or greater of the fair market value; and
The amount borrowed must have a term of at least one year.
These are major requirements which should be reviewed with your lender or lawyer to ensure that you qualify.