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When navigating a presale, it’s crucial to have a realtor who represents your interests. The sales staff typically works for the developer, so to ensure your protection, choose a realtor experienced in presales and familiar with various development projects. We are your presale experts, dedicated to safeguarding your interests throughout the process.

What You Need to Know When Purchasing a Presale Home in British Columbia. Top Tips for Navigating Presale Home Purchases

Purchasing a presale home in British Columbia can be an exciting opportunity, but it also comes with unique considerations and potential risks. Here’s a comprehensive guide to help you navigate the process, including important tax information and details about the new home warranty program.

Understanding Presale Homes

A presale home is a property that is sold by a developer before it is built. Buyers purchase the right to receive the finished unit at a future date. This type of purchase is common for condos, townhouses, and other multi-family developments.

Key Considerations

• Disclosure Statements: Developers are required by law to provide a disclosure statement before selling a presale unit. This document outlines the details of the development, including the estimated completion date, floor plans, and any potential risks. It’s crucial to review this statement thoroughly to understand what you are committing to.
  

• Deposits: When purchasing a presale home, you will typically need to pay a deposit, which is usually around 15-20% of the purchase price. This deposit is held in trust until the property is completed.
  

• Assignment Clauses: Some presale contracts include assignment clauses, allowing the original purchaser to sell their contract to another buyer before the completion date. This can be beneficial if your circumstances change, but it’s important to understand any restrictions or fees associated with assignments.

Tax Information

Goods and Services Tax (GST): When you purchase a new presale home, you are required to pay GST, which is 5% of the purchase price. This tax is payable at the time of completion.  However, there are rebates available for qualified buyers, such as the GST New Housing Rebate, which can reduce the amount of GST payable.

Property Transfer Tax (PTT): Presale homes are generally subject to the Property Transfer Tax, which is calculated based on the fair market value of the property at the time of registration.

The rates are:

• 1% on the first $200,000
• 2% on the portion between $200,000 and $2,000,000
• 3% on the portion over $2,000,000
• An additional 2% on the portion over $3,000,000 for residential properties.

However, there are exemptions available, such as the First-Time Home Buyers’ Program and the Newly Built Home Exemption, which can reduce or eliminate the PTT for eligible buyers.

New Home Warranty Program

All new homes in British Columbia must be covered by mandatory, third-party home warranty insurance.

This is one of the strongest construction defect insurance coverages in Canada and includes:

• 2-Year Coverage: Covers defects in labour and materials, including major systems like plumbing, electrical, and heating.
  
• 5-Year Coverage: Covers defects in the building envelope, including water penetration.
  
• 10-Year Coverage: Covers structural defects.

The warranty is attached to the home, not the owner, and remains in effect upon resale until the coverage expires. It’s important to review the specific details of the home warranty insurance policy provided by the developer to understand the coverage and any limitations.

Conclusion

Purchasing a presale home in British Columbia offers the advantage of securing a new property at today’s prices, but it requires careful consideration and due diligence. Understanding the disclosure statements, deposit requirements, tax implications, and the new home warranty program can help you make an informed decision and protect your investment.

Do you have any specific concerns or additional questions about purchasing a presale home?

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