Property Tax Notices (sometimes called property tax statements) are typically generated and sent out in May each year, and inform property owners how much property tax they will need to pay at the beginning of July when the annual property taxes are due. If you own a property in a city or town, the municipality will generate your property tax notice. If you own a property in a rural area, you will receive your property tax notice directly from the provincial government.
Renegotiating your existing mortgage agreement. You may be increasing the principal or paying out the mortgage in full and arranging a new mortgage.
At the end of a mortgage term, a mortgage can be renewed if the terms and conditions acceptable to both the lender and the borrower. Otherwise, the lender will be repaid in full and the borrower will arrange financing elsewhere. It is never advisable to just renew without having your mortgage broker review available options.
See the full Renewal page.
A ‘rent-to-own’ is a special type of tenancy contract where your goal is to eventually buy the property from the landlord. At the start of the agreement you arrange a price for the purchase and a set period (3 year, 5 year, etc) during which you will pay a monthly amount to the landlord that covers both your rent and a contribution towards your down payment. Your landlord is responsible for accumulating the down payment funds over the course of the contract period, and at the end of contract period you have the right to buy the property from the owner at a price agreed upon when the contract started – typically by arranging mortgage to cover the balance of the purchase price.
The challenge with rent-to-own situations is that for them to be legal and valid at the time you are buying the property out (where you will need a mortgage from a traditional lender) the contract and down-payment money must be handled in a very specific way to satisfy the lender that the ‘down payment’ source is valid towards the purchase.
For a Rent-to-Own Agreement to be considered valid, it must be signed and dated at the start of the contract term and include and/or be supported by:
So the key ideas are that the contract must be written up and signed at the start, it must meet all of the above conditions, it must be registered to the property title at the time the agreement begins (which requires a lawyer or notary), and it must be fair and reasonable and allow for a reasonable portion of the down payment to be refunded should you decide not to proceed with the purchase.
We recommend using a lawyer to draw up the contract to ensure, and that both parties receive independent legal advice to ensure the arrangement is fair and reasonable to all concerned. The solicitor will also help with registration of the agreement to title.
Between the letter of economic rents from and appraiser and the legal costs, you should budget $1,500 – $2,000 to begin a rent-to-own contract that will satisfy a mortgage lender for financing at the time of purchase. Before spending time and money, we stronngly recommend speaking to a mortgage consultant to ensure you understand the risks involved and that you have a good plan in place for eventual mortgage qualification.
Other resources: The BC Financial Services Authority has an article on Rent-to-Own contracts.
When you buy or sell property, one of the documents prepared by the solicitors is the Statement of Adjustments. This shows the calculations for any expenses above and beyond the purchase price itself that become factored into the final amount of money that will be transferred from the buyer to the seller to complete the purchase.
Property tax is the most common item found on the statement of adjustments. Property taxes are usually due on the first business day in July, but cover the calendar year, so depending on when the sale completes the property taxes may have been paid already by the seller (if the sale happens close to or after July), or they may be due in the future and will be paid by the buyer (if the sale happens before or in early June). The solicitors will ‘adjust’ based on the exact date of the sale for how much the seller or the buyer owes to the other party for the number of days that have already passed in the year and who will ultimately pay the property taxes. This will result in the buyer either paying more to complete the purchase (if the seller has already paid the property taxes and the buyer is reimbursing for some of that cost) or receive a credit and pay less than the purchase price (if the seller has not yet paid the taxes and the buyer will have to pay them).
Other common ‘adjustments’ include things like remaining fuel supply in a storage tank (for properties that have oil or propane furnaces), or credit for pre-paid equipment rentals (e.g. the seller had already paid for a 1 year contract for water supply that includes the rental of a reservoir tank).
The Statement of Disbursements is a document you receive from the solicitor when you complete a transaction. It shows an accounting of when and how money moved into and out of the solicitor’s trust account relating to your file. For example, in a property purchase that makes use of a mortgage loan, the solicitor will receive funds from your realtor (the deposit funds), from your mortgage lender and from you (the down payment). The solicitor will then use these funds to pay the seller’s solicitor for the funds needed to complete the purchase, pay property transfer tax to the provincial government, and deduct their service fees and all 3rd party fees involved in completing the property ownership transfer.
The Statement of Disbursements will show the details of these funds being received and paid out, resulting in a final zero balance to complete the transaction.
The T1 General is the tax form you (or your accountant) fills in every year to file your personal income taxes. The basic form itself is 8 pages, but a typical tax filing will also require several extra Schedules and/or Forms to show information for things like self employed Business Income, Rental Property Income, Capital Gains, Investment Income, etc. For your tax filing, the extra forms or schedules required will depend which types of income or expenses you have to declare.
When a lender requests your T1 General, it is typically because your type(s) of income are not the usual ‘salaried full time’ employment, and so the T1 General and statements will give a full picture of your different income sources.
Lenders will always require your full tax filing package, which means all pages of your T1 General and all pages of the extra forms and schedules that go along with it. If you are self-employed or own some rental properties, your full tax filing package may be 20-40 pages with all the forms and schedules included.
Often your accountant or bookkeeper will bundle the T1 General, the statements and schedules and your income slips (T4s for employment income, T3s for investment income, etc) all together as a package when your taxes have been filed. Please bring in the whole package and we will take it apart, copy the documents the lender requires, and put it all back together for you.
Also, lenders will typically request your Notice of Assessment to go along with your T1 General. This is the form you get from CRA after you file your taxes, where they confirm that your tax filing is correct, how much of a refund you will receive (or amount you have owing) and your RRSP contribution amount available based on your income and contributions in the previous year(s). See our Glossary Term for Notice of Assessment for more information on this form, or the Proof of Income statement for instructions on how you can generate these forms from your CRA My Account online.
The T4 Statement of Remuneration Paid (otherwise known as a T4 slip) is provided from employers to employees at the beginning of every year (before the end of February) to detail all the earnings from the previous calendar year. It is used by employees to property file income taxes.
In BC, there are two types of property ownership structures: Joint Tenancy and Tenants in Common.
With Tenants in Common, each tenant is assigned a percentage of ownership of the property and the tenant has the legal rights to utilize that ownership independently of the other tenants. In this structure, the ownership is more similar to traditional assets – a good comparison is to owning shares of a publicly traded company. As a shareholder, you are an owner of a small percentage of the company and you have rights to the company’s assets and profits (if any), and you can choose to sell the shares to another person, use them as collateral for a loan, or write your will such that they are transferred to anyone you wish upon your death, and you can do any of these things without needing the permission of the other shareholders.
The benefit of tenants in common is that each owner can act independently of the others and can sell their ownership to an outside party (or pass their ownership through their estate to an outside party).
The drawback of tenants in common is that if the transfer of ownership occurs due to the death of an owner, the ownership becomes part of their estate and has to pass through probate, will be subject to probate and estate taxes, and if the deceased owner has not taken proper steps to ensure transfer “in whole” to a new single owner, then the deemed value of the owned stake in the property may need to be split among several beneficiaries resulting in the possible need to force the sale of the property in order to satisfy the disposition. Needless to say, the other owners of the property may not want to sell and may not be happy at the forced sale.
For the above reasons, tenants in common is typically used when buying properties as investments or for business purposes, where the owners are not family, will not be living in the property as their primary residence, and they desire the flexibility to be able to sell or pass down their ownership stake to different parties at their own discretion.
The above is general advice only, as with either form of property ownership there are significant potential tax and legal issues to consider. We strongly recommend consulting both an accountant and a solicitor before making a final decision on the type of ownership structure for any property purchase.
For more information on the other type of property ownership, see Joint Tenancy.
The length of the current mortgage agreement. This is different than amortization which is the length of time it will take to pay off the mortgage in full. The term is the length of time that the existing terms and conditions (like interest rate and prepayment privileges) apply.
