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  #1  
Old 2014-02-07, 04:36 PM
House_Hunting House_Hunting is offline
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Default Deposit (10%), taxes - questions

Hello,

I have tried to read a bit more on this, but was not successful.

As you may already know, we’re planning to buy the Ashton from Tartan this year.

I’ve read more and saw that Tartan is requesting 10% of the house price???

We will have the 5% required saved up by September/October.

It might sound like a silly question, but what about the 10%? Can we give the money we have saved up for the down payment to put towards the 10% deposit and what we don’t have, put it on our credit line, paying only the monthly interest fees?

Will the deposit be returned to us at the end? Because we will need this money for the down payment (5%) and to reimburse our credit line.

And is the price shown on the Tartan website includes taxes? Since it’s our first propriety on the Ontario side, we don’t have to pay the ‘’taxe de bienvenue’’ or any other fees, right?


Thank you.
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Old 2014-02-07, 04:47 PM
BlkStnBerk2 BlkStnBerk2 is offline
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Your 5% down payment can be used towards the 10% total required to write the deal.

Then on top of that, you will have to pay a portion of the upgrades you choose as well. For Cardel, we paid 10% of the price of the home, then 10% of the design centre costs, payable just after the last design centre appointment.

On top of all of those costs, you will have to pay Land Transfer Tax to your lawyer. This is due on closing and you would pay this to your lawyer. There is an online calculator to calculate what this amount will be, based on the price of your home.

The builder does not refund the deposit. This goes against the purchase of your home. So essentially, you will be financing 90% of the total cost of the home after taxes.


If you are insured by CMHC, which it sounds like you are. You will have to pay the HST on that premium. This is also an up front cost that cannot be part of your mortgage. Same goes for the land transfer tax. It cannot be written into a mortgage.

I'm uncertain what the rules are as far as financing the extra 5% to give to the builder. You'd have to ask your mortgage specialist at your bank or broker if this is possible.

We had to pay ours in cash. This could not be owing on closing.
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Old 2014-02-07, 04:53 PM
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good2know good2know is offline
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deposit funding gets applied against costs so on paper you get it all back - but there wont be a cheque.

minimum 5% down but of what?
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Old 2014-02-07, 04:57 PM
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Jer in Ottawa Jer in Ottawa is offline
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Quote:
Originally Posted by House_Hunting View Post
I’ve read more and saw that Tartan is requesting 10% of the house price???
This is a 10% deposit for the house to lock you into a contract. You can use your LOC for this or any other credit you prefer.

Quote:
Originally Posted by House_Hunting View Post
We will have the 5% required saved up by September/October.
This will be required by the closing date and your lawyer or mortgage broker will give you exact numbers required for the close of the sale. I strongly suggest a mortgage broker but at the same time do you homework and look around at some banks yourselves too to find the best rate/terms for you.

Quote:
Originally Posted by House_Hunting View Post
It might sound like a silly question, but what about the 10%? Can we give the money we have saved up for the down payment to put towards the 10% deposit and what we don’t have, put it on our credit line, paying only the monthly interest fees?
Yes, but if you have enough room in your LOC that is preferable IMO.


Quote:
Originally Posted by House_Hunting View Post
Will the deposit be returned to us at the end? Because we will need this money for the down payment (5%) and to reimburse our credit line.
Yes, through your lawyer. He/She will take the deposit, closing fees, CMHC (if applicable) fees, land transfer and any remainder will be returned - IF any.


Quote:
Originally Posted by House_Hunting View Post
And is the price shown on the Tartan website includes taxes?
Upto $400,000. Any amount on top of $400 is subject ot 13% HST.

Hope this helps.
Jer
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Old 2014-02-07, 05:24 PM
House_Hunting House_Hunting is offline
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It helps, thank you.

I was really under the impression that we wouldn't be in the obligation to pay the land transfer tax since it would be our first propriety on the Ontario side... I thought it was only when buying a second home in the Ontario province that we needed to pay it... This is what I heard, I am no expert and will need to read more on this.

The HST for a house over 400K is a surprise though... Good thing to know.
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Old 2014-02-07, 05:39 PM
elo elo is offline
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House Hunting, here is the link for land transfer tax requirement.

http://www.fin.gov.on.ca/en/bulletins/ltt/1_2008.html




•The purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
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Old 2014-02-07, 05:43 PM
scjeff scjeff is offline
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Quote:
Originally Posted by House_Hunting View Post
It helps, thank you.

I was really under the impression that we wouldn't be in the obligation to pay the land transfer tax since it would be our first propriety on the Ontario side... I thought it was only when buying a second home in the Ontario province that we needed to pay it... This is what I heard, I am no expert and will need to read more on this.

The HST for a house over 400K is a surprise though... Good thing to know.
You DO have to pay the land transfer tax even as a first time home buyer. The reason you may be confused is the government has a land transfer tax rebate for first time home buyers. I believe the cap on it is $2000. So if your LTT is $2600, you would pay 2600, apply for the refund, and get $2000 back.

http://www.fin.gov.on.ca/en/REFUND/newhome/

Check that link to read about it.

I do strongly recommend you talk to a mortgage agent. Agents will look into your situation and give you the best possible way to figure it out. I am an agent so if you have any questions PM me. I don't care if you use me, I just would want to make sure you know your options, and would point you towards the direction which would have you in the best situation possible. I have worked in new home sales in the city as well so might be able to help.

Best of luck!
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Old 2014-02-07, 05:50 PM
Westporters Westporters is offline
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Tartan includes the HST in the prices listed on the website.

There are discounts for first time home buyers, however if you have ever owned a home anywhere else in the world you can't claim first time home buyers in Ont.

http://www.fin.gov.on.ca/en/tax/ltt/faq_newhome.html#q7
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Old 2014-02-07, 06:59 PM
House_Hunting House_Hunting is offline
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Wink

Thanks for the link...

I never owned a house in the world at any time.

The person I am buying with does own a home but we weren't a couple at the time of the purchase, don't have kids and it will be less than 3 years that we live together when we buy together...

So basically, I could apply for the rebate but not my partner... Did I get this correclty?

And about the HST Jer in Ottawa mentionned that above $400, the HST applies... I think the best way to know for sure is go to the source directly... Will call Tartan tomorrow and see what they have to say...

Thanks for all of yoiur replies and other experiences, comments are welcomed.

Last edited by House_Hunting; 2014-02-07 at 07:13 PM.
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Old 2014-02-07, 07:53 PM
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xdarrylx xdarrylx is offline
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Since your partner owned a home previously, your $2,000 first home buyer credit would be reduced by 50% since one of you already owned a home and you will both be signing on this one (I assume). It doesn't matter that you weren't a couple at the time or there are no kids and that you've been together less than 3yrs. They seem that person as owning a home so your credit is cut in half, or $1,000.

Still better than nothing!
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