Ravir

You won’t start making mortgage payments until the development is complete and the home is ready for possession. However, it’s a good idea to begin arranging your mortgage early—ideally when you purchase the presale. This helps you better understand ownership costs, gives you time to prepare financially, and may help you secure a more favorable mortgage rate closer to completion.

A presale refers to purchasing a home – typically a condo or townhouse – before it’s built or completed. Buyers secure a unit in a new development during the early stages, often based on floor plans, renderings, and show suites, and the property is delivered once construction is finished.

Completed developments with remaining unsold units are still considered presales until those homes are officially purchased.

Benefits:

• Brand new home: You’ll be the first to live in it, with no immediate renovations needed.
• Warranty protection: Most presales come with a 2-5-10-year warranty, helping you save on repairs.
• Time to save: With completion typically 2–3 years away, you have more time to prepare financially.
• Potential appreciation: Presale homes often increase in value by the time they’re built.

Risks:

• Delays: Construction timelines can be unpredictable—delays of 1–2 years are not uncommon.
• Commitment: Once you’ve signed, you’re locked in. If your finances or plans change, backing out isn’t easy. However, depending on your contract, resale through assignment is often an option.

Yes, presale purchases require an upfront deposit, which is your down payment. While every developer may have slightly different terms, here’s what’s typical:

• Upon signing the purchase agreement, you’ll pay an initial deposit.
• You’ll then have a 7-day rescission period to reconsider your decision.
• If you move forward, you’ll usually pay 5–10% upfront, with additional payments of 5% spread out over the following 12–18 months.
• Deposits usually amount to 15–25% of the purchase price, which is applied toward the down payment when the home is completed.

Presale (new) homes in BC may be exempt from Property Transfer Tax if their fair market value is $1,100,000 or less. This exemption applies to various newly built properties, including those constructed on vacant land.

• A new condo unit in a newly built building
• A newly placed manufactured home on vacant land
• Other qualifying newly built residences

An assignment is a sales transaction where the original buyer of a property (the “assignor”) allows another buyer (the “assignee”) to take over the buyer’s rights and obligations of the Agreement of Purchase and Sale, before the original buyer closes on the property (that is, where they take possession of the property). The assignee is the one who ultimately completes the deal with the seller.

In British Columbia, the GST rate on a new house is 5% of the purchase price. You may qualify for a partial rebate if the home is priced under $450,000.

In British Columbia, buyers of pre-construction homes have a seven-day rescission period. This allows them to cancel the purchase agreement within seven days of signing the contract or receiving the Disclosure Statement, whichever is later. To rescind, buyers must provide the developer or brokerage with written notice.

However, this right only applies to new purchasers who have not previously received a Disclosure Statement for the development. If a buyer has already received a Disclosure Statement for the same property, they do not have a second rescission right. Deposits must be held in trust, and if the contract is rescinded properly, the deposit must be promptly refunded.

The BC Home Flipping Tax applies to income from the sale of residential properties, presale contracts, or assignments owned for less than 730 days (two years). This includes properties purchased before January 1, 2025, if sold on or after that date and held for less than two years.

• The tax rate is 20% for sales within the first 365 days, gradually decreasing until it is eliminated at 730 days.
• It applies to all sellers (individuals, corporations, partnerships, and trusts) regardless of residency.
• Exemptions exist for certain primary residences but are subject to specific conditions and filing requirements.