Victoria BC Closing Costs Explained

The Costs Nobody Warns You About

Most first-time buyers in Victoria focus almost entirely on saving their down payment, which makes sense given how large a sum that is. But there is a second category of costs that catches a lot of buyers off guard: closing costs. These are the fees, taxes, and expenses that come due on or before your possession date, and they can add up to several thousand dollars or more depending on the purchase price and whether you qualify for certain exemptions.

Budgeting 1.5 to 4 percent of the purchase price for closing costs is a reasonable rule of thumb for most Victoria buyers, though the actual amount depends heavily on the property transfer tax situation and whether you are using a mortgage.

Property Transfer Tax

Property transfer tax (PTT) is the single largest closing cost for most buyers. It is a provincial tax charged on the fair market value of the property at the time of transfer.

The rates are:

• 1 percent on the first $200,000 of the purchase price
• 2 percent on the portion between $200,000 and $2,000,000
• 3 percent on the portion above $2,000,000

On a $750,000 condo in downtown Victoria, PTT works out to approximately $13,000. On a $1,200,000 single-family home in Saanich, it comes to roughly $22,000. These are significant sums that need to be liquid and available by your completion date.

First-Time Buyer PTT Exemption

BC's first-time buyer PTT exemption provides full relief from property transfer tax on properties purchased for up to $500,000, and a partial exemption on properties priced between $500,000 and $525,000. Given that most properties in Victoria exceed $500,000, many first-time buyers only receive partial benefit from this exemption, or none at all. However, on a condo purchase in the $475,000 to $520,000 range, the savings can be meaningful. Your real estate lawyer will confirm whether you qualify based on your specific circumstances.

Newly Built Home PTT Exemption

Buyers of newly constructed homes may qualify for an exemption on the first $750,000 of the purchase price. This has made new construction an appealing option for buyers who can find qualifying properties in that price range, particularly in the Langford and Colwood new construction markets.

Legal Fees

You will need a real estate lawyer or notary to handle the conveyancing, which includes transferring title, registering your mortgage, and disbursing funds. In Victoria, typical legal fees for a straightforward purchase run between $1,200 and $2,000, not including disbursements like title searches, courier costs, and registration fees, which can add another $400 to $600.

Get a quote from your lawyer or notary early in the process so there are no surprises on closing day.

Title Insurance

Title insurance protects against defects in title that are not discovered through a standard title search, including fraud, encroachments, survey errors, and some types of zoning violations. It is a one-time premium typically ranging from $200 to $400 and is strongly recommended by most real estate lawyers. Some lenders require it. The cost is modest relative to the protection it provides.

Home Inspection Fee

A professional home inspection costs between $450 and $700 for most homes in Victoria, with larger or older homes running higher. This is not technically a closing cost in the traditional sense since it is paid during the offer process, but it is a real out-of-pocket expense that needs to be factored in. Never skip the inspection to save a few hundred dollars on a purchase worth hundreds of thousands.

Mortgage Default Insurance (CMHC)

If your down payment is less than 20 percent of the purchase price, you are required to purchase mortgage default insurance through CMHC, Sagen, or Canada Guaranty. The premium is calculated as a percentage of the mortgage amount and depends on your loan-to-value ratio:

• 5 to 9.99 percent down: 4 percent of the mortgage
• 10 to 14.99 percent down: 3.1 percent of the mortgage
• 15 to 19.99 percent down: 2.8 percent of the mortgage

In BC, this premium is typically added to your mortgage balance rather than paid upfront, though the provincial portion of the premium (PST applied to the insurance premium) must be paid at closing. On a $700,000 purchase with 10 percent down, the PST on the insurance premium is approximately $2,000.

Adjustments

On closing day, you will also pay a prorated share of certain costs already paid by the seller, including property taxes, strata fees (if buying a condo), and sometimes utility prepayments. These adjustments are calculated by your lawyer and are typically a few hundred dollars in either direction.

Moving Costs

Do not forget the practical costs of actually moving. A local move within Greater Victoria using a professional moving company typically runs $800 to $2,500 depending on the size of the move and the day of the week.

Total Closing Cost Estimate

For a typical Victoria buyer purchasing a $750,000 property with 20 percent down, total closing costs excluding the down payment would be in the range of $15,000 to $18,000. For a first-time buyer with 10 percent down on a $500,000 property who qualifies for the PTT exemption, closing costs drop considerably, into the $3,000 to $5,000 range.

Every purchase is different. If you want a clear-eyed estimate specific to your situation, William Johnson at BuySellVictoria.ca can walk you through the numbers before you start shopping.