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5 Costs Associated with Buying a Home in Nova Scotia - Over and Above the Down Payment
Costs associated with buying a home can vary greatly within Canada, so let’s take a closer look at what it expenses you will incur, over and above the purchase price and down payment when you buy a home in Nova Scotia.
1. Deed Transfer Tax Nova Scotia
The number one fee that’s going to cost you, that you are likely unaware of and need to budget for is the Deed Transfer Tax. This tax is based on the purchase price of the property and varies throughout Nova Scotia, with the lowest being 0 and the highest being 1.5%. The rate varies by municipality, so when calculating this number, you’ll want to check which municipality you’re “shopping” in. Halifax Regional Municipality has a rate of 1.4%. With some of the highest price homes in the Nova Scotia, this can be quite a substantial number. You will have to pay this tax on closing, and it will be due to your lawyer as part of the closing costs. As of February 28, 2022 the average home price in Halifax Regional Municipality was $576,986, which would incur a deed transfer tax of approximately $8655. Not a small amount for any buyer!
2. Inspections
Inspections can also be quite costly, both in urban and rural settings. In recent months, we have started to see offers and purchases without the condition (or contingency) of home inspections. For the most part, they are still quite common and often more than just a traditional home inspection is required. Some buyers who forego the home inspection may have one completed after they close so that they have a greater understanding of the working of the home and what updates or upgrades may need to be completed down the road. Some clients like to have the inspection booklet as a reference for future planning.
Traditional Home Inspection – can cost anywhere from around $400 - $800 depending on who you hire. These typically cover the exterior and interior of the home.
If you’re buying a home in a city or town on municipal services, you may want to budget for a Sewer Line Video Inspection to check the conditions of the sewer line from the house to the city or town main line. Depending on the age and location of the property, these lines can be old cast iron, or laminated paper product referred to as “no-corrode”, and could be failing due to age, tree roots or other unknown damage. These can be costly to repair or replace. Cost depends on the location of the line, what is over it, and how easy or difficult it is to access. A sewer line scope can be completed by most plumbers and will cost around $350 +/-. You can be on site for this inspection, and most will provide you with a video of the inspection for your files.
If you are buying a rural property, you will want to budget for Water Testing (quality) and if the well is drilled, you may also want to test for quantity. A Well Recovery Test will let you know how quickly the well recovers water after large usage. It will also provide you with valuable information on the depth of your well. Water quality testing can run from $75+ dependant on what you are testing for, and the Well Recovery Test can cost $300+/-.
Another major inspection most buyers will want to complete is on the property’s Septic System. This inspection will test the pipes and flow from the house, out to the septic tank and then into the septic field. It can pinpoint problems with the plumbing lines, septic tank and septic field. These can be costly to fix, so this is not an inspection I’d advise anyone to skip. A septic inspection will cost $350+. A video of the inspection will usually be recorded for your files.
The last inspection that used to be more commonly completed during the “conditional” time frame is a Radon Gas test. Radon is a radioactive gas that occurs naturally when the uranium in soil and rock breaks down. It is invisible, odourless and tasteless. When radon is released from the ground into the outdoor air, it is diluted and is not a concern. However, in enclosed spaces like homes, it can accumulate to high levels. Exposure to high levels of radon in indoor air results in an increased risk of developing lung cancer. The risk of cancer depends on the level of radon and how long a person is exposed to those levels. A short term (72 hour) test can be done to gauge if high levels exist, but Health Canada recommends a long term (90 day) test for most homeowners now. This should be completed once you take possession of your home. If there is Radon in the house, mitigation can be completed, and a simple system can start around $1750. Basements with a mix of stone and concrete, may require more complex systems and therefore be more expensive to remediate.
3. Lawyers Fees
Lawyers’ fees will vary based on the level of service and expertise. I recommend budgeting at least $1500 for the fees.
4. Disbursements and Adjustments
Disbursements and adjustments refer to items that the seller has already paid for that you will have to reimburse them for on closing. These can include prepaid property taxes, fuel including oil (a full-size oil tank at 909 litres in today’s market is $1000+), propane, and prepaid condo fees if you’re purchasing a condominium. The lawyers will calculate taxes and condo fees based on a per diem and will start the day of closing.
5. Insurance
You will need to have insurance on your property, and this will likely be a condition of your mortgage. In Nova Scotia, we have an insurance clause in our Agreement of Purchase and Sale that can be “checked” so that it is a part of your buyers conditions. This allows you time to make sure you can obtain insurance on the property. Most insurance companies will provide you with a letter of insurability once they've confirmed the property is insurable. You will arrange your policy with your insurance provider to be in effect on the day of closing and you will arrange to pay them yourself, not through your lawyer. Home insurance rates vary greatly, but budget for $125/month as a very loose number.
Realtors Fees
If the property you are buying is listed on the MLS system, the home seller has agreed in their contract to the pay the Realtors fees. The fee is paid out by the seller, from the proceeds of the sale, through the lawyers on closing, to the respective Realtors Brokerages. For a property that is listed with a non MLS company, or a private sale, have a conversation with your Realtor, so you understand your obligations based on your Buyer Brokerage Contract.
Feel free to reach out with any other questions you might have with regards to closing costs.
March 21, 2022