Things to Consider for an Investment Condominium Closing
Are you one of the many
investors purchasing new build condominiums as an investment property? If so,
there are some things to keep in mind to ensure that the final closing goes
smoothly. One would think that the process of purchasing a new build
condominium or house for investment purposes would be very similar to
purchasing the same property as a primary residence. In reality, the process of
purchasing and closing an investment
can carry additional upfront costs, which can take many investors
by surprise and potentially threaten the final closing.
Investors should be especially
aware of the HST prior to the final closing. The main difference between the
costs associated with purchasing a property as a primary residence and
purchasing the same property as an investment property will be who is
responsible for paying the HST. When the property will not be owner-occupied,
the investor is responsible for paying the HST in full (typically $19,000 -
$31,000) on the final closing date.
The investor may be eligible to
file a claim for an HST New
with the Canadian Revenue Agency to recover the amount paid
for HST, but the claim can’t be filed until after the final closing date. Even
with a successful HST rebate claim, it can take many weeks (even months) to
receive the HST rebate.
Is There Financial Help Available to Cover Unexpected HST Costs?
The confusion over who is
responsible for paying the HST upon final closing and the additional rules
governing the HST rebate can leave investors scrambling to come up with the
funds to pay the HST. Inability to pay the HST by the date of final closing can
threaten the closing of the property and bring about very negative
consequences. Any deposit that has been put down on the unit may be lost. In
some cases, the builder may even pursue legal action to recover damages.
What options are available for
investors who need to secure the additional funds to pay the HST? While there
is definitely a need for these types of specific HST loans, the major banks
will not provide unsecured loans for tax-related purposes.
There are HST relief companies
available that specialize in providing HST Rebate Loans for investors closing
How Does an HST Rebate Loan Work?
A loan is issued for the amount
of the HST (up to $27,000) as long as the investor meets the necessary credit
and debt service ratios. In other cases, the loan may be secured as a second
mortgage on the property. The investor
pays a fee for the loan and is responsible for making any interest payments on
the loan until the HST Rebate is received. Once the HST Rebate is received, it
can be used to pay off the loan. The top HST relief companies will even file
the HST Rebate
to help the investor get the money back.
HST relief companies provide the money necessary to deal
with unexpected HST costs and ensure that your investment condominium closing
goes as planned. Take advantage of these professional financing services and
the additional convenience they provide today.