Other than a bunch of enlightened ones, it's really only the real estate market that laughs at COVID-19 at this point.
According to data from the real estate research firm JLR, the price of single-family homes is climbing everywhere in Quebec.
In August, compared to last year at the same date, they sold for 30%, 29%, 28% more in the cities of Terrebonne, Brossard and Granby, respectively. Few of the places where the increases are less than 10%, including the not least Quebec City, at 3%.
In general, the number of transactions is also increasing, with the notable exception of Montreal, due to the scarcity of supply. According to JLR, the market has passed the catch-up stage linked to COVID-19. Compared to 2019, real estate is progressing. As for condos, it is certainly less spectacular, but the market remains at a good level under the circumstances.
The more expensive “Welcome”
Growing transactions and prices, that means growing transfer rights for cities. You know, the famous welcome tax: a windfall! (Bienvenue, that's the name of the minister who established it in 1976, Jean Bienvenue.) For most municipalities, it is a rare source of consolation during a pandemic.
For homebuyers, however, this tax keeps climbing. How much does it cost, and under what circumstances can it be avoided?
How much does it cost ?
Unlike municipal taxes, whose rates are adjusted to offset the increase in valuations, nothing is slowing down the increase in property transfer taxes in cities where values are exploding.
In Quebec, transfer duties are calculated according to a single rate grid for homes under $ 500,000. It is adjusted each year, here is the one for 2020:
- 0.5% for the first $ 0 to $ 51,700.
- 1% for the portion between $ 51,700 and $ 258,600.
- 1.5% for the slice of $ 258,600 and over.
Beyond $ 500,000, a municipality is authorized to apply rates of up to 3%. In Montreal, for example, there are three other levels, of which the highest of 3% applies to the bracket over $ 2 million. Many municipalities apply the 3% tax as soon as possible, starting at $ 500,000.
Who pays ?
As soon as there is a transfer of ownership, the tax must be paid by the new owner, whether the building is purchased, donated or inherited. The tax is calculated on the higher of the two amounts between the transaction price or the market value.
Exemptions are provided for in transfers between family members, in direct line (grandparents, parents, children, grandchildren) and between spouses.
Attention: we say spouses, and not ex-spouses. Once the divorce is pronounced, the former spouses have only 31 days to conclude the transaction and be exempt from the tax. In de facto spouses, the transfer must be made within 12 months after the end of their cohabitation.
To attract families, cities offer a variety of financial programs to new buyers. Some take the form of full or total reimbursement of property transfer taxes.