1. Lesson 5: Initial Costs in Purchasing a Home
I. Read through the lesson.
II. Some extra costs on top of the cost of the home itself
should be considered when buying a home. Some
important things to focus on:
a. Sales tax: if you purchase a new home, add 7% + 5%
sales tax.
b. Land transfer tax: one-time tax paid to the provincial
government:
i. On the first $30,000, pay nothing
ii. On the next $60,000, pay 0.5%
iii. On the next $60,000, pay 1.0%
iv. On the remainder (anything over $150,000), pay
1.5%
c. Property insurance: when you move into a new
home, the homeowners’ insurance is often increased
due to the new home being worth more. You have to
recalculate the insurance for the additional cost, and
it is often only spread over the months remaining in
the year. Use the formula:

2. i. Insurance payment cost = (Insurancenew –
Insuranceold) X (# of months remaining ÷ 12)
d. Property tax : Property tax is paid for a whole year. If
you move into the home in the middle of the year,
you only have to pay for the remainder of the year.
Use the formula:
i. Property tax = property tax X (# of months
remaining ÷ 12)
III. For this assignment, make a list of all additional costs as
shown in the example on page 34. Add up all costs listed
in the questions and calculate Total Additional Costs.