How Much Cash You Need on Possession Day in Alberta

Possession day is when the money has to be ready. Buyers often focus on the down payment and forget that closing involves several other amounts that can add up.

This article walks through the main items that may need to be funded on possession day in Alberta. The exact total depends on your contract, so ask your lawyer for a final figure before closing.

This article covers the law of Alberta.

The main pieces of closing cash

On possession day you generally need the balance of the purchase price, which is the price minus your deposit and any mortgage funds your lender advances. On top of that come adjustments, such as property taxes, and government registration charges. If you buy a new home, GST may also be due.

The Land Titles transfer levy is $50 plus $5 for each $5000 or portion thereof of the value of the land, and the transferee named in the instrument pays it. The transfer levy does not apply to the Crown in right of Canada or the Crown in right of Alberta, but it does apply to agents of the Crown in right of Alberta, the Minister of Municipal Affairs acting under Part 10 of the Municipal Government Act, and the Public Trustee. The transfer levy also does not apply where the transferee's sole purpose is to transfer the land to a person with whom it has a mortgage agreement, the mortgagor pays no interest, and an affidavit is provided.

Land Titles registration charges

Alberta charges no land transfer tax on a home purchase. Buyers instead pay Land Titles registration charges based on the value of the land, generally the purchase price.

The transferee pays a levy of $50 plus $5 for each $5000 or portion thereof of the value of the land. If you have a mortgage, the mortgagor also pays $50 plus $5 for each $5000 or portion thereof of the principal secured. The mortgage levy is calculated on the principal secured rather than the purchase price, and a cash buyer does not pay it.

Registration fees must be paid at submission. Your lawyer normally handles this, but the money must be in place first.

GST on a new home

Alberta has no PST, so only federal GST can apply to a home purchase. On a new home bought from a builder, GST is payable on the full consideration and is payable at final closing, when possession is transferred. That comes from a 1998 CRA policy statement that may not reflect later changes.

A purchaser may assign the new housing rebate to the builder, so the rebate is credited against the price at closing. Ask the builder what the closing figure will be after any rebate.

Property tax adjustments

Property tax is a special lien on the land and improvements, which is why unpaid taxes are dealt with at closing. On request, a designated officer must issue a tax certificate showing taxes imposed for the year, taxes owing, tax arrears and any deferred taxes, and lawyers use it for the tax adjustment.

Tax arrears are taxes that remain unpaid after December 31 of the year in which they are imposed. Property exempt from taxation under the Municipal Government Act is not taxed, so no tax adjustment arises for it. How taxes are shared between buyer and seller is set by your purchase contract, usually as of the possession date, so read that part of the contract.

Property taxes are also an ongoing monthly cost to budget for after you move in.

Other costs and what to do next

Title insurance is not required by the standard Alberta residential purchase contract, which does require a Real Property Report. Title insurance does not take the place of a Real Property Report. A lender's policy protects only the lender, while an owner's policy can cover some non-title issues such as encroachments. If you want it, ask about the cost early.

• Ask your lawyer for a written estimate of all amounts due on possession day.
• Confirm how payment must be made and when funds must reach your lawyer.
• Check with your lender when your mortgage funds will be advanced.
• If buying new, ask the builder about GST and any rebate credit at closing.
• Read the contract's property tax and adjustment clauses.
• Keep a small cushion for items that may change before closing.

Frequently asked questions