Typical Closing Costs When Buying a House in New Brunswick

Saving a down payment is only part of buying a home. On closing day you also pay a group of smaller costs, and some of them are large enough to matter, especially the transfer tax.

This article walks through the usual categories in New Brunswick and what each is for. Amounts for many items depend on the property and the professionals involved, so treat this as a checklist to build your own budget.

This article covers the law of New Brunswick.

Real Property Transfer Tax

For deeds tendered on or after April 1, 2016, the tax is 1% of the greater of the consideration for the transfer and the assessed value of the real property. It is payable by every person who tenders a deed for registration, and it must be paid before the deed is registered.

'Assessed value' means the value at the time of registering the deed, taken or extrapolated from the current assessment list. A price below assessment therefore does not lower the tax.

The examples follow the 1% rule. The tax is rounded to the nearest dollar, with fifty cents treated as one dollar.

When the tax is lower or does not apply

• For a partial interest in property, the transferred share's percentage is applied to the assessed value when computing the tax.
• No tax is payable on certain instruments, including leases under 25 years, wills, certain transfers from estates to beneficiaries or heirs, and transfers to registered charities.
• Where a deed can be registered in more than one registry office, the tax is payable only once, on the first transfer tendered.
• Lower earlier rates are kept for agreements signed before specified dates.

The Act as written has no first-time buyer exemption. The Minister may assess or reassess within one year of registration where a false statement was made or no assessed value was determined, and unpaid tax bears interest and can be registered as a lien.

Property tax adjustments

Property tax is billed annually. Service New Brunswick assesses each property with values as of January 1, local governments set rates in the fall, and bills go out in early March. The tax equals the assessed value divided by 100, multiplied by the local rate plus the provincial rate.

How the year's bill is shared between you and the seller at closing depends on your agreement and your situation, so it is worth confirming with your lawyer. Owner-occupied primary residences receive the Residential Property Tax Credit, which reduces the provincial rate to $0 on the first 0.5 hectares around the home, while non-owner-occupied residential property is taxed at the higher provincial rate. Ask whether the credit applies to your situation.

Other costs to plan for

• Legal fees and disbursements. Disbursements are out-of-pocket costs your lawyer pays on your behalf, such as searches and registration. Ask for an estimate in writing.
• Registration of your mortgage, which is done by registering a mortgage in the prescribed form.
• Certificate of registered ownership, which can be required from the registrar on payment of the prescribed fee.
• Title insurance, if your lender or you choose it. Coverage and cost vary, so ask your lawyer what is being offered and what it covers.
• Water testing for a private well. Testing for bacteria is recommended twice a year, and for inorganic compounds such as arsenic, uranium, fluoride and nitrate when a well is first drilled, before drinking the water and every two years.
• Condominium costs. Owners pay common expenses in proportions set by the declaration.

What to do next

• Look up the property's assessed value on Service New Brunswick's Property Assessment Online using the address, PAN or PID.
• Work out the transfer tax using the greater of the price and the assessed value.
• Ask your lawyer for a written estimate of all closing costs and the adjustments.
• Keep a cushion for items that are not fixed until closing day.
• For a well, arrange water testing and ask about timing relative to your conditions.

Frequently asked questions