What Closing Costs Should Home Buyers Expect in New Brunswick?

The down payment is only part of what you need on closing day. Most buyers also face a tax to the province, legal and registration steps, and a bill for sharing costs with the seller. Some of these costs are fixed by law and others depend on your particular home and agreement.

This article walks through the main costs a New Brunswick buyer should plan for, which ones the law sets, and when they tend to come due. It is general information, so use it to build your questions rather than your final budget.

This article covers the law of New Brunswick.

The main costs beyond your down payment

Think of closing costs in groups: a tax charged by the province, charges tied to registering your ownership and mortgage, adjustments between you and the seller, and costs specific to your property. The table gives a quick overview.

Ask your lawyer for a written estimate of all closing costs well before the closing date, so there are no surprises.

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 or the assessed value of the property. Assessed value means the value at the time the deed is registered, taken or extrapolated from the current assessment list. A price below the assessment does not lower your tax.

In practice, a $300,000 price with a $250,000 assessed value is taxed on $300,000, which gives $3,000, while a $200,000 price with a $250,000 assessed value is taxed on $250,000, which gives $2,500. The tax is rounded to the nearest dollar, with fifty cents treated as one dollar.

Every person who tenders a deed for registration in the province must pay the tax, and it must be paid before the deed is registered. For electronic deeds it is paid electronically as the Minister approves.

Exceptions and special cases

• If you are buying only a partial interest, the transferred share's percentage is applied to the assessed value when computing the tax.
• No transfer tax is payable on certain instruments, including leases under 25 years, wills, certain transfers from estates to beneficiaries or heirs, transfers to registered charities, transfers to the Crown and its agencies, and transfers made only to secure a debt.
• The Act as read has no first-time buyer exemption.
• 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 only for agreements for sale or purchase signed before specified dates.

The Minister may assess or reassess within one year of registration where a false statement was made or no assessed value was determined. Unpaid tax bears interest and can be registered as a lien.

Registration, adjustments and other costs

Electronic instruments can be submitted only by subscribers, who are Law Society of New Brunswick members with an agreement with Service New Brunswick, apart from stated exceptions. Paper submission is allowed in limited cases, such as when a registered owner submits the instrument personally. No statute requiring a lawyer for a purchase was found, so whether you need one depends on your situation and your lender's requirements. The exact registration charges and legal fees vary, so ask for them itemized.

Adjustments are the closing-day accounting between you and the seller. Property tax is billed to each person in whose name the property is assessed, and taxes are due when the notice is mailed. Bills go out in early March. How shared costs are worked out between you and the seller depends on your deal, so it is worth confirming the figures with a lawyer.

If you are buying a new build, whether HST is included in the price should be clear in writing before you sign. A lawyer or accountant can confirm the amount.

Other costs depend on the property. For a home on a well, SNB recommends testing for bacteria 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. For a condominium, owners pay common expenses in the proportions set by the declaration, so review the budget and reserve fund before you buy.

Your deposit and the timing of payments

A real estate agent who receives a deposit must generally hold it as trustee for all parties according to their rights under the offer or contract, not as agent for one party. The exception is that an agent may act for one party and receive the deposit for that party only if the offer or contract says so and every other party acknowledges it in writing. A cheque received with an offer need not be deposited until the offer is accepted, and then must be deposited without delay. Money may not be drawn from the trust account except in accordance with the terms on which it was received.

When other closing amounts are paid depends on your offer and your situation, so it is worth confirming the timing with a lawyer. The transfer tax must be paid before the deed is registered.

What to do next

• Find the assessed value of the property, which you can search through Property Assessment Online using the address, Property Account Number or PID.
• Compare the price with the assessed value to estimate your transfer tax at 1% of the greater amount.
• Ask your lawyer for an itemized closing estimate that includes registration, legal costs and adjustments.
• Ask in writing whether HST applies to a new build and who pays it.
• Budget for property-specific items such as well testing or a condominium reserve fund review.
• Keep funds ready for the deposit and for closing day.

A lawyer can confirm which costs apply to your situation and when each must be paid.

Frequently asked questions