If you’re looking to build a house, buying a piece of vacant land is a great idea. But there are a few things you should know before you make your purchase.
First, you should learn more about zoning laws. These laws will help you decide what kind of land you can buy and what you can’t.
1. Financing
Buying vacant land is an excellent opportunity to start from scratch and build your dream home. However, the process can be overwhelming if you don’t know what to look for. Having a team of knowledgeable real estate professionals, home and commercial property builders, landscapers and other experts on your side can help you navigate the challenges of land purchasing and construction.
One of the most important things to consider when buying land is road access. Ideally, you want the property to be within easy driving distance of major roads that allow for easy access to city water, sewage and electricity. Often, rural land for sale is cut off from public roadways and only accessible by private means, making it difficult to secure these services.
Another thing to be aware of is annual tax obligations. These can be high, ranging from 1-4% per year of the property value. If the land you buy has high taxes, it may be best to look for a different option.
Vacant land financing is harder to obtain than traditional mortgages, which is why you should be prepared for a larger down payment and higher interest rates when buying it. This is especially true if you’re trying to finance raw, undeveloped or remote land with no utilities and no road access.
If you plan to build a house on the land, you may qualify for a construction loan, which can be used to pay for the down payment and other expenses of building the home. Unlike residential loans, which are usually unsecured, construction loans are secured with collateral like the land itself.
When it comes to a construction loan, your credit score will play a huge role in how much you can borrow and the terms of the loan. You need a minimum credit score of 650 to qualify for these loans. If you have perfect credit, these loans will likely be granted with an interest rate of 12 percent or less.
Getting a construction loan can be challenging, but with the right team of professionals behind you, it can be a smooth and hassle-free process. Having these professionals on your side will ensure that the building plans you make for your property are in line with local zoning requirements. Moreover, they’ll also help you identify any potential risks or safety issues that the property might have that could prove costly down the line.
2. Taxes
Buying a piece of vacant land is a big decision. You need to make sure you understand the taxes that may be involved before completing your purchase. This will ensure you can avoid any problems down the road.
Depending on where you are purchasing the property, there may be several different taxes that apply. These taxes include BC‘s Speculation and Vacancy Tax, Vancouver‘s Empty Homes Tax and property taxes.
The Speculation and Vacancy Tax (SVT) is an annual tax that has been introduced by Bc to help curb rising house prices in major cities across the province. Essentially, the SVT encourages owners who do not occupy their properties to rent them out and bring down house prices.
As of January 2019, the SVT applies to residents in most municipalities in the Lower Mainland and southern Vancouver Island, as well as Kelowna, West Kelowna, Nanaimo and the District of Lantzville. In addition, starting next year, the SVT will be expanded to Lions Bay and Squamish as well as six more municipalities in British Columbia.
In addition to the SVT, the Vancouver Empty Homes Tax is another tax that applies to owners who have not occupied their properties for at least six months of the year. These taxes are designed to help combat the current rental housing crisis and increase the availability of rentals.
If you are selling a parcel of land to a relative or a former spouse or common-law partner, that portion is not taxable. This is because the sale does not represent an intention to resell the land for commercial purposes, but rather it is a personal use sale.
The bare land that is sold is subject to GST. The amount of GST you will have to pay depends on a variety of factors, including who is selling it, how the land was used prior to sale and what ‘excess land’ is associated with the property that is being sold.
In addition to the 5% GST rate, the sale of a property can also be subject to provincial taxes, such as Property Transfer Tax (PTT) and Foreign Buyer’s Tax. These taxes are not a part of the final price, but are incurred at the time of closing the sale of the property and are paid by the buyer.
3. Planning and Zoning
Whether you’re looking to build your dream home, a cottage for your family or a vacation retreat, purchasing vacant land is a great way to get started. But before you start building, there are some important things to consider.
The first thing you should do is check out the property’s zoning. Zoning is a legal system that determines the types of land uses that can be built on certain property areas, and it also ensures that they are compatible with each other.
Planning and zoning issues can be difficult to navigate, but there are resources available that will help you understand how to get the most out of your property. These include a land use guidebook, community development planners and local government representatives who can answer questions about the current zoning for your property.
A land-use guidebook explains how the land in your area is zoned and what types of buildings are allowed in each area. It also outlines the rules and regulations for how development can be permitted in the future, such as how many homes can be built in a residential area or how many stores can be located in a commercial district.
Some zoning districts are able to grant special permits, like variances, that allow different types of buildings in an area. This type of zoning may be used to promote density in exchange for affordable housing or public space.
It can also be used to regulate the size of buildings and the amount of parking that is allowed for them. It’s a way to control the growth of your community, which can be good for both businesses and residents.
Depending on where you’re purchasing your land, there could be restrictions on what kinds of buildings you can build and how high they can be. It’s important to find out about these before you buy so that you can plan accordingly and avoid any potential pitfalls.
In addition, you should make sure that the land you’re considering purchasing has access to roads and utilities. This is especially important if your property is located in rural areas, where roads may not be readily accessible.
4. Legal Issues
If you are looking to buy a piece of vacant land in Bc, it is important that you understand the legal issues that may arise. These issues can range from zoning laws to property lines. They can all have a big impact on what you can do with the land.
Zoning is the local government law that governs how a property can be used. It can determine whether or not you are allowed to build a house on the property and where. This is especially important if you plan on developing the land for commercial use.
Vacant land that is in an area with a high rate of crime might not be suitable for building your home. This is particularly true if the lot is near a drugstore or a police station, which can be a dangerous environment for kids to play in.
Another common problem with vacant land is that it might not have access to utilities such as water and sewage. This could mean that you will need to dig a well and have a septic tank installed. This can be costly and can add to the construction costs of the property.
When buying a vacant lot, it is also important to make sure that the land has been properly surveyed. This can be done by a professional surveyor who uses a plat to plot out the boundaries of the property. This can help you ensure that the land is legally yours and will help you when you are trying to purchase an easement.
A good real estate agent can be a great asset when it comes to finding the right vacant lot for you to buy. They can guide you through the process and can help you avoid common mistakes that often occur when people buy empty lots.
Lastly, it is also crucial that you check the annual tax obligations on the property. This is a requirement that most properties have to pay. This can be a major factor in deciding whether to buy the property or not.
Ultimately, buying vacant land in Bc can be a very rewarding experience. It can be a great way to earn a good income or save for retirement. It can also be a great opportunity to invest in property.
Among many other things, David A. Grantham is a contributing author to UmassExtension West Vancouver Blo. He is a renowned expert on real estate in BC.
Born in North Vancouver, Louisiana, Dr. Grantham grew up in Lower Lonsdale. He then went on to complete his business degree at the University British Columbia. As of this writing, Grantham has completed over 100 projects, including the development of a high rise building in Vancouver.
He is a husband, father, son, brother, and friend. He was a dedicated outdoorsman and enjoyed sports such as hunting, fishing, scuba diving, and snow skiing. His wife, Alison Grantham, and their two daughters survived him. He is survived by his wife Alison Martin Grantham and two daughters.