Ask A Realtor: 6 Must-Know Real Estate Questions Answered

Q: What’s the difference between a deposit and a down payment?

A: The deposit is the money you put forward with your offer, which is held in trust and usually 5% of the purchase price, while the down payment is the total amount you contribute toward the purchase price at closing. The deposit becomes part of your down payment, and the remaining portion of the purchase price is covered by your new mortgage at closing.

Q: What’s title insurance, and do I really need it?

A: Title insurance protects you from issues like fraud, unpaid liens, or boundary disputes. Most banks/lenders require it, but even those that own their properties outright will benefit because it covers legal headaches that might pop up later. Title insurance is always strongly recommended.

Q: Do I have to pay capital gains tax when I sell my home?

A: If it’s your primary residence, you don’t. If it’s a rental property, cottage, or investment property, capital gains tax may apply, and new 2024 rules increased the taxable portion for larger gains.

Q: Do sellers really need to disclose everything about a property? What about deaths on a property?

A: Sellers must disclose "latent defects", which are serious hidden problems that could make the home unsafe or unlivable. Any defects that are easily visible or any cosmetic issues don't have to be disclosed. Any known deaths that have occurred on the property (natural, suicide, or even homicide) are considered stigmas, and don't necessarily have to be disclosed - but if a buyer askes, the seller must answer honestly.

Q: How does my property tax assessment actually get calculated?

A: MPAC (Municipal Property Assessment Corporation) assigns a value every 4 years based on property features, size, age, comparable sales, and market trends. MPAC's value is only used for tax purposes, and is often much lower than real market value. Municipalities then apply their individual property tax rate to that assessed value.

Q: What’s the difference between a home warranty and home insurance?

A: Insurance covers unexpected damages (like fire, theft, floods). A warranty (often from Tarion, builders, or third parties) covers defects in materials or systems, like a furnace breakdown or foundation issues.

If you ever have any other real estate questions and want professional input, I am always available to help!