Multiple factors play a role in establishing your monthly condo fee. As a result, it's challenging to have an exact calculation. However, you can roughly estimate it by multiplying the average fee per square foot in your city with the anticipated square footage of your condo. The following table shows the average fee per square foot in major Canadian cities.
In general, condo fees (also known as strata fees) will cover only part of your utilities and contribute to the building's reserve fund. Still, they will generally pay for common area maintenance. Before you finalize your transaction, have your real estate agent or lawyer double-check the fees to discover what is and isn't covered in your costs so that any unforeseen expenditures do not blindside you.
Condo fees typically cover:
The upkeep and essential operation of your building's common areas are included in your condo fees. This includes cleaning indoor and outdoor common spaces, trash removal, snow removal, and repairs to common features.
Every month, a portion of your condo fees are contributed to the building's reserve fund. The reserve fund is a mandatory fund that all buildings must have, as per the Condominium Act. The fund acts as emergency savings for the construction and covers expensive replacements and unexpected repairs as needed.
This varies by building. In older structures, central heating is frequently utilized; as a result, the entire cost is spread evenly across all units based on size. In newer constructions, each apartment may have a heat-pump system, in which the tenant pays for usage.
It's doubtful that your condo fees will include any cable or Internet services, although some new buildings do provide incentives to purchasers.
The data shown is the average from each city. As a result, each building will experience different condo fees. In general, the primary factors that affect condo fees are:
Older structures tend to have higher costs since things are more likely to break down and need to be fixed or replaced. On the other hand, pre-construction condos tend to have a low fee initially. This is the time to contact a home inspector if you're unsure of how old or structurally sound your structure is.
One thing to be cautious about is buildings with extremely low costs. This is because buildings with a low fee might not be investing in maintenance. As a result, you could be stuck with a damaged building and have difficulty selling your unit. Additionally, there could be a rapid increase in maintenance fees to solve unrepaired damages.
Some residences only have a foyer, while others have everything you could ask for. Of course, residents must pay extra for the additional bells and whistles to cover maintenance costs.
Swimming pools, party rooms, valet parking, theatres, and yoga studios are among the many luxuries available at various condominiums in Canada. Buildings with these facilities charge larger condominium fees due to the expense of upkeep and administration. It's best to avoid these buildings if you don't plan on using all the amenities. This is because you will be paying more for features that you don't use.
Owners may also choose to include add-on fees such as a parking spot or storage locker unit. In general, a parking spot costs an additional $50 per month, while storage units are around $15 per month.
Condo fees tend to decrease in larger buildings. While this is not always the case, larger structures tend to have lower monthly costs because the overall expenses are spread across many units.
According to the Government of Canada, property investors can deduct condo fees from their rental income. Fees that represent your share of the upkeep, repairs, maintenance can be deducted. This enables landlords to lower their effective tax rates and pay less income tax. However, this feature is only available to real estate investors- primary residents do not have this option. As always, it is best to consult an accountant to confirm the rules apply to your situation.
As explained above, a reserve fund is the savings account that each condominium is required to have. The point is to have a financial buffer should the building need to cover an emergency repair or high ticket renovation.
However, in some cases, the reserve fund does not have enough money, and the condo needs to charge owners an extra fee known as a special assessment. This is less than ideal as owners must contribute a large sum all at once. To avoid this situation, make sure your condo has a sufficient reserve fund to cover unplanned expenses.
Condominiums can be an excellent decision for homeowners and real estate investors alike. They provide residents with amenities and the opportunity to live in a city. However, potential buyers must consider condo fees in addition to the purchase. By understanding the fees, you can make better decisions about condo living.