Buying a parcel of vacant land and building your own dream cottage or country home on it seems like an economic way to acquire the dream of owning your piece of Ontario cottage country. This seems like a fantastic idea because you can design your cottage to your own tastes and preferences while at the same time saving money by not purchasing an existing structure. What most people do not consider is what it actually costs to build a cottage on vacant land.
Once you find the plot of vacant land that you want to purchase, the first questions you will want to ask yourself are:
Where would I build my cottage?
Will it be far enough away from a water source like a river or lake to avoid flooding the house?
Are hydro and phone lines available?
How far will I need the lines to go to reach the building site?
Hydro lines can be quite expensive if they need to run any long distance.
Once you decide on a location for the building site, you will want to research septic systems and wells in the area you are planning on living in. Some land will require expensive septic systems that can cost more than $25,000.00.
Contacting local well drillers is a good idea. They will know what level the water is usually found at in the area. They can give you estimates and let you know what minerals you can hope to find in your water.
When purchasing vacant land, it is important to consider the Harmonized Sales Tax. Almost all vacant land is sold “plus HST” which is an additional 13% on top of the purchase price. If you build your own home, some of the HST can be recovered after construction but it is a complicated procedure that you should research beforehand so there are no unpleasant surprises down the road.
In addition to HST, you may want to consult with an accountant if you are going to building a second home or vacation property. Capital gains taxes may apply when the property is eventually sold.
If you are still interested in purchasing vacant land in cottage country, there should be certain conditions in your offer to protect you. The offer should include but not be limited to:
- Buyer to verify zoning;
- Buyer to verify municipal authorities and environmental authorities will issue a building permit;
- Buyer to have a test hole dug for the purpose of septic installation;
- Buyer to verify hydro is available and affordable; and,
- Seller to provide a survey.
If purchasing vacant land to build a cottage on is something you are interested in doing, feel free to contact me for advice or to help you find a property to suit your needs.