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HST Ontario - Harmonized Sales Tax

January 5th, 2010

THE ONTARIO HARMONIZED SALES TAX || is proposed to combine the already existing 8% Ontario Sales Tax and the 5% GST into a single 14% value-added sales tax that would be federally administered beginning July 1, 2010.

· Purchasers of newly constructed homes under $400,000 would not be subject to an additional tax burden.

· Buyers of new homes valued between $400,000 and $500,000 could claim a proportional rebate.

· New rental housing rebate, similar to the enhanced new housing rebate, for new residential renal properties.

· Up to $400 million in one-time sales tax credits would be provided to help small businesses make changes to point-of-sale and accounting systems.

· Provincial portion of the tax rate on transient accommodation, such as hotel rooms, would rise from 5% to 8%. Approximately $40 million a year would be allocated to support destination marketing in Ontario tourism regions once these are established.

How will this new HST affect Housing in Ontario? || The Provincial government is proposing to harmonize the GST with the PST. This new tax will be known as the HST. The underlying principle is to increase efficiencies by having just a single tax. However, some goods (i.e. Housing) that have never been subject to the PST, suddenly would be. This could cause a large dilemma for new home buyers.

This has tons of people inside and outside of the Real Estate industry very concerned. The cost of a new condo or a new home in the GTS could jump overnight by tens of thousands of dollars for new purchasers if this new tax was to be implemented with no concessions. (Resale properties are not subject to the GST or PST – this only applies to new purchase).

The province just announced that there will be some new proposed changes to be made to how the HST is implemented as it pertains to new home purchases. HST would apply to services such as moving cost, legal fees, home inspection fees, and REALTOR® commissions. To continue reading the full article release, please follow the link to TREB (Toronto Real Estate Board).

Proposed Changes for New Housing Rebate || HST will apply to the purchase price of newly constructed homes. Originally, the provincial government indicated that it would provide a rebate to ensure that, on average, new homes under $400,000 would not be subject to an additional tax burden. Homes priced between $400,000 and $500,000 would be eligible for a portion of the rebate, and homes priced above $500,000 would be subject to the full HST. However, the provincial government is proposing some significant enhancements to these rebates, as follows:

Enhanced new housing rebate – The province is proposing to enhance the new housing rebate so that new homes across all price ranges would receive a 75 per cent rebate of the provincial portion of the single sales tax on the first $400,000. For new homes under $400,000, this would mean, on average, no additional tax amount compared to the current system.
New rental housing rebate – Similar to the enhanced new housing rebate, the province is proposing a rebate for new residential rental properties. This proposed rebate would support affordable rental housing across Ontario.
Proposed Transitional Rules for New Housing - The province is also proposing transitional rules for new housing. Generally, as part of the transitional rules, sales of new homes under written agreements of purchase and sale entered into on or before June 18, 2009 would not be subject to the provincial portion of the single sales tax, even if both ownership and possession are transferred on or after July 1, 2010. The tax would also not apply to sales of new homes under written agreements of purchase and sale entered into after June 18, 2009 where ownership or possession is transferred before July 1, 2010.

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Waiting to invest? BUT not in 2009? You will be kicking yourself in the ass!

September 22nd, 2009

During the mid winter months of November and December of 2008 was probably the best time to purchase real estate in Toronto. These months were seen as when real estate hit rock bottom of the negative depths of human despair. For those who do not follow the real estate market often, it would be hard to fathom since even till now, the economy continues to cut jobs and downsize. According to some Torontonian Economists, the worst is almost over for Toronto’s real estate market and most of us can only hope that the market continues to flourish for us to reap its rewards.

It was a quick ride with depreciation showing a maximum of 10%. According to TREB statistical numbers, the bulk stabilized and began to grow. Remember the month of February, this was quite busy for sellers who chose to re-sell their property and buyers were out for a hunt and a good bargain. Almost all of the well priced properties were sold by the end of the month. According to the Toronto Real Estate Board, sale numbers based on the MLS for the months of February 2009 were down 31% compared to February 2008 – this can be seen as a large improvement from 55% and 45% for December 2008 and January 2009, correspondingly. On the bright side, sales are only down by 18% for the month of March which isn’t so bad as most predicted. New condominium developments are reporting sales again and buyer traffic is continuing to grow.

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We are obviously not returning to the seller’s market with multiple bidding wars as sellers use to benefit from but rather, a buyer’s market to a more balanced market where the average time to sell is less than 45 days. This can be seen as a market correction which has been long overdue. It is the buyers turn to reap the rewards of a correcting economy. It’s like that saying, “what goes up, must come down!” and this is the best example of it. With real evidence in market statistics, sales and investments, coming May, this mini correction in the real estate market will soon be over and anything lost through January should be recovered. If you don’t believe me, ask anyone whose made a recent purchase or whose made big money in the real estate game. They will tell you that “time is of the essence” and timing the bottom is impossible. If we were all able to predict this, then wouldn’t we all be rich millionaires by now? But that is not the case and only those who continue to wait like sitting ducks will loose in this money making market. Those who do not have a real estate agent to work closely with them will have to rely on the buzz and scare from the media, but we all know that the media tends to over exaggerate the situation. Those who have real access to hard numbers and statistics will know that investments have not come to a halt and only those who wait will miss the opportunity of future gains. People who wait till next year to invest will kick themselves in the ass!

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Real Estate Market Forecast 2009

September 22nd, 2009

A friend of mine forwarded this information to me the other day and I found it to be quite useful. Having been in the real estate field for sometime now, we did see something phenominal happen these last couple of months. For those who invested or just window shopping for properties during the beginning of the year, we all witnessed a quiet moment of silence in the market between January to March. Then suddenly there was a crazy demand for both residential homes and condominiums all over the GTA. From overbidding to multiple offers all across the region, people were beginning to wonder what was going on. Even I was thinking the same thing. We are now midway through September and the ball game hasn’t stopped rollin’ yet! There is no recession for those who believe one is amongst us. And if there is, it is not going to hit us anytime soon.

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CHART OF THE DAY

Canadians searching for clues on the health of the residential housing market should take a close look at an industry statistic known as the sales-to-listings ratio.

To arrive at the ratio, take the number of homes sold in a month and divide it by the number of active listings for that same month. Real estate agents consider it a neutral market when the ratio is between 24 per cent and 28 per cent. It’s a buyer’s market below 24 per cent and a seller’s market above 28 per cent.

In Greater Toronto, for instance, the ratio soared to 58.8 per cent in June – a V-shaped rebound after bottoming in December and January at slightly over 13 per cent. Thomas Cook, a Toronto real estate agent who tracks the numbers in his region every month, says bidding wars dried up early this year, but have roared back. Potential sellers still think there’s a recession in the housing market, limiting the number of listings, he says. The Greater Toronto Area had 8,035 sales and 15,682 listings in August, or a ratio of 51.2 per cent, compared with 6,318 sales and 25,076 listings in the same month in 2008, or a ratio of 25.2 per cent. Other major markets bouncing back include Vancouver and Ottawa, Mr. Cook says.
-B.Jang, Toronto Dominion, Sept 2009-

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Posted in GTA market 2009 real estate Toronto |

Land Transfer Tax & Condo rules (GTA)

April 1st, 2008

The Burning question that most of you have been waiting for me to comment about. A lot of my clients have been bugging me to write a post in regards to the Land Transfer Tax (LTT) so here is the gists of it.

For those of you who are buying a resale condo in the City of Toronto, you should be aware that there are two levels of LTT that must be paid. We all have familiarized ourselves with the already existing Provincial Land Transfer Tax (PLTT) and its corresponding exemptions for first time buyers of new condominiums. This has been added to include first time buyers of resale condominiums also. Just to paint a picture, the formula to calculating Provincial Land Transfer Tax (PLTT) is as follows:

(NOTE: Purchase Price = will be refered to as PP in this case)

Up to PP of $55,000 —> LTT = 1/2 of 1% of the PP
$55,000.01 up to a PP of $250,000 —> LTT = 1% of PP minus $275
$250,000.01 up to PP of $400,000 —> LTT = 1.5% of the PP minus $1525
Over $400,000 —> LTT = 2% of the PP minus $3525

If you are considered a “first time home buyer” this must mean that you or your spouse have never owned Real Estate anywhere in the world at any time. If this is the case in your situation, then you may be entitled up to $2000 exemption fromn the PLTT payable.

The City of Toronto introduced a Municipal Land Transfer Tax (MLTT) that started on February 1, 2008. If you buy in Toronto after that time you will be paying MLTT for property containing at least one, and notmore than two, single family resideneces as follows:

Up to PP of $55,000 —> LTT = 1/2 of 1% of the PP
$55,000.01 up to PP of $400,000 —> LTT = 1% of the PP
Over $400,000 —> LTT = 2% of the PP

In regards to this, the City of Toronto also has a rebate program to a maximum of $3725 for the “frist time home buyer” of resale homes worth $400,000 or less. It is on a sliding scale based on PP. The best way to figure this out is to check with your existing lawyer to calculate and determine the amount so that you will not be short on the closing date.

Now comes the tricky part on the rules and regulations you must abide by when purchasing a condominium. First off, i’d like to add that it is important to go with your agent when thinking about purchasing from a builder. Why? Because there are a lot of questions that you may have and without proper representation, it is difficult to really have someone on your side without any bias’. It’s called “READ THE FINE PRINT!”

Anyway, the next subject i’d like to bring to your attention relates to a circumstance that seems brought up more and more often then I thought - The Agreement and Status Certificate. It is advised to the client that they make sure to read the condominium documents (disclosure statement) and make sure they understand what is in there and it is always stressed to the client that they bring these documents straight to their lawyer to have it explained in detail. Next thing you know, about 1 year down the road, clients call or send an email that the client is in some sort of dispute against the Condo Corporation. Why? Well, cause the board has told them to either get rid of their extra large and loud German Sheppard. Another reason could be for them to remove the renovations they had made to their unit because they were not cosmetic and worst of all, they did not ask the board for permission before they went on with the renovations. When dealing with such legal documentation and neglecting the “fine print” it is usually not the condo corporations fault, not the lawyers fault (if you didn’t obtain one right away) and not the agents fault (if you did not hire an agent for representation) … it boils down to whose fault? Thats right! “YOUR OWN!” … So rule of thumb is, make sure you get the proper guideance before making any major steps in the process of Real Estate. The law is pretty clear annd the condo documents have certain restrictions as well as conditions on doing things. When you buy, just remember that you are stuck with them and saying I didn’t know does not count!

So I URGE you all and cannot stress this enough that you MUST READ the rules and the declaration stated throughout your Status Certificate of the condominium declaration. Make sure you get them and read them within your conditional period (or in other words, “grace period”) before it is too late. If you do not then you take the risk. Ask as many questions to your lawyer, to your agent, to the condo corporation. DO NOT NEGLECT!

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Home Energy Saving - ecoENERGY Retrofit Grant 2008

March 12th, 2008

Good for your wallet. Good for the environment - The New ecoENERGY Home Retrofit Grant - Yes you got that right, I said GRANT!! Thinking about improving your home’s energy efficiency? You could qualify for a grant of up to $5000 with the ecoENERGY Home Retrofit Grant. What’s more, in a typical home, you could save as much as $700 a year on your heating costs, year after year (Source: The Weather Network online).

When it comes to energy savings, the little things make a big difference. Small improvements like caulking around windows, repairing door seals and insulating electric boxes really add up and could qualify you for a grant. Best of all, saving energy is great for the environment (Source: The Weather Network online).

How it works

Woman with Child The first step is to contact a licensed energy advisor to arrange an energy assessment for your home. He or she will provide you with a printed report that shows you where your energy dollars are being spent and what you can do to improve your home’s energy efficiency.

After you have completed the work, your advisor will provide you with a second report detailing how much you can expect to receive and will apply for the grant on your behalf, preparing the paperwork for you to sign. The advisor will then forward your application to Natural Resources Canada (Source: The Weather Network online)..

To be eligible for a grant, your home must have had pre- and post-retrofit evaluations from an NRCan-licensed energy advisor. You have 18 months from the date of the pre-retrofit evaluation to submit your application. Cheques are normally issued within 90 days of your follow-up evaluation.

For more information or to obtain a copy of the ecoENERGY Retrofit Guide or call 1 800 O-Canada / 1 800 926-9105 (TTY).

or refer to this page to find the location nearest you http://oee.nrcan.gc.ca/residential/personal/new-home-improvement/contact-advisors.cfm