Blog

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!