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Tax concerns Toronto Board

Bill 53 would give new taxation powers to City of Toronto
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epresentatives of the Toronto Real Estate Board appeared before Ontario's Standing Committee on General Government on April 26th to raise concerns about a Bill that would provide new taxation powers to the City of Toronto.

Bill 53, the Stronger City of Toronto for a Stronger Ontario Act, would give the City of Toronto the authority to levy new taxes, with certain limitations. Land transfer tax is not included as one of those limitations.

According to TREB director of government relations Von Palmer, Toronto Mayor David Miller has mused about a land transfer tax as one of many options under the new powers from the province. Palmer also notes that the land transfer tax included as an option in information published on the City of Toronto's web site.

Homebuyers already face a substantial provincial land transfer tax when they purchase a home. This tax is calculated as a percentage of the purchase price of a property and is payable in full by the homebuyer when they take possession of the property. On average, Toronto homebuyers pay almost $4,000 in land transfer tax. Any city tax would be in addition to that.

"Land transfer tax is a home buying tax. It can be a significant cost that impacts the decisions for many homebuyers, especially first time buyers. If they have to pay an extra land transfer tax in Toronto, then they will be forced to move farther out, which means more commuting, more pollution and an overall decrease in the quality of life," said John Meehan, President of the Toronto Real Estate Board.

TREB has told the province that, if Toronto housing is made less affordable relative to surrounding areas, it will be more difficult to achieve the objectives of the provincial government's proposed Growth Plan for the Greater Golden Horseshoe, which attempts to prevent urban sprawl by concentrating employment and population growth in designated priority areas. Five of these priority areas are in Toronto.

"Clearly, the intention is that Toronto should be a main focus for population growth in the GTA, but it will be more difficult to encourage people to live here if a new Toronto home-buying tax makes it more affordable for them to live outside of the city," said Meehan.

TREB is also concerned about the impact of a Toronto land transfer tax on businesses and the economy. Land transfer taxes normally apply to all types of property, including businesses. "The city's high business property taxes, and the Province's unfair Toronto business education property taxes, already over-burden Toronto businesses. Allowing a new local land transfer tax will send the wrong message, making it more difficult to attract business to the city," said Meehan.

April 29, 2006 in Agency Matters | Permalink | Comments (4)

Ontario releases tax guidelines

Will impact land transfer tax paid on new homes
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he Province of Ontario quietly released tax guidelines at the end of March that could significantly increase the amount of land transfer tax buyers pay for a newly constructed home.

Purchasers of new homes often agree to a base price and then advise the builder of any extras and upgrades they would like to add. The tax bulletin says the value of these extras and upgrades are to be included in determining the amount to be declared in the land transfer tax statements, called the “value of the consideration”.

The bulletin says this includes items that are part of the permanent structure, such as architectural changes, extra doors and entrances, whirlpool baths, finished basements, roughed in washrooms and fireplaces. It also includes upgrades to flooring, cupboards, doors, windows and counters, as well as exterior upgrades like lot premiums, tree plantings, driveway paving, sodding and grading.

The guidelines also appear to introduce a form of double taxation. The bulletin states that the value of the consideration is to include the value of any liability assumed and miscellaneous costs incurred by the builder as part of the arrangement relating to the conveyance that are passed to the new homebuyer. These include lot levies, development charges, school levies, architect fees, and the Ontario New Home Warranty Plan Fee.

These are the first guidelines released for the determining the value of the consideration for new homes transfers. Critics have blasted the Liberal government for failing to consult with industry stakeholders before quietly introducing the new guidelines. A Toronto lawyer has suggested the provincial government could make the new tax grab retroactive to March 31st, which would create an administrative nightmare.

Homebuyers in Ontario pay a land transfer tax of $5 for every $1,000 in value up to $55,000; $10 from $55,000 to $250,000; $15 from $150,000 to $400,000, and $20 for over $400,000. First-time buyers of new homes and new condos can get up $2,000 in rebates.

To view the complete bulletin, click here.

April 28, 2006 in Legal Considerations | Permalink | Comments (1)

Toronto Commercial Real Estate

Suburban Land Values Increase in Most Markets

Suburban land values increased in five of seven markets since the third quarter of 2005, with Ottawa prices rising 16 per cent to $310,000 per acre. The Toronto figure came in at $661,000 per acre. The highest prices were in Vancouver, with suburban land selling for $760,000 per acre.

Power Centre Rent Inflation to Remain Unchanged

Canada-wide power centre rental rates are expected to rise 2.4 per cent in 2006, the same amount as last year. Expenses are expected to rise between two and three per cent over the same time-frame. Toronto rents and expenses both are expected to rise 2.3 per cent.

See Full Report [in PDF format*].

April 27, 2006 in Toronto Real Estate Update | Permalink | Comments (0)

Boomers drive demand

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he full impact of an aging baby boom generation is hitting recreational property markets across the country, according to the 2006 RE/MAX Recreational Property Report. The report highlights activity in 40 major Canadian centres, and found that older boomers are fueling unprecedented demand for recreational properties in 67 per cent of markets surveyed during the first quarter of 2006.

"Baby boomers have played a key role in real estate markets across North America since the early 1970s," says Michael Polzler, Executive Vice President, Regional Director, RE/MAX Ontario-Atlantic Canada. "In fact, they've influenced everything from education, to politics, to the stock market over the past five decades. It comes as no surprise that boomers have now set their sights on recreational property. Frankly, it makes perfect sense. They believe in real estate as an investment and view recreational property as a relatively safe bet."

"We've been expecting the first-wave of aging boomers for quite some time," adds Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada.

Limited inventory levels have been reported in approximately 50 per cent of markets surveyed. Most markets, however, are reporting recreational property sales for the first quarter of this year on par or ahead of 2005 levels.

Teardown activity is rampant in most areas of the country, as baby boomers construct year-round lakeside dwellings that offer all the comforts of home. Renovation is also occurring at full-tilt in markets across the country.

"This is a generation that has had it all," says Polzler. "They've been the major force behind sales of luxury goods since the booming 1980s. Their homes reflect their success, whether they are in the city or the country."

Boomer demand has sparked an upswing in starting prices for three- bedroom, winterized recreational properties on waterfront lots. Virtually every market surveyed reported an increase. The most expensive markets are found in the West, with Whistler ($1.1 million), Salt Spring Island ($1 million), Shuswap Lake ($1 million), Kelowna (Lake Okanagan - $1 million), Penticton ($800,000 - $1 million), Sylvan Lake ($800,000 - $850,000) and Vernon ($800,000) representing the top seven.

Ontario's Bala/Port Carling area in Muskoka ($500,000 - $550,000) is the most expensive recreational property market in Ontario-Atlantic Canada. Some of the most affordable oceanfront properties can be found on Canada's east coast, where starting prices are under $200,000.

Although aging boomers are leading the charge for recreational properties, younger boomers and Generation X have also bolstered demand for properties from British Columbia to Newfoundland. Many of these purchasers are seeking more affordable properties and are willing to travel a distance to realize their goals and objectives.

International purchasers from Europe, Asia, Australia, and New Zealand are fueling demand for big-ticket recreational properties in Salt Spring Island, Whistler, Sylvan Lake, Bala/Port Carling, and Newfoundland. Americans, particularly those in the northern U.S. states, continue to play a major role in the sale of recreational properties across the country. The higher Canadian dollar has done little to dissuade buyers as prices for recreational properties in the U.S. reach peak levels.

To view the report , click here.

April 26, 2006 in What's next (in real estate) | Permalink | Comments (2)

Glossary of Home Buying Terms

To help you understand the home buying process better, here is a list of common home buying and mortgage terms.

Amortization

A term used to describe the period of time over which the entire mortgage is to be paid assuming regular payments.

Appraisal

An independent assessment of the property by a qualified individual.

Assuming a mortgage

Taking over the previous owner's (or builder's) mortgage when you buy a property.

Buy down rate

This is the portion of the interest rate on a buyer's mortgage that you assume when they buy your home. If you're selling your home and the prospective buyer doesn't like the interest rate on their mortgage, you can offer to add a certain percentage of it onto your existing mortgage.

Capped rate

An interest rate with a pre-determined ceiling - usually associated with a variable-rate mortgage.

Closed mortgage

A mortgage which has a fixed interest rate (usually lower than an open mortgage rate) and a set term that you cannot change. You cannot pay off a closed mortgage before the agreed end date.

Closing costs

Costs that are in addition to the purchase price of a property and which must be paid on the closing date. Examples include legal fees, land transfer taxes, and disbursements.

Closing date

The date on which the sale becomes final, the new owner takes possession of the property and funds are transferred from the purchaser to the vendor.

Conventional mortgage

A mortgage where the borrower is contributing more than 25% or more of the value of the property as the down payment.

Convertible mortgage

A mortgage that you can change from short-term to long-term, depending on your financial needs.

Debt service ratio

The percentage of the borrower's income used for monthly payments of principal, interest, taxes, heating costs and condo fees (if applicable).

Default

A homeowner is ‘in default’ when he or she breaks the terms of a mortgage agreement, usually by not making required mortgage payments or by not making payments on time.

Down payment

The money that you pay up-front for a house. Down payments typically range from 5%-25% of the total value of the home.

Equity

The difference between the market value of a property and the amount owed on the property. This difference is the amount a homeowner actually owns outright.

High ratio mortgage

A mortgage where the borrower is contributing less than 25% of the value of the property as the down payment. The minimum down payment required is 5% of the property value.

Home inspection

A visual inspection of the major components of a home by a qualified individual, who will give the home buyer a true and unbiased picture of the home's condition.

Home insurance

Insurance to cover both your home and its contents (also referred to as property insurance). This is different from mortgage life insurance, which pays the outstanding balance of your mortgage in full if you die.

Interest adjustment

The amount of interest due between the date your mortgage starts and the date the first mortgage payment is calculated from. Sometimes there is a gap between the closing date of your home purchase and the first payment date of your mortgage.

Land transfer tax

A tax that is levied (in some provinces) on any property that changes hands.

Legal fees and disbursements

Some of the legal costs associated with the sale or purchase of a property. It is in your best interest to engage the services of a real estate lawyer (or a notary in Quebec).

Lump sum payment

An extra payment that you make to reduce the amount of your mortgage. This is the same as pre-paying, which you cannot do if you have a closed mortgage.

Mortgage

A loan that you take out in order to buy property. The collateral is the property itself.

Mortgagee/mortgagor

Mortgagee is the lender; mortgagor is the borrower.

Mortgage broker

A company or individual who helps the homeowner find the right financing to buy a property. A broker does not actually lend money but seeks out a lender and arranges the mortgage terms. This may include negotiating with the lender for the best possible deal for the homebuyer.

Mortgage default insurance

Required if you are contributing between 5% and 25% of the value of the property as the down payment.

Mortgage life insurance

This form of insurance pays the outstanding balance of your mortgage in full if you die. This is different from home or property insurance, which insures your home and its contents.

Mortgage rate

The percentage interest that you pay on top of the loan principal. For example, you may take out a mortgage of $100,000 at a rate of 12%. Your monthly payments will consist of a portion of the original $100,000, plus 12% interest.

Mortgage term

The length of time the interest rate is guaranteed for a mortgage. Mortgage terms normally rate from six months to five years or more, after which you can repay the balance of the principal owning or re-negotiate the mortgage at current rates.

Moving expenses

The cost hiring of packers, movers or renting a van.

Multiple Listing Service (MLS)

A computerized listing of the properties available in your area, including information and pictures of each property.

Offer to purchase/conditional offer

A written contract outlining the terms under which the buyer agrees to purchase the property. There may be conditions attached to the offer, for example: offer being subject to arranging the mortgage or selling a home.

Open mortgage

A mortgage which you can pay off, renew or refinance at any time. The interest rate for an open mortgage is usually higher than a closed mortgage rate.

Porting

Transferring an existing mortgage from one home to a new home when you move. This is known as a "portable" mortgage.

Pre-approved mortgage certificate

A written agreement that you will get a mortgage for a set amount of money at a set interest rate. Getting a pre-approved mortgage lets you shop for a home without worrying how you'll pay for it.

Pre-paid property tax and utility adjustments

The amount you will owe if the person selling you the home has pre-paid any property taxes or utility bills. The amount to reimburse them will be calculated based on the closing date.

Pre-payment

Repaying part of your mortgage ahead of schedule. Depending on your mortgage agreement, there may be a penalty for pre-paying.

Property survey

A legal description of your property and its location and dimensions. An up-to-date survey is usually required by your mortgage lender. If not available from the vendor, your lawyer can obtain the property survey for a fee.

Refinancing

Increasing the amount of your current mortgage, at a new interest rate. The term of the new mortgage must be equal to or greater than the term remaining on your current mortgage.

Renewal/renewing

Once the original term of your mortgage expires, you have the option of renewing it with the original lender or paying off all of the outstanding balance.

Sales taxes

Taxes applied to the purchase cost of a property. Some properties are sales tax exempt (GST and/or PST), and some are not. For instance, residential resale properties are usually GST exempt, while new properties require GST. Always ask before signing an offer.

Service charges

The extra costs payable for hooking up hydro, gas, phone, etc. to a new address.

Variable rate mortgage

A mortgage with an interest rate that changes with the market. The rate changes each month, so the portion of your monthly payment that goes towards interest may go up or down each month. But your total monthly payment will probably stay the same.

April 25, 2006 in Buying Toronto Real Estate | Permalink | Comments (1)

Toronto Real Estate Update

April setting record pace
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n the first half of April, the Toronto Area resale housing market showed a three per cent increase in transactions compared to the same time period a year ago, Toronto Real Estate President John Meehan announced today. The 4,140 sales that took place during the first half of the month were also up one percent from the record-setting pace of mid-April 2004.

"The market followed its best first quarter ever with another solid performance to start this month," Mr. Meehan said. "The spring season is a very important indicator for the overall health of the market and it is very encouraging to see this kind of performance."

The President also reported that the average price of a home in mid-April was $366,878, two per cent higher than the mid-March figure of $360,285, and up nine per cent over the $337,206 recorded in mid-April of 2005.

Ted Tsiakopoulos, Ontario regional economist for CMHC, noted that a strong economy and low interest rates are behind the active resale market.

"Strong home sales continue to push GTA home prices higher in April. Steady increases in home prices since the mid 90s have helped consumers feel very confident investing in real estate. A steady job market, strong consumer confidence and interest rates near historical lows will ensure that prices remain sustainable."

A few neighbourhoods across the Greater Toronto Area showed particularly high mid-April sales totals in comparison to mid-April figures from last year:

In the East, Scarborough’s Wexford / Dorset Park area saw 71 per cent more overall transactions compared to mid-April 2005, helped by a jump in condominium activity.

In the West, overall sales activity in Rexdale was 62 per cent higher than totals recorded midway through April of a year ago.

Condominiums made up the majority of transactions in Toronto’s Downtown East neighbourhood as the area saw 60 per cent more overall transactions in the first half of April, compared to a year ago.

North of Toronto, the Markham West / Langstaff neighbourhood showed an overall increase of 89 per cent compared to mid-April of last year, fueled by strong sales of detached homes.

Mr. Meehan added that Toronto Area consumers have a lot to be positive about.

"Consumers are seeing consistent, positive results based on healthy fundamentals and it’s fostering a lot of confidence. The market is well supported and is giving steady returns, yet it remains quite accessible. It’s still a good time to get into the market or make a move."

April 22, 2006 in Toronto Real Estate Update | Permalink | Comments (0)

Hunting for a Home

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ooking for a home can be an intimidating task filled with many questions. What home do I buy and where? Who do I go to for help? And how do I know if I am making a good purchase?

There’s no one “right way” to go about finding a home. But here are a few tips that may make the process a little easier and remove some of the anxiety associated with making what is, for most people, their largest single purchase in life.

The first thing to do is determine how much you can afford and what type of home you want or need. This would include the size, number of bedrooms, location and special features such as a garage, fireplace, fence, dishwasher, hot tub etc.

You’ll also want to consider such things as proximity to schools, community centres and play and sports facilities, public transportation, hospitals, libraries and shopping areas and your workplace. These factors are important to you and your family.

Since your home is probably your single largest investment, you’ll want it to be as attractive as possible to purchasers when you’re ready to sell. So keep in mind the features you think will make it attractive to potential buyers in the years ahead.

Finding a real estate agent to handle your purchase is important. Talk to a few agents with different companies who know the area where you’re looking to buy. A real estate professional can show you homes in your price range in the areas you like that meet your particular needs and budget.

With so many homes to choose from, how do you know if what you’re going to buy is good value?

It’s very important to inspect the structure and grounds of the home you’re thinking of buying and look around the neighborhood to be sure it’s an area where you want to live.

Get a copy of the land survey from the seller to check the boundaries of the property to make sure they are clear of encumbrances and walk around the property yourself to make sure there are no surprises.

You’ll also want to tour the neighborhood and see the house at different times of the day or on weekends to check traffic patterns and noise levels that could affect your decision to buy.

When you find a home you like, inspect it yourself carefully for such things as structural defects, signs of water damage, lack of water pressure, faulty plumbing or inadequate wiring.

You may want to get an inspection done by a professional home inspector before you buy. A professional may uncover problems that you wouldn’t notice.

A good inspector will check the house from the basement to the roof, including the heating and cooling systems, plumbing, walls, ceilings, insulation, electrical wiring, foundation, ventilation, doors and windows, and septic and sewer systems.

An inspector will determine if any repairs are necessary. If possible, plan to go along with the inspector during his inspection. You could pick up some valuable information that will help you in the future with the maintenance of your house. Your real estate agency can likely refer an inspector if you don’t know of one yourself.

Some careful planning can help to ensure that you get a good-quality house that will meet the needs of you and your family in an area you like for a price you can afford without any nasty surprises after you take possession.

April 20, 2006 in Buying Toronto Real Estate | Permalink | Comments (3)

Air Conditioner Rebate Program

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tarting April 21, 2006, consumers will receive a $500 rebate when they replace an inefficient central air conditioner with a new ENERGYSTAR® qualified system. There is a $50 rebate for those who have their central air conditioner tuned up by a registered participating contractor, and a $75 rebate on the supply and installation of a programmable thermostat.

To undertake the Cool Savings program, the Conservation Bureau has partnered with the Heating, Refrigeration, and Air Conditioning Institute (HRAI) and has designed a program that will help reduce peak demand for electricity this summer and reduce overall demand during cooling seasons for years to come.

For consumer information call 1-888-668-4636.

April 20, 2006 in Home Maintenance Matters | Permalink | Comments (0)

It's `The Beach'

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he neighbourhood featuring four beaches is to be officially called "The Beach." The head of the Beaches business association made the announcement yesterday at the Toronto Public Library Beaches Branch.

"Beach area residents have spoken," Neil Macdonald said of a poll conducted over the past month to resolve a decades-old debate on the east-end neighbourhood's name.

Of more than 2,200 votes cast, 58 per cent sided with the singular over the plural. The result means that 100 historic street signs including the words "The Beach" are to go up this fall along Queen Street East.

"I think they've done the right thing (picking a standard name)," John Nishida, chief branding officer at Pigeon Branding and Design in Oakville, said when he heard the news.

"One of the principles of branding is to have a consistent message to all audiences.... Now city officials, government officials and everybody else who has a stake in the community will hopefully use the proper terminology."

April 19, 2006 in Location, location, location | Permalink | Comments (0)

Life's A Beach(es)

The Beach? The Beaches? Two names, one place, and a whole world of debate rages in one Toronto community.

Known for its sandy shores, lengthy boardwalk and the kind of serenity not often associated with life in the big city, the neighbourhood that runs east from Woodbine and uses Queen St. East as its main thoroughfare, is currently suffering an identity crisis. Some call it The Beach. Some call it The Beaches. But the local Business Improvement Association wants to settle the debate once and for all in the hopes of placing the victorious moniker on all the area’s street signs.

It's long been a topic of contention for area residents, but the recent discussion, and the media coverage it's garnered has made for some of the most intense discussion yet.

"It’s a free country, they can say whatever they want to say, but we know in our heart that it’s The Beach," said area resident Paul Rae.

Naturally, others disagree. "I live here, there are five beaches, I can name them all," said another resident. "So therefore it has to be plural." Either way, it’s one of Toronto’s oldest neighbourhoods and the discussion over what it should be called goes back nearly as far.

In 1925, the Scarborough Beach Amusement Park was torn down to make way for new housing.

It was at that time the lines between the separate beaches began to erode, and the argument about the name began to grow just as fast as the neighbourhood’s population.

But perhaps the greatest irony surrounding the whole issue is that the Business Improvement Association says unless they can reach a clear consensus, the signs won’t be changing at all, meaning all of this arguing could ultimately be in vain.

"But then again, what’s in a name anyway?"

April 18, 2006 in Location, location, location | Permalink | Comments (0)

 

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