Planning renovations over the next twelve months? You can get back $1,350 in tax relief – Every little bit helps
February 1st, 2009 Categories: Home Maintenance, Mortgages, Economics, Finance, Real Estate News
Last week’s Federal Budget 2009 proposes a temporary Home Renovation Tax Credit (”HRTC”), which will provide a 15% non-refundable income tax credit on eligible home renovation expenditures made after January 27, 2009 and before February 1, 2010, for agreements entered into after January 27, 2009.
The credit may be claimed on the 2009 tax return for the portion of eligible expenditures over $1,000 but less than $10,000, and will provide up to $1,350 in tax relief (i.e., 15% multiplied by ($10,000 minus $1,000)).
Family members will be subject to a single limit based on their pooled expenditures. For this purpose, a “family” will generally be considered to consist of an individual, his or her spouse or common-law partner, and their children who were, throughout 2009, under the age of 18 years. Eligible dwellings are generally restricted to personal-use homes including houses, cottages, and condominium units.
What expenses are eligible?
The tax credit is for “enduring renovations and alterations”. Individuals will need to keep receipts.
Eligible: renovating a kitchen, bathroom or basement, purchasing new carpet, hardwood floors, a new furnace or water heater, building an addition, deck, fence or retaining wall, painting the interior or exterior of a house, resurfacing a driveway, or laying new sod. Most costs associated with such projects will be eligible for the credit, including the cost of labour and professional services, permits, building materials, fixtures, equipment rentals and incidental expenses.
Ineligible: routine repairs and maintenance normally performed on an annual or more frequent basis, carpet cleaning, financing costs associated with a renovation (e.g. mortgage interest costs), the purchase of furniture and appliances (e.g. a refrigerator, stove or couch), audio-visual electronics, tools or construction equipment or maintenance contracts such as furnace cleaning, snow removal, lawn care and pool cleaning.
So stop putting off doing a bit of work on that house of yours, just don’t go overboard!
| Discussion: 4 Comments »
A Little Help for First Time Home Buyers in Federal Budget 2009
February 1st, 2009 Categories: First Time Buyers, Mortgages, Economics, Finance, Real Estate News
1. Can withdraw up to $25k (formerly $20k) from Your RRSP when buying first home
The maximum amount that can currently be withdrawn from an eligible person’s RRSP under the Home Buyers Plan is $20,000. The Budget proposes that this withdrawal limit be increased to $25,000 for withdrawals made after January 27, 2009.
You are not considered to be a first-time home buyer if, at any time during the period beginning January 1 of the fourth year before the year of the withdrawal and ending 31 days before the withdrawal, you or your spouse or common-law partner owned a home that you occupied as your principal place of residence.
Special rules apply where the home is being acquired for the needs of a disabled person.
Amounts withdrawn must be repaid over a 15-year period, or the unpaid amounts will be included in taxable income.
2) First-Time Home Buyers’ Tax Credit
The Budget proposes a new non-refundable tax credit for first-time home buyers who acquire a qualifying home after January 27, 2009. (The closing date for the purchase of the home must be after that date in order for the tax credit to be available.)
The amount upon which the tax credit is calculated is $5,000, multiplied by the lowest personal income tax rate for the year (15%). The First-Time Home Buyers’ Tax Credit may be claimed in the year in which the home is acquired.
A “qualifying home” is a home which the person or the person’s spouse or common-law partner intends to occupy as their principal place of residence not later than one year after the acquisition.
This new tax credit will also be available for the acquisition of a home acquired after January 27, 2009 either by an individual who is eligible for the Disability Tax Credit (”DTC”) or by an individual for the benefit of a relative who is eligible for the DTC. The home must be acquired to enable the DTC-eligible individual to live in a more accessible dwelling or in an environment better suited to the person’s needs.
The First-Time Home Buyers’ Tax Credit may be claimed either by the person who acquired the home or by his or her spouse or common-law partner. If a qualifying home is purchased jointly, the total amounts claimed by the couple cannot exceed the credit that could be claimed if only one individual had acquired the home.
So First Time Buyers, you are now in a perfect storm, with interest rates at an all time low (prime=3%), a downward adjustment in prices since the economic meltdown in Ocober 08, and a lot of homes on the market.
Give me a call to find out all the relevant information!
| Discussion: No Comments »
“How do I claim the new land transfer tax rebate for first-time buyers?” says Dan from Mississauga
March 3rd, 2008 Categories: First Time Buyers, Mortgages, Economics, Finance, Oakville Real Estate News
I received a call this evening from a gentleman named Dan from Mississauga who had just purchased his first home, a resale.
Dan called me as he had read my post on the new rebate and had been surprised that his lawyer did not know about it. He was wanting to know how to go about claiming it.
LET’S REVIEW THE SITUATION:
1) December 13, 2007, the Ontario government announced a proposed amendment to extend the Land Transfer Tax Refund Program for First-Time Homebuyers to include purchases of resale homes, to a maximum refund of $2000.
2) But the proposed amendment has not yet been passed by the Legislature and needs to receive Royal Assent to become law. It is my understanding that this is a “formality” and that it will likely be passed.
WHAT DO DO BEFORE THE LAW IS PASSED?
1) Pay the land transfer tax upon registration
2) Download the form – Ontario Land Transfer Tax Refund Affidavit for First-Time Purchasers of Eligible Homes (Resale)
3) Submit a copy of the registered instrument on which land transfer tax was paid (in the case of electronic registration, include a copy of the docket summary which relates to the transaction along with a copy of the statement of adjustments)
4) Submit a copy of the agreement of purchase and sale (only those agreements of purchase and sale entered into after December 13, 2007 may qualify)
5) Although eligible first-time buyers of resale homes may apply for the refund once the transaction has closed and the tax has been paid, the ministry would retain the refund requests for processing and would issue refunds after the proposed amendments become law.
6) Certain conditions apply:
- The purchaser must be at least 18 years of age.
- Application for the refund must be made within 18 months after the date of the conveyance or disposition.
- The purchaser must occupy the home as his or her principal residence within 9 months of the date of closing.
- The purchaser cannot have owned a home or had any ownership interest in a home, anywhere in the world.
- A spouse of the purchaser cannot have owned a home or had any ownership interest in a home, anywhere in the world while he or she was the purchaser’s spouse
For more information consult the Ministry of Revenue website, click here or call:
Tel.: 905 433-6361
Fax: 905 433-5770
1 800 263-7776
Submissions should be mailed to:
Ministry of Revenue
Land Taxes Section
33 King Street West
PO Box 625
Oshawa ON L1H 8H9
Dan, hope that helps! Having an extra $2,000 back is nice when buying that first home. To keep abreast of real estate news subscribe now to the Oakville Buzz!
| Discussion: No Comments »
Oakville and Milton Home Sales and Price Changes for January 2008
February 19th, 2008 Categories: Halton Real Estate, Investing in Real Estate, Latest Real Estate Market News & Stats, Mortgages, Economics, Finance
|
Oakville |
2007 |
2008 |
% C hange |
|
No. of Residential Sales |
217 |
194 |
-11% |
|
Average Sale Price |
$419,533 |
$541,935 |
29% |
|
Median Sale Price |
$362,500 |
$415,000 |
14% |
|
Milton |
2007 |
2008 |
% C hange |
|
No. of Residential Sales |
92 |
74 |
-20% |
|
Average Sale Price |
$315,094 |
$335,493 |
6% |
|
Median Sale Price |
$300,000 |
$320,000 |
6% |
Average and median prices are continuing to rise, while number of sales declined in January 2008 versus last year. Inclement weather in 2008 versus a milder 2007 as well a consumer concerns over the impact of U.S. market on Canada have moderated the number of homes listed and sold for the start of the year.
Stay tuned to The Oakville Buzz for monthly stats on home prices and sales volume. Source: Oakville Milton and District Real Estate Board
| Discussion: 1 Comment »
First Time Buyers: Want to Withdraw RRSP Funds to Buy a House?
February 6th, 2008 Categories: First Time Buyers, Halton Real Estate, Mortgages, Economics, Finance, Oakville Real Estate News
Question: 
“Can I use my RRSP’s to buy a house?”
First Time Buyers often ask if they can use some of their RRSP money in the home purchase.
First let me say, now is a a wonderful time for first time buyers to purchase their first home.
Some recent posts on The Buzz discuss various factors iimpacting this decision including new Land Transfer Tax Rebate for first time buyers, an environment of declining interest rates, and a more balanced real estate market in the GTA/Halton area, versus the seller’s market of the last 7 years, all of which bode well for FTB in Ontario.
(See also a recent post on solid economic fundamentals in Canada, despite challenges in the U.S.)
The question of RRSP money being applied to home purchase has been asked me enough times to warrant mention here.
There are two categories of people who are eligible to withdraw RRSP funds (without tax penalty) for home purchase:
1) First Time Buyers
2) People with disabilities or relatives of people with disabilities who are helping them purchase
Some Pointers for RRSP withdrawal:
1) Must be a resident of Canada
2) Must occupy the home as principle residence
3) Have up to 30 days after closing to withdraw funds from your RRSP
2) Don’t need to use all the funds towards the down payment (money can be used for closing costs, home renos etc)
3) Allowed a maximum withdrawal of $20,000 per qualified home buyer
4) Have 15 years to repay RRSP, without tax implication
5) Revenue Canada helps keep accounting straight by providing a statement on the annual Notice of Assessment outlining repayment requirements.
More details on this can be found here on the Revenue Canada website.
IF YOU ARE A FIRST TIME BUYER, CONTACT HILARY 905–599–3311 FOR STEP-BY- STEP GUIDANCE, from financing, to market conditions to moving advice!
| Discussion: No Comments »
Getting a Mortgage Today? Fixed or Variable Rate?
January 31st, 2008 Categories: First Time Buyers, Mortgages, Economics, Finance
The simple answer to this question is to go variable as more rate cuts by the Bank of Canada are anticipated in the next few months. (See my article last week explaining this.) Remember you can always lock in at a later date.
Just in case you’re new to all this stuff:
The discount rate is the interest rate that a bank is charged to borrow short-term funds directly from the central bank (Bank of Canada).
The prime rate is the interest rate that commercial banks charge their most credit-worthy customers.
Banks in the past would set their variable mortgage rate at 0.9% – 1.0% off prime. Not today. They are narrowing the discount so as to improve their profit margin on variable products.
I read an article in the Financial Post on the weekend which you might find interesting (reprinted below). 
BORIS’ READER’S DIGEST VERSION of Financial Post article:
1) The banks are not obligated to lower prime just because the B of C rate has fallen, although most likely they will.
2) With rates falling, the banks will recoup some of their losses by reducing the discount off prime that they give to borrowers.
Mortgage: To fix or to float?
Mortgage: To fix or to float?
Banks expected to get stingier with discounts
Would you borrow money from someone if they could change the rate of interest whenever they wanted to?
About 20% of Canadians signing up for new mortgages have been doing just that. One out of every five new mortgages is now a variable rate product tied to prime. Prime is dictated by your bank.
As rates tumbled during this housing cycle, consumers worried about locking into long-term mortgages. The fear of being shut out of the latest rate cut from the Bank of Canada had consumers looking to products with floating interest rates.
Generally, when the central bank cuts rates, your interest rate comes down. But as the global credit crisis has widened, one big question is whether the banks will continue to lower prime with every cut from the country’s central bank.
So far, the answer is a clear yes. The major banks went along with a 25 basis cut from the Bank of Canada this past week and lowered their prime lending rate for customers from 6% to 5.75%.
“The word on the street has been that maybe they wouldn’t drop,” says Don Lawby, chief executive of Century 21 Canada Ltd.
Whether the banks continue to pass on Bank of Canada cuts probably will not change demand for variable rate products, he predicts. One of the reasons he does not think consumers should or will panic is that they always have the option of locking in their rate on a variable rate product.
Most variable rate products sold by the banks include an option that allows you to fix your rate for the remaining term of your mortgage–albeit at a slightly higher rate than you might normally achieve if you did not have a mortgage contract.
“The issue will always be, ‘is the rate I can negotiate for one, two, three or five years better than my current variable rate or not?’ That’s the decision the consumer is going to make. If consumers think rates are going up, they lock in,” says Mr. Lawby.
But the truth is, floating rate mortgages have been rising for months but it has been happening in such a subtle way few people have noticed. A year ago, a consumer could borrow money at 90 basis points off prime. Anybody with that type of deal is now paying 4.85% interest based on the latest cut.
Unfortunately, if you are borrowing today, credit availability has tightened. As the banks’ costs have increased, their profits have narrowed. To deal with the shortfall they cut the discount offered to 50 basis points off prime.
Essentially, they have balked at the Bank of Canada rate cut by cutting the discount. That same variable rate mortgage today will be at 5.25% interest.
Given the shrinking discount and the uncertainty of the banks going along with future rate cuts, does it make sense to continue to have a floating interest rate on your mortgage?
Moshe Milvesky, a professor at York University’s Schulich School of Business, wrote the now widely disseminated study on whether it made sense to lock in your mortgage rate. In the study which looked at decades of interest data, he found consumers did better 88% of the time with a floating rate mortgage.
“It’s the other direction that worries me. If the Bank of Canada lowers rates and they raise prime or the banks arbitrarily raise prime … that’s more worrisome because of unpredictably,” says Mr. Milvesky.
He predicts the banks will probably just get stingier with the discounts they offer rather than not passing along Bank of Canada rate cuts. They can knock the discount down to 10 basis points and few people will get upset, says Mr. Milvesky.
Ultimately, he does not see a sudden rush to fixed rate mortgages but it will open the eyes of consumers. “It makes them aware of the fact that it is the bank that controls their interest rate, not the Bank of Canada,” says Mr. Milvesky.
| Discussion: 3 Comments »
Canadian Interest Rates Anticipated to Go Down Further/No Cause for Alarm for Canadian Home Prices
January 24th, 2008 Categories: First Time Buyers, Latest Real Estate Market News & Stats, Mortgages, Economics, Finance, Real Estate News
Canadian Interest Rates To Fall Further
As world stock markets roil and the spotlight turns on U.S. Fed Chairman Bernanke to follow up Tuesday’s sharp 75 basis point rate cut with another cut next week, Canadians are wondering what will happen to interest rates here at home.
Last week I was hearing rumors that even if the Bank of Canada were to cut rates, some or all of the major Canadian banks might break precedent and not follow suit. However the relatively more conservative 1/4 point cut in rates this week by the Bank of Canada did result in all major banks reducing their rates accordingly, impacting mortgage rates.
The Bank of Canada has communicated that they are prepared to cut rates further. A communique I read today from the Toronto Dominion Bank Financial Group said we can anticipate a further 50 basis point (1/2%) rate reduction on March 4th with the potential of another 25 basis point cut on April 22nd.
This is good news for homebuyers.
Canadian Home Prices: No Cause for Alarm
The TD communique also indicated that despite tighter credit conditions, strength in domestic demand is expected to remain supported by continued income growth associated with increases in commodity prices since October, which has led to further gains in our terms of trade.
With respect to Canadian home prices, and the rationale for their 50 basis point prediction I quote from today’s TD report:
Home prices remain on the upswing in most major urban centers, and there is little concern that the Canadian housing market will start to mirror the slump in the U.S. In fact, we believe national home prices will rise at a rate of 5-7% in 2008, compared to a U.S. market that will likely absorb losses of around 5% or more. However, we believe that by the next meeting (i.e March 4th), data on the U.S. economy will provide a smoking gun, showing clear signs of a sharp economic slowdown. Given that inflationary pressures remain well in hand, a 50 basis point cut would provide much-needed insurance against the degree to which a U.S. economic downturn would lap onto Canadian shores.
Certainly, inflation will not provide a barrier to a more aggressive Bank of Canada. The central bank has indicated that increased competitive pressures in the retail sector and the one percentage point GST cut at the start of the year will cause both core and total CPI inflation to fall below 1.5% by the middle of this year before returning to their 2% target by the end of 2009.
Looking to buy or sell? Call Hilary at 905–599–3311 or click here to contact Hilary for more market information.
| Discussion: No Comments »
Canadian Real Estate Forecast for 2008
December 19th, 2007 Categories: Latest Real Estate Market News & Stats, Mortgages, Economics, Finance, Real Estate News
Oakville Real Estate, Burlington Real Estate, Halton Real Estate, Canadian Real Estate
I am reprinting the Royal LePage Market Survey Forecast for 2008, released this week by Phil Soper, President of Royal LePage.
It is a good summary of the main economic factors that are influencing the Canadian residential housing market. Note the chart showing price increase broken down by city, from 2006 to 2007, and the forecast for 2008.
In Oakville, Burlington, and the Greater Toronto Area, prices rose on average 6.6% from 2006 to 2007. This was less than the Canadian average which was 10.7%. For Canada and GTA Royal LePage is predicting 3.5% increase in house prices for 2008. I read recently that ReMax is predicting a 5% increase for the Greater Toronto Area. Royal LePage is traditionally quite conservative in its predictions.
Following is the report:
Solid economic fundamentals should allow Canada’s residential real estate market to chart its own course and maintain its buoyancy throughout 2008
TORONTO, December 17, 2007 – After experiencing an exceptional year characterized by strong average house price appreciation and record breaking unit sales, the momentum from 2007 is anticipated to carry over and position Canada’s real estate market for steady, yet moderate growth in 2008, according to the Royal LePage 2008 Market Survey Forecast released today.
Nationally, average house prices are forecast to rise by 3.5 per cent to $317,288 in 2008, while transactions are projected to fall slightly from this year’s record high unit sales to 500,927 (–4.0 %) unit sales in 2008. Despite the year-over-year reduction in unit sales, the number of homes trading hands in 2008 is expected to remain higher than in all years prior to 2007.
“Canada’s housing market in 2008 should continue to thrive on a balanced diet of strong economic fundamentals, including high levels of employment, resilient consumer confidence, modest levels of inflation and the relatively low cost of borrowing money,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services. “Canada is currently enjoying one of the longest housing market expansions in history; however, as we move into 2008 it is anticipated that slowly eroding affordability will cause demand to ease, allowing the market to move toward balanced conditions, with lower levels of price appreciation, and fewer homes trading hands.”
With the most affordable major market homes in Canada, residents of Regina and Winnipeg are forecast to drive the greatest increases in house prices in 2008, as job opportunities and in-migration continue to soar in each city. While Calgary and Edmonton will continue to boast healthy economies and high levels of home sale activity, the excessively fast run-up of home values in 2006 and the first half of 2007 priced people out of the market, causing inventory levels to rise late in the year. Alberta home price increases will be much more moderate in 2008 as the regional market continues to adjust to the new house value reality.
With the country’s highest home prices, Vancouver’s steadfast market will continue to expand on the back of a strong provincial economy. As the city readies itself for the 2010 Olympic Games, there will be an abundance of new jobs created.
Ontario and Quebec markets are anticipated to maintain their relative strength and vibrancy throughout next year, weathering stormy financial markets and adjusting well to the high value of the Canadian dollar. The services based industries that have become the backbone of the Toronto and Montreal economies have tolerated the rise of Canada’s dollar to parity very well, despite increasingly price competitive offering from overseas markets.
In Atlantic Canada, a slight depletion of inventory coupled with high immigration levels will see the housing market growing at a strong and steady pace – Halifax is expected to have higher than national average growth in 2008.
The frenzied pace of price inflation that has characterized the real estate market over the past two years in the resource rich west were unsustainable and should ease substantially in 2008. In Central Canada, price increases peaked in late 2005, and have been moderating since.
From coast-to-coast, the homebuyer demographic is anticipated to swell with first-time purchasers, as many flock to take advantage of recently reduced lending rates, longer amortization periods and the resultant manageable mortgage payments.
Added Soper: “The year ahead presents opportunities for those people who have shied away from the frenetic real estate market of the past few years, with its bidding wars and unconditional offers; while prices should continue to rise, they are expected to do so at a more reasonable pace. Canada’s economy is strong, and the desire for home ownership remains a vibrant and attainable goal – real estate remains a solid long term investment.”
2008 Market Survey Forecast
|
Market |
08/07% |
2008 Forecast |
2007 Projected |
2007 / 2006 |
2006 |
2005 |
|
Halifax |
6.9% |
$233,000 |
$218,000 |
7.3% |
$203,178 |
$189,196 |
|
Montreal |
3.5% |
$238,000 |
$230,000 |
6.6% |
$215,659 |
$203,720 |
|
Ottawa |
4.2% |
$285,000 |
$273,500 |
6.2% |
$257,481 |
$248,358 |
|
Toronto |
3.5% |
$388,500 |
$375,500 |
6.6% |
$352,388 |
$336,176 |
|
Winnipeg |
11.4% |
$190,000 |
$170,500 |
12.2% |
$151,983 |
$134,028 |
|
Regina |
15.4% |
$188,600 |
$163,500 |
24.0% |
$131,851 |
$123,600 |
|
Calgary |
4.0% |
$429,000 |
$412,500 |
19.0% |
$346,675 |
$250,832 |
|
Edmonton |
1.0% |
$341,000 |
$337,500 |
34.5% |
$250,915 |
$193,934 |
|
Vancouver |
4.0% |
$587,500 |
$565,000 |
10.8% |
$509,876 |
$425,745 |
|
CANADA |
3.5% |
$317,228 |
$306,500 |
10.7% |
$276,974 |
$249,201 |
Highlight of 2008 Trends
Strength of the Canadian Dollar
The position of the Canadian dollar hovering at parity will continue to bolster the country’s high consumer confidence, and is anticipated to translate into continued growth in consumer spending. The negative impact of the high dollar on the country’s manufacturing sector for export trade will be mostly felt in Southern Ontario and Quebec; however, both regions are demonstrating considerable resiliency, with a concerted effort by both governments and industry underway to improve productivity and improve international competitiveness.
U.S. Economy
In sharp contrast to the weakening U.S. economy and deteriorating housing market, Canada’s economy and housing market continues to demonstrate staying power. Canadian mortgage products are markedly different from those offered in the U.S., and the sub-prime market makes up a significantly smaller portion of the overall Canadian mortgage market. It is unlikely that the residential real estate industry in Canada will have to endure the kind of sharp correction underway south of the border.
Employment
Employment rates across the country are expected to continue at the current very high levels, driven by the robust energy and general natural resource sectors specifically, and a very healthy services economy in general. In the year ahead, job market growth is anticipated to continue, especially in Regina, Winnipeg and Halifax.
The move by the Bank of Canada to reduce its overnight target-lending rate by a quarter of a percent in December 2007 will bode well for first-time buyers planning to enter the market in 2008. The relatively low current interest rates, and the possibility that rates could fall even lower in response to moderating inflation and lower rates in the U.S., will continue to attract new buyers to the housing market.
Call Hilary and Her Home-Sellling Team for assistance in buying or selling in Oakville, Burlington, Mississauga, Milton or Georgetown.
| Discussion: 7 Comments »
