Calculating the Toronto Land Transfer Tax

Straight from TREB, here's several ways to calculate the Land Transfer taxes (both provincial and city of Toronto). While not identical calculations, they're pretty close.

Provincial Land Transfer Tax
(Applies to all Ontario properties, including Toronto)

0.5% on the first $55,000
plus 1.0% of the amount from $55,001 to $250,000
plus 1.5% of the amount in excess of $250,001 to $400,000
plus 2.0% of the amount in excess of $400,000

Toronto Land Transfer Tax
(Applies to Toronto properties only)

0.5% on the first $55,000
plus 1.0% of the amount from $55,001 to $400,000
plus 2.0% of the amount in excess of $400,000

OR

Use the following formula:
(Provincial land transfer tax only)

Purchase Price	Calculation of LTT
0 - 55,000	.005 x Amount
55,001 - 250,000	(.01 x Amount) minus 275
250,001 - 400,000	(.015 x Amount) minus 1,525
400,000 +	(.02 x Amount) minus 3,525

If the purchase price falls within this range, then apply formula to purchase price

(e.g. on a $175,000 home (.01 X 175,000) minus 275=LTT)

OR

4. LTT Reference Table

The following numbers are for reference only. Your individual land transfer tax calculation should be calculated and verified by your solicitor. The following chart is based on the Land Transfer Tax (LTT) levied by the Province of Ontario as at May 1996, and the City of Toronto land transfer tax, which takes effect on February 1, 2008. Please note that the provincial and Toronto land transfer taxes can be amended by the Province and Toronto City Council.

Purchase Price	Provincial LTT (Applies to all Ontario Properties, including Toronto)	Toronto LTT (Applies to Toronto Properties only)
$55,000	$275	$275
$60,000	$325	$325
$65,000	$375	$375
$70,000	$425	$425
$75,000	$475	$475
$80,000	$525	$525
$85,000	$575	$575
$90,000	$625	$625
$95,000	$675	$675
$100,000	$725	$725
$105,000	$775	$775
$110,000	$825	$825
$115,000	$875	$875
$120,000	$925	$925
$125,000	$975	$975
$130,000	$1,025	$1,025
$135,000	$1,075	$1,075
$140,000	$1,125	$1,125
$145,000	$1,175	$1,175
$150,000	$1,225	$1,225
$155,000	$1,275	$1,275
$160,000	$1,325	$1,325
$165,000	$1,375	$1,375
$170,000	$1,425	$1,425
$175,000	$1,475	$1,475
$180,000	$1,525	$1,525
$185,000	$1,575	$1,575
$190,000	$1,625	$1,625
$195,000	$1,675	$1,675
$200,000	$1,725	$1,725
$205,000	$1,775	$1,775
$210,000	$1,825	$1,825
$215,000	$1,875	$1,875
$220,000	$1,925	$1,925
$225,000	$1,975	$1,975
$230,000	$2,025	$2,025
$235,000	$2,075	$2,075
$240,000	$2,125	$2,125
$245,000	$2,175	$2,175
$250,000	$2,225	$2,225
$255,000	$2,300	$2,275
$260,000	$2,375	$2,325
$265,000	$2,450	$2,375
$270,000	$2,525	$2,425
$275,000	$2,600	$2,475
$280,000	$2,675	$2,525
$285,000	$2,750	$2,575
$290,000	$2,825	$2,625
$295,000	$2,900	$2,675
$300,000	$2,975	$2,725
$305,000	$3,050	$2,775
$310,000	$3,125	$2,825
$315,000	$3,200	$2,875
$320,000	$3,275	$2,925
$325,000	$3,350	$2,975
$330,000	$3,425	$3,025
$335,000	$3,500	$3,075
$340,000	$3,575	$3,125
$345,000	$3,650	$3,175
$350,000	$3,725	$3,225
$400,000	$4,475	$3,725
$450,000	$5,475	$4,725
$500,000	$6,475	$5,725
$550,000	$7,475	$6,625
$600,000	$8,475	$7,725
$650,000	$9,475	$8,725
$700,000	$10,475	$9,725
$750,000	$11,475	$10,725
$800,000	$12,475	$11,725
$850,000	$13,475	$12,725
$900,000	$14,475	$13,725
$950,000	$15,475	$14,725
$1,000,000	$16,475	$15,725
see calculation chart at top of page

For additional information please contact the Ontario Ministry of Finance at 905-433-6361 (for provincial land transfer tax questions) or the City of Toronto at 416-338-0338 (for Toronto land transfer tax questions). The Toronto Real Estate Board assumes no responsibility for the accuracy or completeness of the information set out in this section.

Christmas Lights 2008!

Interested in checking out some exceptionally decorated Christmas homes in the GTA?

We are too!

Here are some of our favourite picks.
Please add your own streets that you feel are worth seeing - we'd love to check them out!

#1 Pick - 4 Rosea Court in Richmond Hill - over 50,000 lights this year! Visit http://www.lindsaylights.com/ for more info. It's actually a very active light show - tune your radio to 104.9 FM for the music. Clark Griswald, step aside. Here's a map.

Are you near South Pickering? Then check out several streets on each side of Frenchman's Bay. On the east side, there several well-done homes on Ilona Park Road. Here's a map. One house in particular here, was just covered in the Toronto Star - click here for the article.

And on the west side of the bay, several streets including Vicki Drive, make the trip worthwhile. Here's this map.

If you send me directions to any other gems, I'd be happy to post them here, too!

From a photography-interest side of things, if you've taken some good night pics of Christmas lights, I'd love to both see them and hear what settings you used to take the pics. I'm always interested in comparing photography notes.

Recent Real Estate Articles in the Media

Here are some interesting real estate articles that I've come across this week....

• On the importance of home staging in a down market - click here
• And another one - click here
  
• On dealing with a buyer's market - click here
• Pros and cons of a back-split - click here
• On how Mayor Miller's city of Toronto tax helped kill the market - click here
• On falling home prices - click here
• A good warning on the merits of a home inspection - click here - it also gives a great example of why you should turn off your water when you take a winter vacation!

Enjoy!

How to Not Sell Your House

This note is a follow-up to my previous one on the advantages of Home Staging, but in a somewhat opposite manner.

Sometimes I come out of a listed house wondering "what were they thinking?". When people are trying to sell their house, you'd think that they would want as much money for it as possible. After all, it's a huge investment.
Especially now - there's more competition on the market for buyers to choose from.
In addition, one would think sellers want to sell as quickly as possible.

Yet I come across *all* kinds of crap out there. Yes, crap - such as people (adults) actually living in a unfinished basement crawl space - even WHILE buyers are coming through! White shag-rugs with a strange red stain so large that it looks like a scene from a CSI episode. Hideously, loud paint colours. Prominent tributes to deceased family, friends or relatives. Urns with cremated remains of a human and/or pet sitting on the mantle. Sometimes I wonder if people are actually trying to SELL their house or just scare the bejeepers out of all who visit.

So thinking back to some of the things that my buyers and I have seen, here are my "tips" for how to NOT sell your house.

• Don't clean up. Thirty-three pairs of family shoes in the foyer - that's the most I've ever seen so far, and yes, I had to count. Dirty ashtrays, clothes on the floor, socks in the living room, uncleaned kitty-litter pans, old newspapers, empty beer bottles all strewn around - just begs for a offer-bidding war, doesn't it?
  
• Don't de-clutter. All this does is tell buyers "Hmmm, there's not much space in this house. We need to look elsewhere".
  
• Don't de-personalize. That picture of your charming niece is someone else's "Ugly Betty". Why distract buyers from the real reason they're there?
  
• Don't re-paint - by far the most inexpensive way to get more money for your house. This isn't about being proud of your daughter's hot pink bedroom choice. It's about neutralizing the house so buyers can picture *themselves* living there.
  
• Don't air it out - Cook something nasty, even just boil a cabbage - very little chases buyers out of a house faster than an odour.
  
• Leave dirty dishes out everywhere. Dishes in the sink or dishwasher are understandable. People are very busy these days. But dirty dishes everywhere else just says "Animal House" - lowball offer! Maybe leave a bucket of fried chicken out for the guests!
  
• Leave dirty laundry out. Imagine going into a room to see dirty clothes littering the floor or a g-string the size of Neptune hanging on a laundry string! A nice, open, fermenting bag of hockey equipment is a nice touch.
  
• Don't clean the windows. Just another implication that the house hasn't been cared for and therefore is worth considerably less than you want to receive.
  
• Don't turn on the lights. Sure. You want to sell a house worth hundreds of thousands of dollars and at the same time save 50 cents by not leaving the lights on for an hour!
  
• Don't open the drapes. Great - if you're selling a cave!
  
• Don't clean the yard. Nothing sells a house like an old bath tub or car growing in the yard or having the buyers trip over something or step in dog-doo-doo.
  
• Leave Uncle George's ashes on the mantle. You can't imagine how fast this can spook home buyers right out of the house.
  
• Leave unfriendly pets in the house. Nothing says "Buy me" like a crazed dog threatening to tear down a door to gnosh on your leg. It's a great way to appeal to the buyers who don't like animals.
  
• Don't shovel the walk/mow the lawn - imply how unkempt the rest of the house is - a great way to say "Don't come in!"
  
• Use compact fluorescent bulbs and/or under-wattage bulbs. Sure, CFLs save money but the bluish tint they cast in your home isn't the most pleasing. For the duration you have the house on the market, make it look warm and inviting - use incandescent bulbs *and* brightly light everything. Pack those CFL bad boys in your moving cartons to take with you. Heck, I'll even pay for the bulbs!
  
• Don't replace burnt out bulbs. Just let buyers guess what your place looks like!
  
• Don't clean sticky/dirty floors/carpets. In one house, I had my stock almost pulled off my foot because it got stuck to something nasty-sticky on a hardwood floor - yum!
  
• Don't use a Realtor. In large part, getting the best price comes from the having your house receive the widest exposure possible. The only ones looking at sell-it-yourself sites are bargain hunters - in effect, you're targetting the cheapie buyers who are likely going to offer you even less!
  
• Stay home during a tour. Showing them what *you* want them to see, rather than let them see what *they* want to see. Yeah, that's smart. Your presence also inhibits their own open conversation and their need to open cabinets and closets. And it makes them feel like you're hiding something, by trying to control the tour.
  
• Leave your choice of music playing. Not everyone appreciate rap or even classical music. You're not selling them on your big-azz stereo or musical tastes. Let buyers talk about the house in peace.
  
• Leave your family pictures on display - I had a client who *loved* one condo but abruptly and absolutely refused to make an offer once he saw a picture of the current owners. "Our type of people hate their type of people" he said - "But they don't come with the house!", I explained. No use. Never have I seen an about-turn faster than that.
  
• Post lousy pictures with your listing. And some people wonder why no one is touring the house? Have a look below at some pics I've seen with real listings.
• Smoke like a chimney inside - Next to a bad cooking-related odour, I would say that the smell of embedded old/stale cigarette smoke drives buyers out of a house (especially non-smokers), unbelievably fast.

I'm always willing to offer suggestions on how to sell your house for the best possible price, in the shortest period of time. Sometimes, it may require a little extra work on the sellers' part to get there, but time and again, I've seen that it's worth it to them.

Stage it!

I was pleased to read an column from the TREB President, Maureen O'Neill on the merits of home staging.

Why? I've been providing FREE professional Home Staging to my clients for the past 5 years!
Want to see a great example?
Check out www.32Leamington.com

Many other realtors will either dismiss it or suggest someone to you so *you* can pay for it, or they'll claim they can do it themselves.

Your house is likely one of the biggest investments in your life! Isn't it worth it to try and put a little extra money in your pocket by having a professional do it?

Currently there are over 26,000 properties listed on the TREB system - a whopping increase of 26% over this time last year! And this is at a time when listings typically DECREASE because many sellers know that there are fewer buyers at this time of year *and* they don't want people traipsing through their house around Christmas.

If you're selling your house, don't you want to
a) sell it as quickly as possible and
b) try to get as much money for as possible?

The average "days on market" (DOM) has increased from 31 days at this time last year to 37 days!

There are fewer buyers out there today. I'm doing my best to snag one them for your house!

If you would like to receive a free copy of that Home Staging column, just send me an email and I'll get it to you ASAP.

Retirement and Real Estate

In my previous entry, I lightly touched on the retirement and real estate connection and voila, here's an article on thestar.com that covers it a bit more in depth.

Something to keep in mind when you're thinking about a retirement home in some other area.
As we age, our medical/specialist needs are likely to increase, too. So when you're thinking "Gee, that place way out in the country would be a great, inexpensive place to retire", make sure that you also give some thought to

• how far is the medical treatment I might need?
• is that kind of specialty even available in that area?

We have friends who moved out to the countryside, but still have to drive into town to get regular medical treatments. Likewise, we also have some friends who are contemplating a retirement move out into the country but their current medical-specialist requirements are keeping them here, where these services are available, nearby.

On another consideration, while I could easily see us eventually retiring into something smaller in the country or "near-country", I could never give up high-speed Internet - that's a big factor on our own list.

So while considering your real estate-related retirement options, take a step back and look at the larger picture per your personal needs. There's more to it than just the house.

Real Estate Articles of interest

Here are some links to interesting articles and their points of view.

In GlobeInvestorGold.com, this article says "....As of August, there were more condos under construction in both Toronto and Vancouver separately than there were in all Canadian cities combined a decade ago..." and makes a connection between what's currently happening in the Canadian real estate market and the U.S. market of two years ago, in effect, a 2 year lag.

The National Post has an article that, among other things, touched having the vision of knowing when to buy and sell real estate - not wanting to sell at the bottom etc.

But guess what, if you're upsizing, you're also BUYING at the bottom - so while you may be getting less for your own house than you had hoped, you're also likely going to make a decent score on that house you're buying up into.

It's no different than buying stocks. The only reason to sell at the bottom is because you want to buy something else that's down, that has a great chance of rising higher and faster than the stock you're selling.

Otherwise, to paraphrase what one noted stock watcher says, "if you're holding a good stock, it should be a good stock at both the bottom and the top of the market - that you should only sell a stock when the company itself is no longer doing well, regardless of what the overall market is doing...good companies and their stocks will often rebound earlier and possibly higher than the rest".

And likewise, a good home in a good neighbourhood will increase in value higher and faster than homes in lesser areas.

But ultimately, if you're thinking of making a move, make it for your own reasons - because you need the upsize (or downsize), not because of what the market as a whole is doing.

Doing the math:
You're selling your $400,000 house in a market that's down 5%.
A $400,000 house is down $20,000

But you're buying a $700,000 that's also down 5% or $35,000
Well you just saved $15,000 off your new mortgage!
And when the market comes back, that's now your equity!

And if you're in a good house, with no reason to upsize or downsize, then, unless you're retiring in the next couple of years and getting out of real estate entirely, what do you care what the real estate market is doing today? It'll be higher down the road anyways. Just ride it out.

Ouch -Here it comes!

The numbers are in for the first half of October and it's not a pretty sight.

According to TREB, compared to the same period in 2007, sales are down 18%, and compared to the same period in 2006, down 10%. Within the City of Toronto, sales are actually down 21%.

Average prices are down, too. In the City of Toronto, average prices are down 15% versus an overall decrease of 11% across the GTA. In the 905 belt, prices are only down 8%.

It's important to note that there's a slightly hidden reason why Toronto's sales are down more than the 905 belt, compared to 2007.

City of Toronto Land Transfer Tax. When the city announced that this tax would take effect in early 2008, it caused an upward spike in home sales as people scrambled to buy and close before that tax kicked in. As a result, sales towards the end of 2007 actually increased instead of the usual decrease. This helped skew the sales figures for 2007 in Toronto.

Inventory-wise, it's great for buyers. Compared to a year ago, there are now 30% more homes on the market. More choices means more sellers are competing for your offer, which means more aggressive pricing and, with a sharp Realtor, more agressive negotiations on your behalf.

For sellers, there are ways to protect and justify your asking price to help put more money in your pocket. Be sure that your Realtor has a sound marketing plan for your house.

Interesting Reads
Here are some recent, interesting articles about the real estate biz.

This one in the Globe & Mail, does a nice job of comparing the default rates of mortgages in the U.S. and in Canada. In short, in Canada, it's 0.27%. In the U.S. for their prime customers it's 4% and for the sub-primes, it's 18% !!!

Time and time again, I'll advise my clients that it's really not a good idea to buy first and sell their existing house afterwards. There are numerous reasons (contact me if you want the full scoop). But here's an example (a bit extreme) in this Globe & Mail article of why it isn't advisable. Imagine being stuck with both houses?

Our real estate market will be affected by the U.S. economy

There's no doubt about it - the GTA real estate market is going to feel the effects of the woes in the U.S. financial sector (if it's not already starting to feel the efffects!)

In extremely simplistic terms, you could use today's plunge in the stock market as an example scenario (one of many)

• Two very large U.S. banks collapsed today. One went bankrupt and the other was bought by Bank of America. So the stock markets, including the Toronto TSX went into a tailspin, losing over 500 points
• A lot of money was lost in the stock markets as a result
  
• Stockholders lose money, some of it was borrowed
• Some of it can't be repaid to the lenders
• The lenders tighten their credit criteria or even raise rates to compensate
  
• It now becomes tougher to get financing or even increased financing for that newer, bigger home you wanted to buy
• That means fewer home buyers in the real estate market
  
• Less buyers means more seller-competition for those buyers
• Highly motivated sellers (I.e. those who lost big money in the stock market) will aggressively reduce the price of their home to get it sold to those fewer buyers
• House prices stop rising, level off, and could even start declining

and so it goes.

So while the exact same thing might not happen here, we're still going to feel the effects.

Easy Home Automation!

For well over 20 years, since before I got married, I've been using X-10 home automation devices to control lights and other devices in my home.

I first started using it in my one bedroom apartment, while I was single. I bought just a couple of pieces at the now defunct Eaton's department store and my use has grown from there.

My system controls lights, pool heater and pump, door chime, motion detectors, garage door openers, fans, heaters and more.

I'm able to vary what I control and when, throughout the year, depending on my needs at the time. Ay Christmas, I control my outside and inside Christmas lights. During the winter, I also control the ice-melting heater on the roof, around the eaves. On vacation, I have more lights under automated control. And in summer, I control the pool, deck lighting and several fans around the house.

All in all, it allows us to save money on electricity by using it more effectively (especially on the pool pump) and to also give us increased peace of mind when we're away from the house.

If you're considering the use of individual timers here and there around your home, I would suggest that you look into a home automation product that can grow/adjust with your needs instead. Being able to manage them all from a single location is considerably easier than having to go around the house adjusting individual timers etc.

For a supplier local to the GTA, you should check out www.aartech.ca or www.baranharper.com
Both offer good prices and timely service.

Mark your valuables

I was reading in the media this past week about the police nabbing some suspects involved in a large-scale bike theft operation. Apparently they recovered hundreds of bikes and are in the process of returning them to their owners. But without being able to prove ownership, it makes the process that much more difficult.

Police recommend that you use an engraving tool to mark your valuables. Two recommended options are to mark your SIN or your license plate number on them. One problem with the SIN suggestion is that police can't locate you via your SIN - that's private information. Whereas your license plate is a different story - very easy to find you.

Want an easy trick to be able to prove the bike is yours, roll up and stuff your business card down the seat post. Then it should be relatively easy to fish it out down the road, should the need arise.

But on a larger scale, many of us just can't make the time to go through such a seemingly laborious and time-consuming process. Is there an alternative? I think so - courtesy of the digital age.

Take digital pictures of your valuables.
Shoot photos like crazy.
And even include yourself in some pics, to prove a personal connection between you and that item. (I.e. just because I photograph a Ferrari doesn't mean it's mine). Being in the photo with your valued possession doesn't automatically prove that it's yours either, but it makes the case for it that much more compelling.

When you buy a house and you're also purchasing certain chattels with it, such as a fridge, stove, dishwasher, select light fixtures etc., make your to ask your realtor to include a clause in your offer that gives you permission to photograph those specific chattels. (do not photograph without the seller's permission and especially do not photograph items that are not part of the offer - how would you feel if it was happening in your house?)

By taking photos of chattels at the time of the offer, you can set an expectation of what you should be getting on closing date, plus the condition they're in as well. In rare instances, unethical sellers have tried to swap out appliances after the sale, but before closing. Having pictures, plus having a clause in your offer that tells the sellers that you are likely to have these pictures is a strong deterrent to problems on your closing date.

I would rather take the extra steps up front to try to prevent problems down the road, than having to deal with them after the fact.

They can't be serious?

In an article in today's Toronto Star, a BMO economist makes reference to the change in the real estate market and says
"There is no debating that there is now a serious chill in Canada's housing market after a six-year boom," observed Doug Porter, BMO Capital Markets deputy chief economist.

A "serious chill"?
The same article says the average price declined across the country by 0.4% and yet they rose in the GTA by 4%.

If that's a "serious chill", what the heck would they call anything more than that?

Sales are off their peak, that is true. But even the stock market never stays at the peak. They're both *markets* - they rise and fall.

It seems the media fluctuates between market that's burning up or melting down - because anything in the middle would be, well, normal, and therefore not really newsworthy.

So I guess they feel that "serious chill" sounds more media-worthy than something like "normalizing" or "settling" etc.

As you can probably tell from my blog, I'm a cup-half-full kind of person and while I agree the market is off it's peak, I just can't quite swallow that "serious chill" thing.

Sheesh!

Feds revamp mortgage lending rules

The Globe & Mail online site reports today that the federal government has announced plans to change the mortgage lending rules to pre-empt a housing bubble similar to what happened in the U.S.

Both the Finance Minister and Governor of the Bank of Canada had expressed concern in the surge of 40-year amortizations; feeling that they were contributing to a bubble situation.

CMHC mortgage insurance will no longer be available on amortizations over 35 years in length and buyers will also require a minimum 5% down payment. The intent is to prevent people from over-leveraging themselves into houses that they realistically can't afford and would most likely lose at the slightest upswing in mortgage interest rates.

In addition, buyers will require a minimum credit score of 620 along with stronger "documentary evidence" that buyers can pay their loans.

What does this mean to the buyers?
On a $200,000 mortgage at 6% interest, the reduction from 40 years to a 35 year amortization will mean an additional $41.00 on the monthly payment and will save them over $49,000 in additional interest charges.

The new rules come into effect on October 15, 2008.

P.S. The feds report that mortgage defaults are at 0.27 percent - near the lowest levels since 1990!

New FINTRAC Legislation begins today!

As mentioned here previously, today, June 23 is the day that the new laws take effect with regards to tracking suspected anti-terrorist financing and money laundering.

Here's an article in today's CANOE.CA that mentions the same expected backlash that I've felt would be forthcoming from home buyers and sellers.

In short, they're going to have to provide some significant, additional personal information in order to conduct a real estate transaction, such as

• date of birth and
  
• occupation,
  
• plus ID such as a driver's licence or passport.

It's not something mandated by the real estate business - it's bigger than that - it's federal legislation.
So when we ask you for this information, please don't feel offended at us - we're only adhering to the laws.

I wish the government or even the real estate organizations at the provincial or federal level had done a much better job of informing the public that this is the "new world", rather than let us break the news to our clients and customers seemingly out of the blue. I mean, I haven't seen or heard a single ad about this on TV or radio to let the public know this was coming. Maybe that's their intention - that they don't want the criminals to know.

And interestingly, if people either refuse to provide the information or we feel there is something suspicious about the transaction, we're obligated to not only file a report with FINTRAC but we're also obligated to *not* tell you that we're doing it.

By the way, this is no different from how the banks, stock brokerages, casinos and other business must also act now under this legislation. Read one of my following blog posts if you want the link to FINTRAC or to read more about this.

Big brother is watching....(well, at least more than yesterday!)

MLS.CA changing to REALTOR.CA

On June 30, 2008, the Canadian Real Estate Association (CREA) is going to be replacing the existing www.mls.ca website with an new 'n improved version which will also be rebranded as www.realtor.ca

One of the reasons for the change in URLs is to help reinforce public understanding that these property listings and services are being brought to you by realtors across the country.

The new website will also feature a new, interactive mapping systems for listings.

The old and new sites will be run in parallel for awhile and then at some point, CREA plans to shutdown the old mls.ca site and just redirect everyone to realtor.ca.

New FINTRAC Legislation - June 2008

I think this is going to cause a bit of a shudder throughout the real estate biz. Not just from the Realtors, but especially from the buyers and sellers.

Effective June 23, 2008, there's new federal legislation coming into effect that has broad ramifications. I'm only covering it as it pertains to real estate transactions.

The legislation is called The Proceeds of Crime and Terrorist Financing Act. It's intended to help in the fight against money laundering and terrorist financing, in part, through greater disclosures.

I already attended a seminar on this and samples that they provided to us demonstrated that these actions have become quite sophisticated and interconnected and it's up to the FINTRAC analysts to track these kinds of transactions and "connect the dots". And believe me, to the average Joe, these are otherwise normal looking transactions. Often times, it's not even evident at the individual-transaction-level. It's only when several, seemingly unrelated activities are connected that the bigger picture becomes clear.


What does it mean in real estate transactions?
Basically, it means more detailed identification of buyers and sellers is going to be required (including any third parties, too). It's now going to require

• photo ID,
  
• date of birth and
  
• primary career/occupation (and "self-employed" won't cut it).

It will also require some mandatory reporting on our part if we even suspect that a participant in a real estate transaction may be involved in these illegal activities. It's a one-way process. We file the reports with them but they tell us nothing in return. And obviously, we're prohibited from disclosing the fact that we even filed a report.
There's going to be a lot of shake-out on this as the ramifications and obligations get digested and the individual brokerages map out how they plan to deal with it all.
As usual, working with an informed Realtor is your best bet.

You can obtain a copy of the FINTRAC brochure from my website.

Or, you can always visit the FINTRAC website directly to learn more about their mandate as well as this legislation in particular. Just browsing their homepage will give you an idea of their scope - casinos, life insurance, securities dealers, accountants, large cash transactions, electronic funds transfers and much more.

And, importantly, this legislation supersedes the PIPEDA legislation (Personal Information Protection and Electronic Documents Act) and your right to privacy.

Resale Housing Market stats

Here are some of the most recent stats on the resale housing market in the GTA.
Prices continue to rise at a steady pace although sales numbers are slightly lower than the previous record level.

Selling a new home that you didn't occupy?

If you're one of those "investors" who buys a new home and then re-sells it without even having occupied it yourself, be aware that you're on the hook for some additional obligations related to the Tarion New Home Warranty Program.

A notice from the Toronto Real Estate Board to Realtors today says:

"Tarion also advises those who buy new housing units and re-sell without first occupying them are required to submit an Application for Registration as a ‘Vendor’ to Tarion Warranty Corporation, meeting specific terms and conditions.

They are responsible for the Deposit Protection, Delayed Closing and any material changes made after purchase from the builder. They are further required to provide Tarion with written confirmation that the builder will provide necessary warranty service or alternatively, specify how they will provide it.

In addition, Tarion points out that the warranty start date is the date of possession of the owner who occupies the unit. The new owner should be provided with the ‘Homeowner Information Package’ outlining the warranty coverage.


For more information visit www.tarion.com"

Note that they state that either the builder will provide the necessary warranty service or YOU will, which seems to imply that if the builder declines to provide warranty service in this kind of situation, then you're on the hook to do so.

This is just a reminder that when you're getting involved in real estate transactions, you're talking about big money and potentially big obligations. Make sure that the Realtor (and/or lawyer) representing your interests knows how to deal with, and cover you in these situations as best as possible. Not all Realtors know all of the intimate details equally well in every specific type of transaction. Interview your Realtor to make sure that you've got the best one representing your interests that particular situation.

And before you invest your hard-earned money in a specific area, whether it's stocks, bonds, real estate, mutual funds etc. do your own homework, too. The Internet (and Google) makes it a lot easier to learn how to protect yourself. There's a difference between "risk" and "reckless".

Yes, it's true - the market is down

When you've been in a market that's been peaking for so long, it's only inevitable that at some point the numbers are going to be lower than the year before and finally this appears to be it.

An article on thestar.com discusses it and also fairly points out that sales are still high, based on historic numbers, just off the record ones from the past couple of years.

We're still tracking to significantly exceed the sales numbers of even 2004-2005.

But the printed media seems to love anything that has a "doom & gloom" aspect to it so a number of sites are reporting on it. One column is even called "Housing Gloom"!! Oh give me a break.
It's like there's no middle ground. We're either in record territory or "gloom"???
So much for balanced reporting.

Comparing your property taxes

In today's Toronto Star online, there's an easy-to-use calculator that allows you to compare how your property taxes stack up against many other municipalities in the GTA.

If you think they're mostly the same, think again.

The average home is now worth about $400,000, so let's use that to compare taxes.
For a home assessed at this amount, here's what you would pay in 2008 in:

• Oshawa $6,047.22
• Whitby $4,713.31
• Ajax $4,637.34
• Pickering $4,494.60
• Toronto $2,443.70
• Mississauga $3,076.69
• Oakville $3,090.68
• Vaughan $3,123.32

As you can see, Oshawa is the runaway leader in high property taxes and the City of Toronto has, by far, the lowest property taxes. Kind of makes you wonder why they seem to fuss so often about their taxes.

Longer mortgage amortizations? Nothing new.

I've heard from a few people recently who seem a little shocked at the appearance of 35 and 40-year mortgage amortizations. When in fact, this kind of thing isn't new at all. People were saying the same kinds of things when amortization periods increased from 7 years (yes, 7!) to 10 and then 15 years before hitting 25, where they've been for quite awhile.

But the reality is that this is how homes remain affordable while prices keep going up - not just home prices, but the prices of everything.

Back in 1962, my parents bought their first home for under $20,000 and amortized over 7 years. And in 1967, Dad bought a brand new Chevrolet Impala for $3,300!

Can you imagine getting a *mortgage* for only $15,000? It seems ridiculous by today's standards - heck, many people carry a balance like that on their credit cards today. Today, that might be considered for a car loan, and you'd have a hard time getting a loan period (amortization) for longer than 3-4 years!

If you had a mortgage of $420,000, simply by changing from a 25 to a 40 year amortization, that reduces your monthly payment by $335/month! That's a significant reduction on your monthly bills and still allows you to live in your dream house.

Granted there are pros and cons to longer vs. shorter amortizations but whether we're talking 25-40 year or 10-25 year, it's a debate that's been going on for many, many years. There's no right answer - but rather, which is right for *you*.

In Japan, because their house prices are far higher than ours, mortgage amortizations of 100 years are commonplace there. But they weren't always that long.
It's just part of the continuing changes to keep things like real estate and cars affordable.

At our office, we have an in-house mortgage broker, SGH Mortgages Inc. You can talk with either Steve King or Rob Mason and quickly determine both what you can afford and what kind of mortgage is right for you. They're great guys and very helpful. 1-905-619-9500.

Living for Free? Nothing is FREE!

It's odd how often I come across prospective sellers who have lived in their house without doing almost any upgrades (other than the those that are pretty much mandatory) and then want to list their house for close to the same price as the competitors who *have* not only put maintenance money into their home, but kept upgrading it as well.

For an example, I've been in a number of homes where the owner bought new from the builder and lived in it for several years without even freshening up the paint over the builder's bland default paint colours, or where they haven't even upgraded even the most prominent light fixtures from what the builder installed (usually very cheap).

Home buyers and sellers should keep in mind that spending a little money on a continual basis to keep the house up to date is often times a lot cheaper than finding out down the road that no one wants to buy the house for even close to market rates because "it's dated" and they would need to spend a lot of money on top of the purchase price, to bring it up to date.

Imagine yourself going to the fruit market to buy apples - which ones do you pick?
The cleanest, shiniest apple that's in the best shape, right?
It's no different with a house.

The typical rule of thumb is that you should plan *on average*, to spend 1% of the value of your house, on maintaining your house every year. Now, some years you might not spend anything but that's just going to catch up on you at some point.

And if you try to sell without having spent the money, well, it will catch up on you in the form of lower than expected offers for your home.

To paraphrase the the old TV commercial for Fram oil filters
"You can pay now or you can pay later"

Lots new for the New Year!

Happy New Year!

There are a number of items worth mentioning at this point. I'll list them and then explain a little more

• GST reduced to 5%
• New record set in 2007 for resale homes
• 40 year mortgages have arrived
• Ontario Land Transfer Tax rebate for first time buyers
  

As mentioned in a previous post or two, as of January 1, the G.S.T. has been reduced to 5% across the board so be sure to check all of your receipts. Rumour has it that some merchants have been "slow" to implement the change.

From the Toronto Real Estate Board, a new record was set in 2007 for the total number of resale home transactions. There were 93,193 homes sold in the calendar year, up 12% over last year and up 11% over the previous record year 2005 (84,145 sales). On a year-over-year basis, the average price rose 7% to $376,236. So unlike the real estate market in the U.S., the Toronto market (and the Canadian market in general) is still going strong.

According to an article in today's Star by Ellen Roseman, you can now get a mortgage amortized over 40 years. Unfortunately, you can't lock in the interest rates for this length of time (max. 10 years) but you can certainly lower your monthly payments, if you wish. HAving said this, let me also say that you'll pay far more in interest payments with this amortization.

Here's an example. Let's say that you borrow $300,000 at 7% interest.


Amortized over 25 years, you'll pay $330,376 in interest payments, on top of the original $300,000.
Amortized over 40 years, you'll pay $584,429 in interest payments, on top of the original $300,000 loan. That's an additional $254,053 in interest just for the extra 15 years.

All that just to reduce your monthly payment by $258.


And finally, the provincial government has agreed to extend the rebate on the provincial Land Transfer Tax to include first-time-buyers of resale homes. Previously, the rebate was only for first-time-buyers and *new* homes. Talk to your lawyer for more details about it.