Paul Young - Real Estate Questions & Answers: 1st Time Buyers get $10,000 Tax Credit till Mar31,...

Paul Young - Real Estate Questions & Answers: 1st Time Buyers get $10,000 Tax Credit till Mar31,...: First Time Home Buyers can get $10,000 Tax Credit under following circumstances: 1/  Buying newly built homes . 2/  The $10,000 refun...

1st Time Buyers get $10,000 Tax Credit till Mar31,13.

First Time Home Buyers can get $10,000 Tax Credit under following circumstances:

1/  Buying newly built homes.

2/  The $10,000 refundable income tax credit is from BC Government to support new-home construction sector.

3/  Limited time from Feb 21, 12 to Mar 31, 13.

 

5% federal GST On New Homes after April 1, 2013?

You only have to pay 5% federal GST on buying new homes after April 1, 2013:

1/  If offer is signed on or after April 1, 2013.

2/  If possession takes place on or after April 1, 2013.

3/  5% GST will replace 12% HST.

4/  Federal rebate (36% of 5% of house price) will still apply if you are qualified.

How come 2% embedded PST?

1/  Builders used to pay PST on construction materials.

2/  PST was part of the cost to build a house.

3/  The PST was included or embedded in the house selling price.

4/  The embedded PST on the average was about 2% of the house price.

Buy A New Home During PST/HST Transitional Period?

Transitional Period is from April 1, 2012 to April 13, 2013.


If you buy a NEW house during transitional period:


1/  you will have to pay a transitional BC provincial tax of 2% on house price.


2/  you will still like before have to pay GST (5% on house price) to the federal government.

Principal Home Buyers still get federal rebate: 

**36% rebate x 5% GST x hse price $350,000 = maximum rebate $6,300

**from $350,000 to $450,000, maximum rebate $6,300 will be phased out on a straight basis; at $450,000, federal rebate=0

PST/HST Transitional Rules start Apr 1, 2012. Formula?

In BC, PST will replace HST on Apr 1, 2013.

The transitionl rules start Apr 1, 2012, one year earlier.

The Provincial Enhanced New Housing Rebate Formula will give Principal Residence Buyers more rebate back if House Price is higher than $525,000:

Old Rebate Formula   = 5% (rebate) x Hse Price (up to $525,000) =$26,250 (Max)

Transitional Rebate Formula=5% (rebate) x Hse Price (up to $850,000) =$42,500 (higher Max)

Not Living There All The Time U Owned Your Principal Residence?

Do you have to report sale of your principal residence if you don't live there the whole time you owned it?

1/  Yes, you have to report sale on your tax return.

2/  You have to calculate the PRE (Principal Residence Exemption) and taxable capital gain.

3/  PRE = (# of years used as Principal Residence + 1)   x    Total Capital Gain
              Total # of yr You Owned Your Principal Residence

The extra 1 year in the equation means the year of moving, which will be counted as principal residence.

4/  Taxable Capital Gain = Total Capital Gain  minus  PRE

Only 1.5 Acres Considered Principal Residence?

Is your Home with Lot over 1.25 Acres considered Principal Residence?

1/  Only 1.25 Acres will be considered Principal Residence.

2/  When you sell, land in excess of 1.25 Acres will be considered Capital Gain or Loss.

3/  If the property is not subdividable, the whole land may be considered Principal Residence.

You And Spouse Can Own 2 Principal Homes?

Can You And Your Spouse designate 2 Principal Residences?

After 1981: You and your spouse may only designate ONE Principal Residence both together.

Before 1982: You and your spouse can designate TWO Principal Residences, one for yourself and 1 for your spouse.

Partly Principal Home, Partly Rental, Pay Capital Gain Tax?

Do you need to pay Capital Gain Tax on sale of a Partly Principal Residence with a Rental Suite (eg, a duplex)?

1/  When you sell, you need to split the Capital Gain or Loss between Principal Residence and Rental Suite.

2/  You can do the splitting by using square feet or number of rooms.

3/  Just need to report the Rental Part.

4/  No need to report the Principal Home Part.

5/  For the Rental Part, pay Capital Gain Tax if you gain; claim loss if you lose.

Principal Home: Pay Tax On Capital Gain?

Do you need to pay tax on Sale of Principal Residence?

1/ No need to pay tax on any gain.

2/ No need to report on your income tax return.

3/ You cannot claim any loss if you lose on selling principal home because your home is considered personal-use property.

What Is A Principal Residence?

A Principal Residence must be :

1/ a house,  cottage, condo,  trailer, mobile home  or houseboat.

2/ freehold, leasehold or co-op housing.

3/  owned by you solely or jointly.

4/ lived in some time during the year by you, your current or former spouse, or your children.

5/ that you designate the property as your principal residence.

6/ 1.24 acres or less in size.

Contamination: Why Remove Underground Oil Tank?

Reasons why Underground Oil Tank must be removed:
1/  Law requires that Oil Tank after being out of service for two years must be removed .


2/  Oil may leak from oil tank and contaminate the soil.


3/  Oil may migrate to neighbouring properties and cause liabilities and costs.


4/ To remove contaminated soil and its remediation are very expensive.


5/  A tank, if known to exist, must be removed before the property can be sold.

Contamination: Got Underground Storage Tank?

How can you know that you have Underground Storage Tank on your property?

1/  Call 311 to check if there is any record.

2/ Check visual signs: any remaining filler pipe from ground, supply lines, vent pipes and fuel oil marks.

3/  Hire a contractor to search.

A property owner is responsible for removing any underground storage tank on the property.

Strata: Exemptions To Rental Restriction Bylaw?

A Rental Restriction Bylaw cannot stop a condo owner from renting his unit:
(I)   to his Family Members
(II)  if it causes Hardship to the owner.

Family members mean:
1/  Spouse of Owner.
2/  Parent or Child of Owner.
3/  Parent or Child of Spouse.

Strata: Rental Restriction Passed. Effective Now?

Where a New Rental Restriction Bylaw is just passed, its application will be effective at least 1 year later.

For condo without tenant (i.e. owner-occupied unit), the bylaw will apply 1 year later.

For condo with a current tenant, the bylaw will apply 1 year AFTER THE TENANT HAS MOVED OUT.

Rental: 6 Ways To Serve Notice To Landlord?

Tenant can serve written notice to landlord by the following ways:
1/  Serve notice in person.

2/  Serve notice to landlord's agent.

3/  Serve notice to an adult living with landlord.

4/  Post notice to front door of landlord's home or office. Landlord is presumed to have received after 3 days, not counting the day of serving.

5/  Mail the notice, which is deemed to be served 5 days after mailing.

6/  Mail by registered mail.

Rental: One Calendar Month Notice To Move Out?

For Month-To-Month Tenancy:
To move out, tenant must provide written notice to landlord one calendar month before the planned date of moving out (normally the last day of a month).

For Fixed Term Tenancy not stating that tenant must move out at the end of the fixed term:
Tenant can give one calendar month written notice to the landlord to move out before the end of tenancy.

If moving out before end of a fixed term tenancy, tenant has to continue to pay rent until end of the term.

If tenancy is for a fixed term of 6 months or more:
*Tenant can ask for landlord consent to assign or sublet the rental unit.
*Landlord cannot unreasonably withhold consent to assign or sublet.

Strata: Can U Sell Your Parking Stall?

Yes, you CAN if:
1/ Your parking stall is a separate strata lot.

2/ Your parking stall is part of a strata lot.

3/ Your parking stall is an INTEREST of a long-term lease on common property.

No, you CANNOT if:
1/ Your parking stall is common property. (All condo owners have equal right to the use of common property.)

2/ Your parking stall is limited common property, which is part of common property.

Age: Can You Own Property at 18?

No, in British Columbia, you cannot own property at 18. You have to be 19 (a legal adult) to own property.

Yes, in Ontario, you can.

The Age of Majority in Canada is the age at which a person is considered by law to be an adult.

The Age of Majority in Canada is determined by each Province and Territory.
For examples, in Alberta and Ontario, the age is 18; in Northwest Territories and British Columbia, it is 19.

Strata: Upgrades Not Covered By Insurance?

If Upgrades were Installed by Original Developer, the upgraded fixtures would be covered by the strata insurance.

If upgrades were not installed by original  developer, the upgraded fixtures would be considered as Betterments and would not be covered by strata insurance.

It would be better to order Upgrade Packages from Original Developers than from outside contractors. Grey areas can be avoided.

When buying your own insurance, you may include Betterment Insurance to safeguard.

Strata: Liable To Pay Deductible $100,000?

If you caused a fire negligently, you may be sued by the strata corporation to recover its deductible portion of insurance claim up to a maximum of $100,000.

Strata Property Act does not limit the capacity of Strata Corporation to sue an owner in order to recover the deductible portion of an insurance claim if the owner is responsible for the loss or damage.

You may consider purchasing Deductible Insurance to cover.

Strata: Non-Rental Restriction Violation Fine $800?

What is the Maximum Fine for Non-Rental Restriction Violation (eg, keeping your pet in your condo Under Bylaws Pet Restriction)?

Maximum Fine for Violating Non-Rental Restriction (Pet Restriction) is $200 for every 7 days.

For 28 days (about 1 month), the Maximum Fine = $200 x 28/7 = $800.

Strata: Rental Restriction Violation Fine $2,000?

What is the Maximum Fine for renting out your condo Under Bylaws Rental Restriction?

Maximum Fine for Violating Rental Restriction is $500 for every 7 days.

For 28 days (about 1 month), the Maximum Fine = $500 x 28/7 = $2,000.

Strata: Bylaws Vs Rules?

Difference between Bylaws and Rules in Strata Condos:

Bylaws have to be approved by 3/4 votes of owners .
Pet restriction is bylaw because it involves the inside of the Strata Lot (Condo).

Rules (re: use and safety of Common Property) are approved simply by Strata Council.
Operating time of swimming pool is a rule because it concerns the use and safety of Common Property only.

Ownership: Foreigner Property Ownership Restrictions ?

Are there any Foreigner Property Ownership Restrictions in Canada?

Majority of Provinces have no restrictions on foreigner property ownership in Canada, including BC, Ontario, Quebec, Nova Scotia, Newfoundland and New Brunswick.

Two examples of restrictions:
1/  In Saskatchewan, foreigners may not own land over 10 acres.

2/  In Alberta, foreigners may only own up to 2 pieces of land not exceeding 20 acres in total.

Parking: Park Without Licence Plate At Own Parking Stall?

Can you park a vehicle without licence plate (i.e. without auto insurance) at your own strata parking stall?

No, you cannot park without auto insurance at your own strata parking stall.

However, you can purchase storage insurance for the vehicle and park at your parking stall.

The strata corporation does not want to be by any chance liable for any theft or damage to your vehicle.

Tax: Annual Property Taxes Formula?

Formula :   Tax Rate  x Value of Property = Annual Property Taxes.
                                      1,000

Tax Rate: varies with different property classes. Tax rates are determined annually by the City.

Property Classes: residential, business, industry, farm, recreation, etc.

Value of Property: is determined annually by the BC Assessment.

Annual Property Taxes: are set by the City based on revenue needs.

Warranty: When 2-5-10 Coverage begins?

For Detached Home (constructed by builder on land owned by Owner) :
Commencement Date is the earliest of  1/ Date of Actual Occupancy , 2/ Date of Occupancy Permit and 3/ Date of Completion of New Home.

For Detached Home (constructed by builder on land not owned by Owner) :
The commencement Date is the earlier of  1/ Date of Actual Occupancy and 2/ Date of Transfer of Legal Title.

For Condo:
The commencement Date is the earlier of  1/ Date of Actual Occupancy and 2/ Date of Transfer of Legal Title.

Warranty: 2-5-10 Coverage?

2-5-10 Coverage means the 2-5-10 Year New Home Warranty Insurance (a third party warranty) which is mandatory for all new homes for sale, unless there is an applicable exemption.

Homeowner Protection Act sets the minimum standards of coverage and details.

2 year coverage:
  1/   1 year labour and materials on any defect on the home.
  2/   1 1/2 year labour and materials on defect on the Common Property.
  3/   2 year labour and materials on specified defects ( eg, electricity, heating and others) on the home and Common Property.

5 year coverage: on building envelope, including exterior walls, foundation, roof, windows, doors and water penetration.

10 year coverage: on load-bearing structure.

HST: HST On $1million New Principal Home?

Rule 1: At $450,000 and above, Federal HST Rebate = 0.

Rule 2: Maximum Provincial HST Rebate = $26,250.

So, for $1million new home:

Federal HST Rebate = 0
Provincial HST Rebate=5% of $1,000,000=$50,000 becomes maximum $26,250

 New Home Price:                                                                         $1,000,000
12% HST on new home $1,000,000                          $120,000

Rebate: Provincial:         5% of home $1,000,000 = $26,250
             : Federal: at $450,000 & above, zero out  =         0
Total Rebate:                                                          $26,250

Net HST on New Principal Hm $1,000,000 ($120,000 - $26,250) $93,750
New Home Price + Net HST                                                        $1,093,750

HST: How Much HST On New Principal Home $450,000?

At $450,000 and above, Federal HST Rebate = 0.

So, for $450,000 new home:

Federal HST Rebate = 0


New Home Price:                                                                         $450,000

12% HST on new home $450,000                          $54,000

Rebate: Provincial:      5% of home $450,000=  $22,500
             : Federal:         at $450,000, zero out  =         0
Total Rebate:                                                        $22,500

Net HST on New Principal Hm $450,000  ($54,000 - $22,500)        $31,500
New Home Price + Net HST                                                        $481,500

HST: How Much HST On New Principal Home $400,000?

Federal HST Rebate is phase out on a straight-line basis between $350,000 and $450,000.  So, for $400,000 new home:


Federal HST Rebate = ($400,000 -$350,000) / ($450,000 - $350,000) x  ( Maximum Rebate : 36% x 5% x $350,000 )


Federal HST Rebate = 50,000 / 100,000 x $6,300 = $3150

New Home Price:                                                                              $400,000

12% HST on new home $400,000                          $48,000

Rebate: Provincial:      5% of home $400,000=  $20,000
           : Federal:            calculated above         =    $3,150
Total Rebate:                                                           $23,150

Net HST on New Principal Hm $400,000  ($48,000 - $23,150)  $24,850
New Home Price + Net HST                                                          $424,850

HST: How Much HST On New Principal Home $350,000?

Buyer is eligible for HST rebate if new house purchased is used as principal residence.

Investor is eligible for HST rebate if tenant is using the new house as principal residence.

New Home Price:                                                                              $350,000

12% HST on new home $350,000                          $42,000

Rebate: Provincial:      5% of home $350,000=  $17,500
           : Federal: 36% of 5% of home $350,000= $6,300
Total Rebate:                                                           $23,800

Net HST on New Principal Hm $350,000  ($42,000 - $23,800)  $18,200
New Home Price + Net HST                                                          $368,200

Pre-emption: $1 Per Acre?

Pre-emption (Taking Precedence) was a method of acquiring Provincial Crown Land by claiming it.

This pre-emption process existed from 1859 to 1970.

In 1970, the Land Act was amended to eliminated this method of acquiring Crown Land.

A pre-emptor would mark off 160 acres, register in the Government Land Survey and be issued  a Crown Grant.

After 2 years of continuous occupation, the pre-emptor could pay $1 per acre to gain full title.

Marijuana: Grow Op House?

What are some noticeable indications of a marijuana grow house?

1/  Windows are covered.

2/  Windows are covered with thick condensation.

3/  Bright light fleeing from covered windows.

4/  Strong skunk-like odour from the house.

5/  Smell of overly strong fabric softener to mask smell of marijuana plants.

6/  No snow on roof while others are snow-covered.

7/  Lawn is neglected.

8/  Excessive steam coming from house vents.

Fence: Who Pay & Where?

Where should a fence be erected? Who should pay for it?

A fence should be erected on the dividing property line between your lot and your neighbour land.

Neighbours should share the cost of the fence regardless of who proposes first.

You can call your local City to help settle any disagreement about fence location and cost sharing.

You may sue your neighbour to contribute.

If you have an outdoor swimming pool, fences are required by local bylaws.

Tree: A Tree Hanging Over Your Property?

A tree outside your property is hanging over your property. What can you do?

1/  You can cut the branches at the property line.

2/  You can dig out the roots on your side.

3/  Your neighbour may be responsible for any damage on your side.

4/  Check with the municipality for details.

5/  Don't kill the entire tree. It is one thing to cut a few branches; it is another to cut down the tree.

Title: Your House Stolen?

A Title Thief can impersonate you to register the sale of your home with the Title Office.

The Title Thief will take a mortgage out (eg, $500,000) against your mortgage-free home. The mortgage will then go into default.

A Title Thief like to target properties that are mortgage free.

To protect, you can buy Title Insurance.

Title: Where Is Your House Registered?

When you buy a house, your name(s) will be registered in LTSA (Land Title & Survey Authority of BC), which is a statutory corporation, formed in 2005, responsible for administering the Land Title and Survey System in BC.

3 Main Services:

1/  LTSA provides conclusive evidence of title and this is backed by an assurance fund in the unlikely event of registration error.

2/ LTSA approves legal survey plans for public and private lands.

3/  LTSA issues Crown Grant Documents to transfer Crown Land into private ownership.

NR6: Better Way To Pay Non-Resident Tax?

What is NR6?
NR6 is a government form undertaking to file a Canadian Tax Return within 6 months of the year end.

2 Ways to pay non-resident tax on rental income:

1/  Pay 25% of gross rental revenue (ie before any expenses) to Revenue Canada and file a tax return a year after to claim back overpaid amount.

2/  Forecast the upcoming year's net income and remit only 25% of the net income (instead of gross income) to Revenue Canada. Then after the fiscal year ends, settle any difference with Revenue Canada by filing a Canadian Tax Return within 6 months of the year end.

A NR6 form (undertaking to file a Canadian Tax Return)  has to be completed by non-residents or their agent.

Tax: Overseas Investors Pay Tax on Rental Income?

Do Overseas Investors have to pay Tax on Rental Income from Properties in Canada?

Yes, overseas investors (ie non-residents owning Canadian rental properties)  are required to pay 25% of net annual income (gross rent minus expenses) to Revenue Canada as Non-Resident Tax.

Property Tax: Defer Your Property Tax?

What is BC Property Tax Deferment Tax Program?

It is a loan program allowing you to defer your annual property taxes if:

1/ You are a Canadian Citizen or Permanent Resident in BC for at least 1 year.

2/ You or your spouse is 55 or over; or you are a surviving spouse; or you are a person with disability.

3/ You maintain minimum equity of 25% of the current BC Assessment value on your home.

4/  You have adequate fire insurance policy for an amount not less than the current BC Assessment value.

5/  You are living and conducting your daily activities at your house.

To Apply: Pick up FIN 51, an Application And Agreement For Deferment Of Property Taxes from your City Hall or Service BC Centre or go to this website: http://www.sbr.gov.bc.ca/individuals/Property_Taxes/Property_Tax_Deferment/forms.htm 

Government Grants: $12,000 Renovation?

1/ Canadian Government's ecoENERGY Retrofit Homes Program: up to $5,000 Home Improvement Grants, in effect until Mar 31, 2012. (earlier)

2/ LiveSmart BC Government Rebates (Efficiency Incentive Program): $7,000 home energy rebates and more, in effect until Mar 31, 2013. (later)

Above together:  Canada ecoENERGY ($5,000) + LiveSmart BC ($7,000) = total $12,000 Grants.

First Step: Call 1-877-732-9888 for details or to book a Home Energy Audit. (The audit costs BC homeowners $175; Ontario, $200).

Title: Joint Ownership With Your Son?

You may want to change sole ownership on your house to joint ownership with your son.

1/  You will lose the total ownership and control on your house.

2/  You cannot sell or refinance or reverse it back to just your name without consent of your son.

Title: Tenants In Common?

Most business partners will hold title as Tenants In Common.

Tenants In Common have no right of survivorship.
When one tenant in common passes away, the share does not go to the other surviving tenants.
The share will be transferred to the estate of the deceased tenant.

Tenants In Common can have unequal shares ( eg, 1/4, 1/4 and 1/2 split).