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Archive for the ‘Taxes’ Category

What is in store for the rest of 2010?

Friday, April 23rd, 2010 by Dan Cooper

There are a number of factors driving the housing market today. First, house prices dropped over the past two years and mortgage rates have been lower than we’ve ever seen them – making homeownership more affordable to more Canadians. Our economy began to recover late last year, giving consumers more confidence to spend – and we saw that surge in spending in auto and house sales during the first quarter of this year.

Also driving the housing market in recent months is the impending increase in interest rates and the introduction of the HST on July 1 by the provincial government. These two key factors have encouraged people to buy now to beat the HST and to lock in their rates. The extremely attractive financing rates, along with an unleashing of pent-up demand, turned out to be an extremely potent combination in bringing buyers back into the market.

Where does that leave us for 2010 and beyond? According to Kevin Moffat, Vice-President of TD Canada Trust, the supply of listings should increase as a result of the recent solid price gains and the strong sales that make it more attractive to sellers. At the same time, he says, the demand side of the market will see sales remain strong in this ultra-low interest environment, although they are showing signs of cooling. “The moderation in sales is likely partially a reflection of the fact that some of the purchases in 2009 were brought forward from 2010 in order to take advantage of interest rates that were perceived to be too good to last,” he says. “The bottom line is that sales growth is slowing, listings are increasing and this is leading to a cooling in the home price appreciation.”

Two recent developments also contribute to Kevin’s expectation that the market will continue to moderate. First, while he calls the move by the federal Finance Minister to tighten mortgage insurance rules “prudent,” they were expected to boost sales into this month and temper sales thereafter. And, given the considerable press coverage around the change in the qualifying interest rate, there is no question that it has induced some buyers to enter the market before it comes into effect.

A second reason to believe the market will cool is that the Bank of Canada has indicated it will start raising interest rates earlier than anticipated. According to TD Economics, the Bank’s conditional commitment to leave its policy rate at 0.25 per cent until the second half of the year fostered a “now or never” mentality among potential buyers. Despite all the uncertainty of the national marketplace, what has been constant has been Oakville’s almost insular housing market which has bucked the countrywide trend and maintained steady growth and good value over the long term.

Dan Cooper is an award winning Broker with Royal LePage Real Estate Services Ltd., Brokerage – the Number 1 Royal LePage Team for Canada in 2009. He can be reached at 905.338.3737, direct line at 905.849.3303 or through his innovative and interactive website at DanCooper.com. Be sure to catch the Dan Cooper Real Estate Series on DailyWebTV.com. For his free booklet How To Sell Your House For Top Dollar – Fast! or his Guide to Oakville Real Estate, please call the Dan Cooper Team.

Posted in Finances, Mortgage, Planning, Real Estate, Real Estate Market, Statistics, Taxes | No Comments »

Managing mortgage rates and the HST

Monday, March 8th, 2010 by Dan Cooper

There is mounting pressure for buyers and sellers to make a move over the next few months. Just last week the Bank of Canada maintained its overnight rate at 0.25 per cent, but economists are predicting interest rates will begin to rise in July which will convince some consumers that making the move now and locking into a lower mortgage rate might be the wisest decision.

Not only are rates expected to rise later this year, but July is a critical month since the new harmonized sales tax (HST) comes into effect on the 1st and will add to the price of a new home, especially homes priced $400,000 and higher. New home builders are currently using this as a marketing tool, encouraging buyers to buy now and avoid the full 13 per cent impact of the HST. Essentially, the province is marrying the existing Provincial Sales Tax (PST) of 8 per cent and the Goods and Services Tax (GST) of 5 per cent to create one tax of 13 per cent known as the HST or Single Source Tax. Under the HST, home buyers and sellers will have to pay extra tax on a range of services associated with real estate transactions such as mortgage insurance premiums, title insurance, legal fees, moving costs, real estate commissions and home inspection fees. Currently, consumers only pay the 5-per-cent GST on these services. Subject to the 13-per-cent HST, these services will then cost you an additional $2,000 or more on a home priced at $360,000 for example.

According to Pauline Aunger, President of the Ontario Real Estate Association, these additional taxes could price some home buyers, especially first-time buyers, right out of the market. “Now is not the time to be erecting barriers to homeownership,” she argues “We need consumers to invest in housing to help get our economy going again.” While beating the HST is certainly a consideration while shopping for your new home, realize that after July 1 when the HST comes into effect, builders may be forced to offer discounts or incentives if the new tax dampens sales. Carefully weigh your options and your priorities to determine what makes the most sense for you. The best strategy is still to find your ideal location, find a home that suits your needs and tastes and offer a price that is comfortable for your budget.

As for what might happen with mortgage rates over the next 12 months, Douglas Porter, deputy chief economist with BMO Capital Markets, sums up what most economists are saying today. “Canadians should not be expecting these extreme lows of interest rates to last that much longer. The bank is slowly but surely laying the groundwork for higher interest rates,” he says. According to a BMO report, the central Bank did not feel pressured to alter the rate due in part to vigorous domestic spending and a higher level of economic activity in Canada.

BMO predicts that the Canadian dollar will remain strong against the U.S. dollar and will be on par through to the fall, which will lead the Bank of Canada to cautiously hike rates. If your financial plans this year include buying or selling a home, choosing a Broker who will get the most for your home quickly will reduce the hassle of selling and put money in your pocket. Not only is Dan Cooper Canada’s #1 Royal LePage Team, but Royal LePage outpaced all other firms in volume sold in Oakville last year.

Dan Cooper is an award winning Broker with Royal LePage Real Estate Services Ltd., Brokerage – the Number 1 Royal LePage Team for Canada in 2009. He can be reached at 905.338.3737, direct line at 905.849.3303 or through his innovative and interactive website at DanCooper.com. Be sure to catch the Dan Cooper Real Estate Series on DailyWebTV.com. For his free booklet How To Sell Your House For Top Dollar – Fast! or his Guide to Oakville Real Estate, please call the Dan Cooper Team.

Posted in Finances, House Building, Mortgage, Planning, Real Estate, Statistics, Taxes | No Comments »

Plan your tax for maximum return

Wednesday, February 3rd, 2010 by Dan Cooper

Tax season is fast approaching and as you scramble to collect receipts, bills and slips, financial advisors will tell you the same thing – planning should be a year-long endeavour. Having said that, though, there are some valuable last-minute tips that could help you reduce your income tax costs.

These are merely suggestions, so be sure you consult with your advisor before making any decisions.

One of the biggest home improvement plans to come out of the government is the Home Renovation Tax Credit. This credit can only be applied for the 2009 taxation year on eligible expenditures. But note, you must have incurred these expenditures up to and including January 31st, 2010 in order to apply them to your 2009 tax return. The credit, by the way, is only available for the 2009 taxation year.

Novel tax strategies include your children. Did you know that you can file a tax return for children with “earned income” in order to start accumulating RRSP room? You can contribute to an RESP to start saving for your child’s education, and may be eligible for a government grant. Keep receipts for fees paid for your child under the age of 16 for enrolment in eligible physical activity programs and you might be able to take advantage of available fitness tax credits.

When it comes to claiming charitable donations, combine all donations for you and your spouse and claim them on one tax return. If your total donations are less than $200, consider carrying them forward up to five years.

These past couple of years have been challenging for everyone, but economists are telling us that better days are ahead; that the recession is over and that we will begin to see modest growth in jobs and family income. So begin your planning now for 2010 in order to enjoy maximum returns next April.

If your financial plans this year include buying or selling a home, choosing a Broker who will get the most for your home quickly will reduce the hassle of selling and put more money in your pocket. Not only is Dan Cooper Royal LePage’s #1 Team in Canada, but Royal LePage outpaced all other firms in volume sold in Oakville last year.

Dan Cooper is an award winning Broker with Royal LePage Real Estate Services Ltd., Brokerage – the Number 1 Royal LePage Team for Canada in 2009. He can be reached at 905.338.3737, direct line at 905.849.3303 or through his innovative and interactive website at DanCooper.com. Be sure to catch the Dan Cooper Real Estate Series on DailyWebTV.com. For his free booklet How To Sell Your House For Top Dollar – Fast! or his Guide to Oakville Real Estate, please call the Dan Cooper Team.

Posted in Finances, Planning, Taxes | No Comments »

Consider buying a home now to beat the new taxman.

Wednesday, July 8th, 2009 by Dan Cooper

leaner

The new Harmonization Sales Tax (HST) proposed by the provincial government has the home building and real estate industries deeply troubled. While there continues to be some fine tuning before it comes into effect July 1st, 2010 – the bottom line is that it will cost you more to buy a home once the new tax is in place.

Essentially, the province is marrying the existing Provincial Sales Tax (PST) of 8 percent and the Goods and Services Tax (GST) of 5 percent to create one tax of 13 percent known as the HST or Single Source Tax (SST). Under the HST, home buyers and sellers will have to pay extra tax on a range of services associated with real estate transactions such as mortgage insurance premiums, title insurance, legal fees, moving costs, real estate commissions and home inspection fees. Currently, consumers only pay the 5 percent GST on these services.

Subject to the 13 percent HST, these services will then cost you an additional $2,000 or more on a home priced at $360,000 for example.

According to Pauline Aunger, President of the Ontario Real Estate Association, these additional taxes could price some home buyers, especially first-time buyers, right out of the market. “Now is not the time to be erecting barriers to homeownership,” she argues “We need consumers to invest in housing to help get our economy going again.”

And while the association is strongly urging the province not to go through with harmonization, the reality is that the government will not likely back down and we will assuredly see the HST next year.

The question many potential buyers might want to ask themselves is that would it be in their best interests to purchase a home within the next 11 months to avoid the HST? The first consideration concerns price. There seems to be little advantage to waiting. House prices are beginning to move upward as our economy slowly recovers, but are still attractive today. So, if the price is right, wouldn’t you rather take that $2,000 you would pay in extra taxes after next July and invest it in your home? In addition, you would certainly realize greater value with a “today” strategy since current government incentives to make home improvements and upgrade energy efficiencies will stretch your dollar that much farther.

Buying a home is one of the biggest investments you will make, and seeking the best value for your money is always a smart strategy.

Dan Cooper is an award winning Broker with Royal LePage Real Estate Services Ltd., Brokerage. He can be reached at 905.338.3737 or direct line at 905.849.3303. For more information about Dan and his team please see his innovative website DanCooperTV.com, or be sure to catch the Dan Cooper Real Estate Education Series on DailyWebTV.com. For a free copy of his Guide to Oakville Real Estate or his booklet How To Sell Your House For Top Dollar, please call the Dan Cooper office.

Posted in House Building, Real Estate, Taxes | No Comments »