The sale of your primary residence is still tax exempt (usually – some exceptions are listed below). However, starting with the 2016 tax filing which is required by April 2017, you are now required to report the sale of ALL properties, including your personal residence. (They’re calling this “an administrative change”.) If you require information about when you bought or sold a property in the Ottawa area we’d be happy to provide that to you. We don’t have access to all of the purchase details such as adjustments at closing that your lawyer would have given you. (We can usually look this up even if you weren’t our client, though we won’t have as much detail.) For your personal primary residence, they’ve added a new page to Schedule 3, and it’s quite simple if you’ve used your home exclusively as your primary residence: a checkbox, the property address, when you bought it, and what you sold it for. However, my guess is that they will be asking for more information in future years, so it’s better to keep your purchase information and details of improvements available in case they’ll be required. From the Canada Revenue Agency website page for “Reporting The Sale Of Your Principal Residence”: “When you sell your principal residence or when you are considered to have sold it, usually you do not have to report the sale on your income tax and benefit return and you do not have to pay tax on any gain from the sale. This is the case if you are eligible for the full income tax exemption (principal residence exemption) because the property was your principal residence for every year you owned it. Starting with the 2016 tax year, generally due by late April 2017, you will be required to report basic information (date of acquisition, proceeds of disposition and description of the property) on your income tax and benefit return when you sell your principal residence to claim the full principal residence exemption.” Purchase cost, purchase expenses, and the cost of improvements are not required to be reported when it has been used exclusively as your personal residence for the entire time that you’ve owned it. You can designate any dwelling as your primary personal residence, but only one per person (or couple). It can be a cottage, and it can be located in another country. You can also change the designation without selling the property, such as deciding that your cottage becomes your principal residence because you are renting out your home in the city. They do have a formula for calculating the taxable capital gain based on how many years it was solely your residence compared to the number of years as a rental. And what if you rent out a room or a part of your home? You will have to calculate capital gains if it is a separate unit, like a nanny suite in the basement, but not if it’s a small portion of your home. An interesting site called www.TaxTips.ca says in their article called “Change In Use Of a Residence”: When you rent out a part of your home or cottage, you are considered to have changed the use of that part of the home from personal-use to rental property. Depending on the circumstances, when you eventually sell your home, or have a deemed disposition because you stop renting part of it, you may have to report a capital gain on the portion of your home that you rented out. The CRA Rental Income Tax Guide, T4036, and S1-F3-C2: Principal Residence (see partial changes in use) state that if all of the following conditions are met, you will not be considered to have a change in use: – the part of the home used for rental purposes is small in relation to the size of the whole property, – you do not make any structural changes to the property to make it more suitable for rental purposes, and – you do not claim any capital cost allowance on the part you are using for rental purposes. If all of the above conditions are met, you will not have to report a capital gain when the property is sold or the rental is stopped. Otherwise, you will have to report a capital gain based on the portion of the house that was rented. NOTE: Summations and “plain English” articles such as this are very helpful for non-accountants like me. However, you should use an accountant or refer to the CRA website to confirm that the summation is correct. (Interestingly, the CRA takes no responsibility if you call and an agent gives you incorrect information, or if one of their publications is incorrect. They say that the only real source for information is the Income Tax Act…)
Are you looking to buy your very first home? Or perhaps you are planning to resell after many years in your home and move to another? In both cases you should take the following things into consideration, as they can save you from a costly – and unpleasant – experience. (You can read more detailed explanations of each item below, or just contact us for quick and personal answers.) 1. Get pre-approved for a mortgage 2. Check your credit report and score 3. Create a budget – or review it 4. Be prepared for the extra costs 5. Use professional help when dealing in real estate 6. Don’t pick your real estate agent or lender blindly 7. Recognize that your “wish list” is just that 8. Hire a home inspector 9. Research the neighborhood 10. Consider the resale value We’d love to help you find your perfect home in Ottawa, and to answer any questions you may have. Contact us by phone or email and we’ll get started. Here are some more details about the 10 Tips 1. Get pre-approved for a mortgage It is very important to get preapproval from a mortgage professional. A good mortgage broker can review your specific financial situation and suggest alternative lenders & options. (Resellers should take advantage of this free service as well.) You’ll learn the most expensive house that you will be allowed to mortgage, and the maximum mortgage payment that you are allowed under the mortgage rules. (Many people want to buy as much house as possible, but if you spend less it will give you more to spend on other things.) A second advantage to pre-approval is that you will normally be given the best rate available from that lending for a period of up to 4 months – whether it goes up or down from your approval date! Email us now if you’d like to know the experienced professionals that we recommend. 2. Check your credit report and score Your mortgage professional will pull up your credit report and will discuss it with you. The cleaner your credit report and the higher your credit score, the more likely you are to be preapproved for a mortgage at a low interest rate. You are entitled to a free copy of your credit report, and the law allows you to dispute mistakes. Read this good CBC Canada article about credit reports, credit scores and how to get them. http://www.cbc.ca/news/canada/how-to-check-your-credit-report-1.1185975 3. Create a budget – or review it Everyone has heard that it’s a good idea to create a budget. It’s particularly good to create one before beginning a home search to determine just how much house you can comfortably afford. A good rule of thumb is to devote no more than a third of your monthly household income to housing costs, including mortgage principal, interest, taxes, and insurance. There are several work sheets available online to help you figure out your income, debts, and expenses. It is very worthwhile to use this in conjunction with the information from your mortgage professional. 4. Be prepared for the extra costs Don’t underestimate what you can comfortably afford each month! Remember that there is a big difference between cash-flow and one-time expenses. CMHC fees for mortgages will be added to your mortgage so it’s not an extra out-of-pocket expense, but will increase your mortgage payment slightly (your lender will tell you exactly), and therefore your on-going cashflow. You know that you’ll be paying mortgage, property tax, and perhaps mortgage insurance every month. Remember to take into account property insurance and utilities. Perhaps life insurance as well? This is where your budget can help. One-time fees can surprise people when they buy. Moving costs vary from a couple of hundred for do-it-yourself van rentals and pizza, to thousands for a cross-country move with a company. Land transfer tax can be even more expensive. It varies depending on the price of the home, but between 1-2% is common – and it’s not wrapped into the mortgage. (Buyers in Toronto pay double that amount.) A rule of thumb is to be prepared to spend about and extra 2%. However, the largest portion of that is land transfer tax, and most first-time buyers will get a full or partial rebate of it. We’re happy to give you a more detailed idea of what to consider. Just email or call us. 5. Use professional help when dealing in real estate Sure, it’s possible to go out and buy a home without the aid of a professional real estate agent. And most people use the web even when working with an agent. . Yes, we want to recommend ourselves. But whether you choose us to help you buy or someone else, consider the advantages of using a real estate agent: real estate agents have direct access to the MLS system including all the properties that have been sold – and those that didn’t sell; therefore your Realtor® can advise you on whether the home is worth the price, and this is particularly important for the For-Sale-By-Owner properties (most homeowners feel that their property is worth more than it actually is); real estate agents work in real estate all day, and understand the market better; your Realtor® can provide expert advice on locations and property values; your Realtor® will arrange to show you all the properties that interest you, at your convenience; the agent for the Buyer is virtually always paid from the fees of the listing agent – so normally no cost to you as the buyer!(So why wouldn’t you get professional help when buying your biggest asses – especially when it’s free?) Email us or call us to find out how we can help you. 6. Don’t pick your real estate agent or lender blindly Ask relatives, friends, neighbours, and coworkers for referrals. And then interview some until you find someone that you trust and that you’re comfortable spending time with. We work with you to find the home that fits you, and provide assistance throughout the process, from searching, to offering, to closing. It’s important for us that it be the right home for you for as long as you want to live there. It’s important to ask any questions you might have – there are no dumb questions. We want you as friends and clients should you ever choose to move again! 7. Recognize that your “wish list” is just that Please do tell us all of your “love to have” list. Note that you may find out that homes with everything on that list may be a bit more expensive than you can afford. We find it helpful to discuss and try your “perfect search” during our initial meeting. Then we can review and adjust together. 8. Hire a home inspector Regardless of the age of a property, a home inspection is a worthwhile investment. We will do our best to provide advice on obvious shortfalls in a property, but inspectors have specialized training that allow them to provide a much more thorough analysis of a property for you. The vast majority of inspections result in a small to-do list for you after you acquire the property. Much less often the inspection will identify something significant, and in that case we will work to negotiate a satisfactory resolution between the buyer and the seller. (Or perhaps it’s just too much work, and another home is a better option.) 9. Research the neighbourhood There are often good deals for properties on busy streets. Is the house quiet enough though? And the backyard if you like to entertain outdoors? Safe for children if you have them? Are you comfortable in the neighbourhood? Would you be worried walking alone or with your dog at night? Do you have good access to work or school by your preference of transit or car? Are schools important to you? As you narrow down a couple of neighbourhoods you might want to speak with the principal and/or check out the Fraser Institute School Rankings website. Note that it breaks the municipality of Ottawa down into the “older” cities such as Nepean, but it’s still an interesting place to check out. http://ontario.compareschoolrankings.org/elementary/SchoolsByRankLocationName.aspx And yes, we’re happy to give you detailed info on a neighbourhood. Email us or call us. 10. Consider the resale value But don’t make this a deciding factor. You’ve just started the home-buying process. However, most people up-size or down-size over time. And life is full of surprises, whether it is a job transfer or having another child or taking care of an incapacitated relative. When the time comes to put your house on the market, will your home be easy or difficult to sell? Properties on busy streets tend to be less expensive, but also don’t tend to appreciate as well. Your real estate agent will be happy to give you a idea of the pros and cons. Consider also renovating and decorating. Paint can be easily changed for the purpose of selling. But adding a bedroom that can only be accessed through another room may be a detriment rather than a positive… We’d love to help you find your perfect home in Ottawa. Contact us by phone or email and we’ll get started.
Everyone who has moved once or twice has tips on how to pack, sort, transport, unpack etc. But if you’re not fortunate enough to have a frequent mover in your rolodex, here are some packing tips you can consider on your next move. • Pack picture frames in padded envelopes from the dollar store. • Use zipper seal bags to transport loose items like pens and fridge magnets. • Laundry baskets can transport clothes, kitchen appliances, bathroom accessories, etc. • Bedding can be packed in garbage bags and used as padding around furniture in the moving truck. • Use plastic wrap to secure drawers, lids, shelves, etc. that may slide during transport. • Paper bags work great for wrapping glassware. Plus there’s no ink residue like there is with newspaper. • Don’t move anything empty. All spaces can and should be packed with goods to save on packing costs. For instance crackpots can transport spices. • Empty toilet paper and paper towel rolls can be taped together and make a great way to transport cords. Cords can be individually stored and labelled so they don’t get tangled together. • Take a photo of the back of your television/entertainment center so you know how everything gets wired back together. A quick Internet search will yield a lot more packing tips. Whatever you choose to do while packing, make sure you give yourself enough time to get it all packed up before the movers get there or you’ll start moving day off on the wrong foot. Do you have any special packing tips or tricks? We’d love to add them to this list for others to benefit as well! Just send us an email (from your email program) or via our contact form and we’ll update this page right away.
Canada Mortgage and Housing Corporation released it’s results on the Seniors Housing Market. Highlights The vacancy rate for standard spaces hit 11.3% this year, its lowest level since 2009. The vacancy rate for all spaces touched 10.7%, its lowest point since 2001. Total supply of seniors’ housing grew by 4.9% to 56,301 spaces in 2016, but growth in demand outpaced the growth in supply. The average rent for a standard space increased by 6.7% to $3,499. Vacancy Rate Hits Its Lowest Level The overall seniors’ housing vacancy rate in Ontario dropped from 11.5% last year to 10.7% in 2016, the lowest level since the start of the standardized Ontario wide survey in 2001. Meanwhile, the vacancy rate for standard spaces also reached 11.3%, the lowest level since its introduction in 2009. See more details in the full report at http://www.cmhc-schl.gc.ca/odpub/esub/65981/65981_2016_A01.pdf?lang=en You can also visit their Housing Market Information for lots of other reports.
Be warned that Hydro has become more expensive – again – on May 1. And don’t forget that mid-peak and on-peak time have switched again: it’s now MOST expensive from 11am to 5pm. Give a cheer that we in Ottawa and Ontario saved electrical energy this winter. We didn’t use as much and didn’t spend as much on hydro as the companies projected, so we’re going to be rewarded. They’ve increased our hydro rates!!! Yes, that’s our present for conserving energy. The Hydro Ottawa website says: “The total monthly bill for a typical residential customer consuming 750 kWh per month increased by approximately $3.13 per month”. Doesn’t sound so bad when they spin it that way. But they don’t bother mentioning that this is only the increase on the November and January increases! As noted on the image, the increases are: 2015 Oct 30 2016 May 1 increase $ 0.080 $ 0.087 8.75% $ 0.122 $ 0.132 8.20% $ 0.161 $ 0.180 11.80% Maybe they should be legislated to limit their increases to cost-of-living? Oh, but it’s being privatized, so would that even be possible? Or perhaps we can look forward to rebates/discounted rates if we use more than they project? Here’s an article by CBC news: Hydro rates going up this summer, Ontario Energy Board says Electricity rates in Ontario are among the highest of any jurisdiction in North America, despite the fact that we produce even more energy than we use. In fact, Ontario Hydro pays private producers to not produce/add energy into the grid! And it dumps “excess” to other jurisdictions like Michigan for a fraction of the cost that we pay (one article suggests that it may be as high as 20% “dumped”). The Toronto Sun interviewed the major Ontario political parties about this subject: Higher electricity rates kick in for Ontario “Progressive Conservative energy critic John Yakabuski said the current on-peak charge of 18 cents per kWh is a 418% increase of the price when the Liberals first took office in 2003.” Just imagine how privatizing the system is going to help our rates… And here’s an Open Letter by Parker Gallant, the former banker who several years ago launched FP Comment’s prophetic Ontario’s Power Trip campaign: Ontario’s Power Trip You should also see if you’re eligible for the Ontario Electricity Support Program (OESP) and the Low-Income Energy Assistance Program (LEAP). Minimum eligibility appears to be income of less than $28,000 for a household of 1 person, but somewhat higher incomes are eligible depending on the number of people in the household.
Developed using data from the Multiple Listing Service®, the MLS® Home Price Index (or MLS® HPI for short) allows you to see trends in home prices for a type of home in a given area, with the same set criteria over time. The concept is to see how just Granny Smith apples have done, instead of all types of apples, which may include much more or less expensive types. It does make sense in concept, and it is worth seeing general trends over time. However, because it is designed to minimize the impact of changing styles, it may not be as relevant to property types where styles do change fairly rapidly, like condos. Therefore, it must be used in the same way as other generalized statistics. You can see it in action across Canada and get more info on it at http://www.crea.ca/housing-market-stats/mls-home-price-index/ We can drill down to a particular area and property type in the Ottawa area for you – just contact us. (Interestingly, Area’s A through H range from the borders with Quebec to the north and east, to the St Lawrence, and west to Merrickville and Brockville, so a bit more selectivity is worthwhile.) The MLS® HPI is not designed to predict the value of an individual property. However, since it is based on MLS®listing content the MLS® HPI provides a relatively accurate picture of home price trends in a given region, municipality or neighbourhood. The MLS® HPI can help you gauge changes in housing prices over time, including changes in: Overall home prices for the market as a whole Prices for specific housing categories in a given area, or for the overall market How is the MLS® HPI different from average and median home price calculations? The MLS® HPI is based on the value homebuyers assign to various housing attributes, which tend to evolve gradually over time. This means that price changes calculated using the MLS®HPI are less volatile than those derived using common measures like average and median, which can swing dramatically in response to changes with high-end or low-end sales volumes over time. It is often difficult to determine if average or median price fluctuations really reflect changes in buyers’ willingness to pay for certain housing attributes, or just changes in the volume of very expensive or inexpensive home sales from one time period to the next. The MLS® HPI removes that uncertainty. How does the MLS® HPI work? The MLS® HPI tracks changes in home prices by comparing price levels at a point in time with price levels in a base (reference) period. The base period value is always 100. For example, if the base period for single-family homes is 2005, and the MLS® HPI value for single-family homes in December 2011 is 149.1, you know that the value of single-family homes is up 49.1%, compared with 2005 (149.1 ? 100 = 49.1%). Above is the example of the criteria used for the home type “apartment”. The HPI tracks that same type of apartment across the years so that changes in size, finishings, etc are not included. The criteria listed above for apartments may not be so typical of the style now-a-days, but it still follows that style across the years. Curious about how your type of home has done? Or curious about how another type has done? Just contact us and we’ll be happy to run an HPI for you!