A important message and reminder at tax time from Real Estate lawyer Jonathan G. Griffiths...
" It's getting to be tax time again! If you have first time buyer clients who bought a home last year you may want to make sure that they know about line 359 on their income tax return. Its called the First Time Home Buyer’s Tax Credit and it allows for a tax credit of up to 15 percent of closing costs to a maximum of $5,000.00 so effectively $750. Where more than one person purchases the $750 is shared. It seems that closing costs include CMHC fees so most people would qualify for the maximum. Its the broader Federal government definition of first time buyer, and the buyer or spouse must intend to occupy within a year of acquisition as principal residence to qualify for the credit. If any of your first time buyers were unaware of this credit and have not claimed the credit in previous years, my accountant says that it is possible to go back four years to claim the credit by filing a T1 Adjustment for the year in question."
CMHC has developed a great App to help home buyers, especially first-time home buyers, get organized and manage their home buying experience.
To get download, click here.
It a recent chat with a client, it has become clear that it is getting more and more difficult as time passes for a first time home buyer to find a decent home in Toronto under $550K. The inventory of new listings is down in comparison to previous years and the prices have been going up as a result of low interest rates and the resulting competition/bidding wars for good homes at this first time buyer price point. First time buyers are ready and willing to buy but will need to compromise on some features to get into the market.
The thing to keep in mind is that it’s a first home. This isn't the "forever" home. It is natural for most first time buyers to make an entry level purchase such as a condo or small home to start. Having said that, it is also natural for first time buyers to have high expectations when first starting to look. This is when compromises need to be made. Once they see what is available and get educated about the market, it's time to make adjustments to those initial expectations.
Once invested in a first home, as needs change and income grows, it may be time to make a move to a larger home. At this point equity has been building in the first home with the payment of a mortgage ( instead of rent to a landlord ) and capital ( from improvements ) and asset appreciation ( year over year for the last 20+ years residential real estate has been averaging approx 5% per year increase in value).
Most first time buyers who wait to buy the perfect home often get priced out of the market and are never able to catch up.
My personal experience is to start by investing in a home within your budget that has good bones that you can live in, in a good location. You can't change the location but certainly can improve the home over time!
Before you set out to meet with mortgage lenders, we recommend that you order a copy of your credit report to make sure it doesn't contain any errors because lenders will check it before approving you for a mortgage. A credit report is a summary of your financial history and shows whether or not you have had any problems in the past paying off debts.
The Financial Consumer Agency of Canada (FCAC) - a federal government agency - is an independent body working to protect and inform consumers of financial products and services.
Click here to be re-directed to their website for some great tips and how to order your own credit report.
You've just found the perfect home and are discussing the terms of your offer. Along with your offer, it's customary to submit a deposit to show the Seller your intention and commitment to complete the purchase. The question always arises as to what amount of deposit is considered appropriate. The amount of the deposit will depend largely on the purchase price, local customs, circumstances ( multiple offer situations ) and of course the amount of cash you have readily available. 'Readily available' is key here as once the offer has been accepted by all parties, the deposit must be delivered to the Selling Brokerage within 24 hours of the acceptance.
The deposit is generally in the form of a Bank Draft or Certified cheque and is held in the Brokerage Trust Account until the transaction is complete at which time it's applied to the purchase price. It's important to note that the funds in the Brokerage Trust Account are insured through a Deposit Insurance Program provided by the Real Estate Council of Ontario ( RECO ) for registered Members, Sales Representatives and Brokers.
In cases where a conditional offer has fallen through ( for example a not-so-favourable home inspection or the bank hasn't approve the financing ) there is generally a statement attached to the condition that requires the deposit to be returned to the Buyer without penalty. At this time, a written Mutual Release is signed by the Seller and the Buyer so that the Brokerage can release the funds back to the Buyer.
I've been asked this question quite a bit lately by prospective home buyers wondering about how the schools in select neighbourhoods rank or perform. I generally stay away from getting too involved in sharing my opinions but offer my clients the advice of doing their own research. The Fraser Institute has some great information on school performance rankings and clients should always visit in person the schools in question. It's also a great idea to speak to neighbours about their child's experiences.
There are many good schools across the city so don't worry if you are priced out of certain popular neighbourhoods. Keep an open mind and you might be surprised at the affordability and community in a not as popular neighbourhood.
Based on our personal moving experiences and those of our clients we've highlighted below a few very helpful things to consider when preparing for moving day.
Don't arrange to move on closing day from one home to another if possible. This will help you avoid frustrations, delays and confusion of moving times.
One of the most frustrating things that can happen to you when moving on closing day is getting all packed up, picking up the keys from your lawyer and getting on your way only to arrive at your new home to find the sellers are still there moving their belongings from the home. This happens.
Another situation that can cause frustration is the delay in receiving the keys to your new home. Many times the passing of the keys ( upon registering the deed transfer ) from the sellers' lawyer to your lawyer is delayed until late in the afternoon and sometimes as late as 6 pm. You cannot move in before you have possession of the keys.
There have also been many cases where you are all packed up and on the truck from the previous night ( because the moving company recommended this or they were all booked up for your actual closing/moving day). Your belongings were sitting in storage all night and the next day you show up ready to move in on closing/moving day but the sellers are still moving out. If you have a moving truck sitting there from 9 am in the morning until you get the keys, that can add up to one expensive move, since the movers are often paid by the hour.
We recommend choosing a closing date that is not a Friday or at months end. These days are so busy that you are pretty much guaranteed not to get the keys until late in the day. If that is the case, plan accordingly.
Be cautious of discount movers. There are many, many stories of angry consumers who have been held hostage by some unscrupulous moving companies. We had a client who was forced to pay an extra $500.00 dollars to get their belongings removed from the moving truck after they had already agreed on a set price of $800.00 dollars. The company promised a large truck with 3 men and on moving day showed up with 2 men and a smaller truck. They had to take a second load. Once the second load was loaded they said it took them a lot longer than expected and demanded the extra money to release their belongings. This happens more often than we know. The other problem is that when you try to complain about these companies, it is just one of many companies under the same umbrella with many complaints against them.
You must be careful who you use and make sure that you ask around first before making a commitment to any moving company. Get recommendations and testimonials from people who have had a positive experience with a moving company. Considering that most of your furniture and personal belongings are going to be loaded onto the truck, you want to be sure this is a reputable company. This is why we would suggest that you may want to pay a little more for one of the larger companies who have great reputations for their service. As you know with many things in life, "you get what you pay for".
Do a quick walk through your new home before you start moving your belongings in. You may need to do a little clean up first so have a bunch of garbage bags, mops, brooms and cleaning supplies ready...just in case. Moving day can be messy and the cleanest homes will get a bit dirty, especially during wet weather. Hopefully the previous home owners are respectful and clean the home before they leave but don't expect it. Better yet, hire a cleaning company to go in and do a thorough cleaning job before you move in.
Change your locks on moving day. This is highly suggested to ensure your family is safe in your new home. You never know who was living in the house previously and how many keys were cut over the years. Often people will have extra keys being held by neighbours and family members that they forget to hand in on closing day.