Most Toronto real estate buyers are still confused about the Harmonized Sales Tax that was implemented on July 1st. If this headline seems familiar, that’s because a few months back Royal LePage announced the results of a poll they conducted regarding home buying and the HST. Home buyers were confused then, and home buyers are confused now – according to another new poll announced today.

The HST does not apply to resale homes in Toronto.

The poll was conducted by Ipsos Reid, and commissioned by the Ontario Real Estate Association. It found that 56 per cent – more than half – of people in Ontario mistakenly believe that the Harmonized Sales Tax (HST) applies to the sale of resale homes. A resale home is one that has been lived in and that is being put up for sale by its current owner (and their realtor if applicable), not a home that has been newly constructed and never lived in.

The HST does not apply to resale homes. The HST only applies to newly constructed homes that have never been lived in.

While it’s a simple mistake, assuming that the HST is applicable to new homes means that home buyers believe that they will pay tens of thousands of dollars on top of the sale price in taxes. The Toronto Real Estate Board reported this month that the average price of a resale home in September this year was $427,329. If HST were applied to this price, the total would be $482,881 – added costs of over $55,000!

Thankfully, the HST does not apply to these homes. The only HST involved during these  resale home transactions is on services related to the transaction that were normally subject to GST – like legal fees – but not on the price of the home.

“Clearly, Ontarians still don’t know what the HST covers and what is exempt,” said Ontario Real Estate Association president Dorothy Mason in a statement. “This is not helping the housing market, and it’s not helping the Ontario economy.”

The OREA has called on the Ontario government to take action through HST awareness campaigns to get the message out more effectively to prospective home buyers in the province.

Most Toronto Real Estate Buyers Confused About HST is a post from: Toronto Real Estate | Toronto MLS Listings | Toronto Homes For Sale

One facet of owning anything in Canada is what happens to your possessions after you die, and this is very true for Toronto home owners. Most Canadians will choose someone to act as the executor of their estate, and if you have been chosen as an executor you should be aware of the lengthy and complicated process ahead.

Hiring a Toronto lawyer or accountant can make the task of being an executor of an estate much easier.

An executor is named as such directly within a will, and according to the Canadian Bar Association their duties include gathering up all of the estate assets (land, home, money, investments and personal belongings), paying off the debts of the deceased and then ensuring the requested beneficiaries receive what has been left to them.

A lawyer and accountant can be hired and paid from the estate to help sort through all of the responsibilities involved in being the executor to ensure all goes smoothly and nothing is missed.

If you do decide to be the executor, your duties will include making funeral arrangements, confirming that the will you have is the last will the deceased had drawn up, canceling any subscriptions and credit cards along with notifying beneficiaries.

If the deceased lived alone in a home or condominium, it is up to the executor to change any locks and ensure that the deceased’s valuables are taken care of or stored safely.

Insurance is also a factor, and to prevent insurance policies on a home from being cancelled automatically while the home is vacant, the insurance agency should be spoken to about acquiring a vacancy permit.

If acting as the executor of an estate is not done correctly, there is personal liability involved. While being asked to be the executor of an estate can be considered a huge honour, there’s no shame in asking for help with such an important job.

Another option is choosing to not act as executor at all. If you have not taken any action to deal with the estate or the assets of the deceased, no one can force you to take on the serious responsibility. However, once you have begun sorting through the assets you are legally bound to the task at hand.

Being asked to be an estate executor in Toronto is a post from: Toronto Real Estate | Toronto MLS Listings | Toronto Homes For Sale

The amortization period is the length of time it takes to pay off a mortgage. The average amortization period is 25 years, but some are longer and some are shorter. While recent Ontario mortgage rule changes suggested amortization rates would be reduced, it never ended up happening. Choosing an amortization period can be a difficult decision, because on one hand the longer the amortization period, the lower monthly mortgage payments will be. On the other hand, the shorter the amortization rate, the less interest you will pay.

How much will that Toronto home end up costing?

For example, on a $200,000 mortgage amortized over 10 years with a monthly payment of just over $2,200, the total interest paid at a rate of 6% would be $65,000. The highest amortization period available is 35 years, and the interest paid on the same mortgage would total $274,815, but with monthly payments of only $1,130. The payments on the shorter mortgage are twice as high, but the interest paid is over four times less than the longer amortization period. Still, it can be a difficult decision.

The Financial Consumer Agency of Canada has these pieces of advice for those looking to save money on their mortgages no matter which amortization period you choose:

Mortgages can be for different terms, ranging from six months to 10 years. Upon this deadline, the mortgage is up for renewal. The FCAC recommends that Canadians “shop around” to determine if their current mortgage is still the best one suited for them, or if there are better interest rates and payment privileges available elsewhere. Keep in mind that there could be costs involved when changing lenders.

Add an extra payment per year. Do this by making biweekly payments instead of monthly payments, which will grant you one additional payment per year while saving on interest because of more frequent payments.

Some mortgage lenders will allow their borrowers certain prepayment privileges, allowing them to make payments for a certain amount each year without incurring any penalties, but the terms of this allowance differs from lender to lender. Learn how much wiggle room you have with your particular lender, and take advantage of any prepayment privileges.

Choosing an amortization period on a Toronto mortgage is a post from: Toronto Real Estate | Toronto MLS Listings | Toronto Homes For Sale

Now that July 1st, 2010 is past, all Toronto real estate buyers and sellers will have to deal with paying the new HST tax when they buy or sell.

But it’s not all bad… for buyers of resale homes, the impact is minimal For sellers the costs will be somewhat higher.

Take a look at this short Real Estate Minute video to get all the answers.

Toronto Home Buyers And Sellers Now Face Additional Closing Costs is a post from: Toronto Real Estate | Toronto MLS Listings | Toronto Homes For Sale

Toronto Real Estate – The Best Way to Save For Your First Home

In a recent MacLean’s magazine article, they were talking about how very few Canadians save properly for their retirement.  As Sally and I get closer to that big day (still several years away), we’ve become a bit more focused on paying down debt and clearing off mortgages.  Here’s a couple of tips on what we’ve found works very well for ourselves and our clients.

If you’re not currently a homeowner, the absolute best way to save for your first Toronto house or TO condo, and get some free money from the government to do it, is to use your RRSPs.  Let’s say you have 6-12 months before you plan to purchase but have no money saved right now.

First step is to check your Revenue Canada Notice Of Assessment which will tell you how much contribution room you have.  You can contribute up to $25,000 to your RRSP (if you have the allowable limit on your NOA) and use it towards your down payment, closing costs, etc.  If two first-time buyers are purchasing, you can each contribute $25,000 from your RRSP plan.

If you don’t have the cash available right now to put into an RRSP account, go and arrange an RRSP loan.  You should do that immediately and set it up for, let’s say, a 12-month amortization.  At the end of that 12 months, you’ll have saved a significant amount and, when you file your taxes the next spring, the government will give you back a big tax refund cheque.

There’s LOTS more detail to setting it up than what I’ve outlined here of course.  To find out the nitty-gritties of setting this up, go to www.FreeGovernmentMoneySeminar.com and set a date to come to one of our workshops.  In about one hour, we’ll talk about what tax refund to expect, how to best arrange an RRSP loan and much more.

If you already own a home, and want to save big bucks on the interest you’re paying to the bank, Sally and I use our Mortgage Terminator Program to painlessly pay off the principal of any mortgage in just 10 years without having to use any lump sum payments whatsoever.  Sally and I are down to under 4 years left on our mortgage now and the process is very
simple… you don’t even miss the small payments coming out of your bank account every 14 days.

Read more about it at www.MortgageTerminator.TorontoRealEstate.ca and, if you’re interested, we’ll send you a custom spreadsheet tailored to your specific mortgage to show you how you can do this too.  It’s quite exciting to see your balance shrinking when you get your mortgage statement every from your mortgage lender each January!

Click here to read more about the Home Buyer’s Plan and HERE to find out more about how to create a down payment.

Determine how much your tax refund might by going to this online tax refund calculator.

Toronto Real Estate – Thomas Cook talks about Downpayments, RRSPs

Toronto Real Estate

Best Way To Save For Your First Home is a post from: Toronto Real Estate | Toronto MLS Listings | Toronto Homes For Sale