Property Transfer Tax

Property Tax

Property Transfer Tax is a National Scam

One of the things that keeps reminding me that I no longer in Arizona but back ‘in the nanny state’ is the national scam known as Property Transfer Tax (PTT). Everyday I deal with folks who are scraping up there hard earned cash to start building some equity or create a better life for their family, quite a number have already purchased a house a few years back and are no longer exempt from this national travesty.

I don’t have a problem with the Government collecting its fee’s off of property ownership, if you have ridden the housing market up and gained a lot of paper  equity then it’s a small price to pay for your winnings. But… what really irks me is that they keep collecting on properties that have had it paid and paid and paid, a gift that just keeps on giving.

Property Transfer Tax Rates http://www.sbr.gov.bc.ca/individuals/Property_Taxes/Property_Transfer_Tax/tax_rates.htm

The amount of tax due depends on the fair market value of the property that is transferred:

* If the fair market value is $200,000 or less, the tax is 1% of the fair market value
* If the fair market value is greater than $200,000, the tax is 1% of the fair market value up to $200,000, plus 2% on the portion of the fair market value that is greater than $200,000

For example:

* if fair market value of property is $150,000
tax payable is: 1% of $150,000 = $1,500

* if fair market value of property is $250,000
tax payable is: 1% of $200,000 = $2,000
plus 2% of $50,000 = $1,000
for total tax payable of $3,000

Real World Example

You are purchasing an older home you intended to fix up and sell for a profit in the Valley for $490,000
-you pay PTT on $490,000 ( for arguments sake I am not going to include the first time buyers and other ‘exceptions’)
tax payable is: 1% on $200,000 =$2,000
plus 2% of $290,000 =$5,800
Total tax payable       =$7,800
-You then renovate the home and make several ‘improvements’ such as remodeling the kitchen, upgrading the landscaping, or heck even take out a wall or two.
-After 8 months of ownership and finishing your renovations you meet with an agent and decide to put it on the market at $560,000 a nice $70,000 profit.
-The property sells at $550,000
-The new buyer will have to pay Property Transfer Tax on $550,000 at $9,000 the Government has just double dipped on this property in one year, and made $16,8000
How do they collect twice in one year, it’s almost strong armed robbery.

What brought this to my attention was the fact that in today’s July 23, 2008 Vancouver Sun’s Don Cayo wrote a great editorial about the PPT, it was more focused on business and you would not believe how they put it to small businesses, I guess that’s what makes us individuals accept our medicine.

At TD Canada Trust we do not finance the PTT and ensure that it is collected by the conveyance, guess that with the no down payment mortgage your new down payment will have to be a tad larger still…..

What are your thoughts on the Property Transfer Tax?

Giving Your Home a Makeover

Renovation, TD Canada Trust Mortage, BC Mortgage Information, HELOC, Self Directed mortgage, Home Equity Line Of Credit

You would probably be hard pressed to find a single person that loves every feature of their home. Most of us have a laundry list of things that we would like to be done to make the house perfect. But is it important to implement those plans?

Our homes are one of our most important investments. And the design and function of our home affects our lives every day. But in terms of investment potential, are we more likely to make money on our property if we remodel or move to a home that’s a better fit?

Sometimes remodeling pays off and sometimes it doesn’t. Almost always, the remodel represents a significant investment of money. No one wants to invest in something that won’t pay off, but it can be hard to determine if your plans offer true potential profits. Click here and learn which improvements add value to your home

You can use some points to help you evaluate whether the remodel is worth it or not, or whether it will affect your home’s resale ability. Here are a few points to consider.

Does it affect the curb appeal of the home?

Is your remodel going to make your house more attractive? If you were trying to sell your property, would it make people more inclined to stop and take a tour? Sometimes minor investments, like a fresh coat of paint on the front door, a few new flowering shrubs and a groomed front lawn are all you need to make the house presentable from the curb.

Will the remodel make your home competitive with your neighbors?

Is there something about your home that is lacking, that other homes have already? Maybe you need to add an extra bath. If you only have one bathroom when all the homes surrounding you have two or three, the remodel will definitely make your home more competitive with the those surrounding it.

Will the remodel make your home stand out?

Is there something about the remodel that will make your home distinctive from other homes? Emotions guide most buyers, and if they see features that are attractive, even upgrades from other homes, you property is more likely to resonate with them as being attractive.

Is your remodel going to add something people like or demand in houses?

Just like with clothing, there are parts of a home that become fashionable and parts that aren’t. For instance, stainless steel appliances are far more appealing than old generic white ones. Think about trends and the length that it will be in place before you make final decisions about what to add to your home and how buyers may view it.

Renovating is something you do for yourself and your family to make your home more enjoyable, but it’s also something you have to think of in terms of attraction to others. Depending on how long you intend to be in a home, unless the remodel makes the home more “sellable”, it may just not be worth it. On the other hand, some changes add great value to your personal enjoyment of the home.

Remodeling your home can help you fall in love with your home all over again, and it can be a great long-term investment strategy. A good remodel can add years and dollars to your home.

Contemplating a Renovation? If so, you’re probably trying to figure out the best way to pay for everything. A TD Canada Trust Home Eqity Line of Credit can be used as a mortgage and a personal line of credit all in one. With the ultimate in convenience and flexibility, TD’s Home Equity Line Of Credit (Self Directed Mortgage) might very well be the low-cost financing choice you need to get your profect underway sooner than later! Set up your appointment today TDdave

Canadian Mortgage Changes

“Mortgage changes followed concerns about housing crunch in Canada

by Julian Beltrame, The Canadian Press”

“OTTAWA – Concerns that cracks were beginning to appear in the foundations of Canada’s housing market were behind the government’s surprise decision to crack down on loose mortgage conditions ushered in less than two years earlier, officials and experts say.

Starting Oct. 15, Canadians will no longer be able to purchase a home with a government-backed mortgage with a 40-year amortization and no down payment.  

Instead, mortgages will be limited to 35 years and the government will only insure 95 per cent of the value of the home, meaning buyers will need to come up with at least a five per cent down payment. As well, borrowers must demonstrate that debt servicing costs are no more than 45 per cent of gross income and have a good credit rating.

But while most in the housing sector welcomed the announcement, they also questioned the timing. The Canadian housing sector is cooling after six torrid years of growth.

Bank of Montreal deputy chief economist Douglas Porter said the decision should have been made a year ago, when Canada’s housing market was likely exhibiting signs of a bubble as both prices and starts increased by double-digits over the previous year.

“It’s better a little late than never and better than ridiculously late,” Porter said.

“I think in hindsight, we can attributed a lot of the very strong conditions we saw right across the country in 2007 to the loosening up of rules in the prior year,” he explained. “At the time, I was a little concerned that the Canadian housing market just continued to thunder along last year when the fundamentals were starting to move against it.”

Liberal MP Garth Turner, who recently authored a book warning about a Canadian housing bust, suggested Canadians could expect to see the value of their homes fall about 15 per cent nationally, and 30 per cent in some hot markets such as Vancouver.

While praising Finance Minister Jim Flaherty for acting, Turner said the minister has also set up the conditions under which some Canadians will try to beat the Oct. 15 deadline.

“This pulls the plug right out of the bubble, but it does it in a way that inflates the bubble another few months,” he said.

“If you’ve been shopping around for a home and you don’t have any money for a down payment, you will want to buy now with zero down and a 40-year mortgage. If you’re a lender, you’ve got three months to load up people with debt regardless of what the debt-service ratio is.”

Ottawa said the changes were a precautionary measure designed to head off a U.S.-style subprime mortgage crisis, not an indication of underlying problems in the Canadian system.

But officials said concerns had been mounting for months as the government tracked the explosion in the issuing of mortgages longer than 25 years, for years the standard in Canada.

The government had been consulting with lenders, insurers and brokers for the past few months over generous mortgage products, said Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals (CAAMP).

“I think they were worried about what was coming out of the U.S. in increases in defaults and foreclosures, and I think they were concerned over their 100 per cent guarantee, wondering, ‘What is our risk here in a calamity?’ ” Murphy said.”

Julian Beltrame, The Canadian Press

http://www.canadianbusiness.com/markets/headline_news/article.jsp?content=b0710133A&page=2

I think that many folk’s are reading the headlines and forgetting to do a little more research, one of the biggest differences that can be plainly seen from the American counterparts is that the US was using 100 year Amortizations, yes you read that correctly 100 years. In the Vancouver market it is almost impossible for anyone to break into unless they have a substantial source of income, I don’t know of that many young people who have the kind of income to even consider home ownership in the Greater Vancouver Area.

I don’t foresee many being able to buy out there baby boomer parents either, and the parents need to pull the equity out of there homes in order to retire. “Nearly 3 out of 5 middle-class retirees will probably run out of money if they maintain their pre-retirement lifestyles, a new study from Ernst & Young www.ey.com has concluded.

The study, set to be released Monday, finds that Americans will have to drastically reduce their standard of living before retirement to live comfortably, or even avoid destitution, later in life. Middle-income Americans entering retirement now will have to reduce their standard of living by an average of 24 percent to minimize their chances of outliving their financial assets, the study found. Workers seven years from retirement will have to cut their spending by even more – 37 percent.” http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/07/13/MN9511OD8S.DTL

More Canadians will continue to be increasingly dependent upon their nest egg that has been built by the equity of homeownership, how will the new generation afford to take over the burden of what have become million dollar mortgages?

Just as an example the amount of income required for a 850,000 home with 5% down over a 35 year term would be 185,535 per year, I don’t know of many people under 40 that are legitimately earning that kind of income—even combined income—a great deal of the Vancouver bubble has been created from offshore money and as of right now the amount of offshore influx is still over 50k people from oversees moving here every year!

What do you think, is the younger generation going to be able to sustain these prices??

Home Selling Strategies II

Let’s talk about using the Traffic Home Selling Strategies. In the last installment we looked at how developers and marketing companies use the strategy of Traffic to help move their product, let look at how these tactics can be incorporated into your own personal marketing.

Traffic has been used by developers for years; let’s look at some tactics that emulate the developers  

- Set your target list price in the upper part of the range, although this seams like the opposite of what to do, it will allow you to build in your incentives and create a bargaining atmosphere that will appeal to buyers in this market, remember that the fear of loss is much more powerful than the sense of gain, a buyer will be much more inclined to go through with a deal if they deem it as the deal of the century – instead of pulling buyers through a garden hose, you will have them diving into the water.

-Financial Incentives, one of the best tactics that marketing systems employ, the secret here is to have set the pricing structure up to absorb these costs and not cut into your bottom line. Place a Buyers agent incentive on the property, either increase the compensation percentage for the agent or by simply offer up a large guaranteed commission, your showings will increase dramatically, and the more showings the more likely that someone will fall in love.

-Follow up, Follow up, Follow up, everyone is reluctant to leave their information at a development site because we all know that we will be bombarded with follow up material, they will call you, they will mail you, they will overstuff your inbox and now they have started to text you! It has become incredibly hard to gather folk’s information because of the fear of overbearing contact. Here are some great ways to put potential clients at ease.

1) Stress that all of your follow up material has a simple un-subscription process, and make sure it does J

2) Clearly explain to your potential client that you are in the business of following up not solicitation, explain that you understand that their time is valuable and so is yours, you have much better things to do then to solicit for business on a Sunday morning and are here to help them not hound them. Have different follow up schedules for different clients needs, if they are not actively going through the sales process with you, put them on a drip campaign to maintain contact. Don’t frustrate yourself by chasing after hopes and dreams

3) Offer a compelling reason to give your information, one of the best I have found is to hold a draw at the end of the month, go down to Winners/Ross and buy a few high quality neutral colored towels, nice soaps, bath accessories and candles put them in a large gift basket, remember presentation is the key, so cellophane and ribbons are a must, offer a second prize as well, currently I am using The Holmes Inspection book by Mike Holmes available at most book stores. Place the basket and secondary prize in the kitchen and offer ballots with a pen and a clear ballot box half filled with ballots, (just like how they fill up tip jar at starbucks before their shift J ) At the end of the month I hold the draw, I hand deliver the winners there prize and take a photo of the presentation, everyone who entered is emailed a copy of the photo which promotes good will.    

-Incorporate outside the box Marketing Tactics, Things like the ‘Ugly Yellow Sign’ campaigns that most know as a call capture tool can yield great results at opens when they are strategically placed. We are constantly bombarded with the usual glossy images and slick advertising, these have become almost useless as they now simply blend into the scenery. The Ugly Yellow Signs stand out because they are handwritten, tacky and give a distressed merchandise look, in fact I held a open in which the house was quite frankly overpriced in this market but we peppered over 50 Ugly Yellow Signs for the open, over 60 feature sheets were gone in a hour and a half and people kept commenting on how the price seemed like a bargain. – if it looks like a bargain then it must be a bargain

-Curb Appeal, time and time again home staging has been one of the best ways to help move merchandise, just as we all dress up for a special date or event, a staged home helps you put the best foot forward. Even renting a temporary self storage unit to un clutter has profound effects

Keys to Multiple Meetings

Getting to Know Clients Over Time

Your success in becoming an Super Agent depends on how effective you are at meeting with your clients, not once but multiple times. In the relationship business, you cannot expect clients to fork over their business or become your personal advocates from a single encounter.

The best relationships develop over time from getting to know each other, establishing trust and discovering opportunities that help your clients as well. But too often agents get stuck because they give away too much information during their first meeting, making it more difficult for the client to rationalize meeting with them a second or third time. Just like when you first met your best friends it takes time for a relationship to develop and blossom, leaving them without a hunger for an encore can kill any forward momentum

Fortunately, there are some simple things you can do differently that will help you plan and hold multiple meetings with the same client. Follow the 3 principles described in this article and you’ll experience success in landing multiple meetings.

Don’t Be Interesting

In your first meeting, you should ask questions and listen. You should offer nothing of yourself until you comprehend the client’s goals and understand the potential obstacles standing in the way. The second and third meetings with the same client will anchor the relationship but the key to getting those meeting hinges on the success of your first meeting.

The fifth habit in Dr. Stephen Covey’s bestseller, “7 Habits of Highly Effective People,” tells us to seek understanding. Being interested, instead of being interesting, means you’re not trying to impress the client, or “wow” him or her with your offerings. Seeking to understand shows you’re curious about the client’s problems and eager to comprehend their circumstances.

Don’t Give It Away

The more you develop the habit of seeking understanding, the less time you’ll spend in your first meeting discussing the least important subject – yourself.

When you meet a client for the first time, they don’t care about you. That’s not an insult; instead it’s good news, because if you feel pressured to impress a client, you’ll making another critical mistake – you’ll tell your whole story. It’s the biggest reason why it’s difficult to get to a second or third meeting. If you include in your presentation every aspect of your service and every reason for doing business together, you’ll leave nothing for follow up. It’s the same reason why many movie sequels do so poorly at the box office. The first episode gave away the whole story, leaving the second one uninspired.

Plan Your Sequel Beforehand

However, there have been some wildly successful movies that included sequels, like the Star Wars trilogy and Harry Potter. The key to their success is that the sequels were planned and written before being filmed.

Before you meet with an client for the first time, plan how you’ll get to your second and third meetings. Take the time to prepare and forecast what the potential clients needs will be, are they downgrading, are they first time buyers, what king of information can you offer to follow up with?

Plan your questions, like an interview, for the first meeting. Your strategy might include discussing the client’s goals and any potential obstacles standing in their way. By getting an client to talk about potential obstacles, you help them to share their problems. The greater the problem they raise, the more important it becomes to them to get it solved. Your goal is to help the client raise significant problems you can solve.

But your key in the first meeting is to get the client to share their problems – not to solve their problems. Instead, your first meeting should simply raise their awareness of their problems. You’ll use this momentum to plan the second meeting – to discuss how to solve their problems together.

Although you could have given solutions right away, you would be destroying any future opportunities to build more rapport and trust. Get the client to show you where their pain is, remember people love to talk about themselves and their problems, one you find some hot buttons do not offer solutions but plant the seed for the second meeting.  

Holding multiple meetings serves an important purpose because the relationship development process occurs more naturally. Actually, by slowing down the “getting to know you” process, you speed up rapport and trust building. When you have rapport and trust, your odds increase of forming a loyal client.

 

 

Canada Day in Langley 2008

Canada Day has always been a great celebration, not the loud
brashness that you come to expect from the fourth of July, but a collection of
things that make this country so great. I started the day at the Langley Canada
Day Festival at McLeod Athletic Park. Langley Canada Day Celebrations has

grown to be the biggest two day event in the Langley’s and one of largest

Canada Day celebrations in the province.
http://www.langleycanadaday.ca/

It was hard to believe how much there was to offer, petting zoo’s,
continuous stage show, children’s rides/games, aircraft static displays,
Crafter’s Alley, Vendors, marketplace, special community exhibits by gymnasts,
firefighters, merchants and special community groups as well as live
musical entertainment from local talents.

RE/MAX
was out in full force as well, they sponsored the first aid
tent of course, they had a RE/MAX
balloon out
as well!!

One of
the more interesting things was a V8 Powered Custom
motorcycle from Azzkikr Customs http://azzkikr.ca/azzkikr/
can you imagine, how about towing your boat behind this one!!

But my personal favorite was the Dam’s Lincon Mercury

http://dams.dealerconnection.com/?lang=en

Monster Truck!!

This was a very popular ride! I wish I had waited in the enormous
line to get my chance, but alas it was too hot to stay put that long!

After the Canada day address I went to one of my favorite Pubs The Dubblin

Crossing in Langley/Surrey http://www.dublincrossing.com/home.html if you have never been GO!

It is quite the treat, they have my favorite Harp on tap, very hard to find anywhere

What good would living on the wet coast bring if we did not get to the beach??

I went chill’in http://www.tasteofwhiterock.com/articles/chill042007.html on White Rock Beach to soak up some of

the festivities on the beachfront and pier.

Just like the Langley festivities live music was a huge draw for the
White Rock crowd.

I was able to catch a set of the Sumner Brothers, one of my favorite local acts with special guest Jim Black on the Guitar,

at Chill’in I ran into some friends who work at Mercedes Benz of Vancouver, if you are in the market for a new Mercedes,

I whole-heartily recommend you see Adrian http://www.mbvancouver.com/index.cfm?id=3314

Looking forward to another great year in this beautiful Country, thanks to
everyone for making it a wonderful celebration.

Should you refinance??

There is really only one person who can decide whether or not you should refinance your mortgage. And that person is you. Many homeowners have benefited financially from a mortgage refinance, but whether or not it’s the right thing to do depends on your own financial circumstances.

With that disclaimer out of the way, let’s discuss some financial scenarios when mortgage refinancing makes sense.

Mortgage Refinance – Quick Definition

Before we talk about scenarios when it makes sense to refinance, let’s briefly define what exactly a mortgage refinance is. Basically, refinancing takes place with you pay off your current mortgage with a new one.

At first this might seem pointless. After all, a mortgage is a mortgage, right? Wrong. The whole point of refinancing a mortgage is to take advantage of a better interest rate.

For example, if you have improved your credit score since your first mortgage loan, you would likely qualify for a better interest rate on a new mortgage loan. In such cases, you can pay off your old mortgage with a new one, and enjoy a lower interest rate on the new loan. This of course means you will pay a smaller mortgage each month. That’s the primary goal of mortgage refinancing.

When to Refinance

Now that we understand what it means to refinance a mortgage, let’s talk about scenarios when it makes sense to do so. As a general rule of thumb, it’s probably a good time to refinance if the interest rate is two percentage points below your current rate. In such cases, the money you would save each month would certainly make up for the upfront costs of refinancing your mortgage (origination fees, etc.).

Another scenario might occur if your income has increased. If you are making more money than when you first took out your mortgage (and you can afford a higher mortgage payment), you could refinance the mortgage to shorten the term of your mortgage. If the current interest rate is lower for the shorter-term mortgage, it would make sense to refinance the mortgage. Oppositely, you might wish to make larger principal payments against your mortgage to pay it off sooner. These are all possibilities with a mortgage refinance.

Using a Refinance Calculator

In every case of mortgage refinance, there is a certain “break even” point. This is the point, beyond which, it makes sense to refinance your mortgage. In other words, the money you save will exceed the money you pay to take on a new loan. To calculate whether you would benefit from a refinance visit CNNMoney.com

Refinance calculators can help you determine this break-even point by comparing your monthly savings (after refinancing) to the amount you would pay if you did not refinance. If you would like advice on whether or not it is the right time for you to refinance, contact me.