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Ontario Expands Land Transfer Tax Refund Program
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| The McGuinty government is giving all first-time homebuyers a break on land transfer tax by proposing to expand the Land Transfer Tax Refund Program to include purchases of resale homes, Finance Minister Dwight Duncan announced today.
“Expanding this Land Transfer Tax refund is an important part of our government’s commitment to helping Ontarians buying their first home,” Duncan said.
Effective midnight tonight, first-time buyers of resale homes, as well as newly constructed homes, would be eligible for a refund from the provincial government of up to $2,000 of the Land Transfer Tax paid.
The expanded Land Transfer Tax Refund Program for First-time Homebuyers is part of a package of new tax initiatives announced in the 2007 Fall Economic Outlook and Fiscal Review that would provide $1.4 billion in provincial tax relief for business and people over three years. The government is making strategic investments in people, communities and infrastructure to strengthen Ontario’s economic advantage and help manufacturers and other sectors challenged by current economic conditions. |
Remax Housing Outlook 2007 For Kitchener/ Waterloo
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Although housing sales were off to a slow start earlier in the year, the Spring thaw brought a flurry of new activity to the Kitchener-Waterloo area. During the first five months of 2007, unit sales were eight per cent higher (2,216 units) than the same period one year ago. Average price rose in excess of four per cent to $243,481. The number of active listing are helping to maintain a balanced market. Days on market, however, have experienced a 10 per cent decline to 37. First-time buyers are active, with most looking for detached or freehold townhomes in the $200,000 to $250,000 range. Trade-up buyers are also entering the market, cashing in on solid equity gains in recent years, and driving demand for properties priced from $350,000. The most active price range, from $200,000 to $225,000, represents 16 per cent of sales (350 units)—a 14 per cent increase from 2006. Popular areas at this price point include Kitchener West and Waterloo North. Another affordable option considered by a growing number of firsttime buyers is entry-level condominiums, priced from $130,000. Trendy loft conversions, such as the Arrow shirt factory in Kitchener and the Bauer industry building in Uptown Waterloo, are attracting younger purchasers. The upper-end of the market is thriving. Homes priced from $350,000 to $400,000 have experienced a 56 per cent increase in sales—120 units compared to 77 units during the same period last year. Homes priced from $400,000 to $500,000 have experienced a 40 per cent increase in sales—88 units compared to 63 units. After several consecutive years of strong upward momentum, Kitchener- Waterloo’s housing market shows no signs of slowing down; unit sales and average price are expected to climb five per cent by year-end.
Taken from Remax Housing Outlook Ontario for 2007
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Why Do Deals Fail On Financing?
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As an investor, you see a building listed at $500,000, you go offer $475,000
and think you have a good deal, you budget for 25% down and then the bank
calls, bursts your bubble and tells you need to come up with 34% down. WHY?
As multiplex properties have been appreciating at a rate almost twice the
maximum annual rent increase, the net income has been falling at roughly 2%
to 3% per annum for about 4 years and our rates of returns have been
dropping. As investors, we can decide what an acceptable rate of return is,
but that may be a little different to what the risk underwriters at the
banks consider a good rate of return.
As the last thing any of us want to do is, negotiate hard for a couple of
weeks, agree on a price for a property and then have to pull out of a deal
because the bank changes the ground rules on down payment, I have been
working with 2 of the 3 main lenders when it comes to multiplex's over 4
units and now have modified my methodology to do a "Bank" value test before
we make an offer.
Its simple, both TD and BOM are now placing value on Income to determine
lending requirements, cost per unit and comparables are secondary measures.
When using this valuation method, the price of the building you are looking to
buy is irrelevant. All we need to key in is the Gross Income, and the
mortgage rate and amortization, the vacancy factor and maintenance is
determined by the bank and the net income determines the amount the bank is
willing to lend
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