1. Distress Selling: At times, selling quickly is unavoidable. That’s when knowing the right techniques to sell your home without looking desperate and making yourself a target for low bidders really pays off. Know all there is to know about the market before listing and work hand in hand with the right real estate professional. Ensure that you are not settling for the first offer through the door.
2. Best Home in the Neighborhood: Your home is one of your most personal possessions. Don’t be blind to flaws and needed cosmetic improvements. This will cause overhauling of the home, hurting its chances to be sold. Getting in touch with the right real estate agent gives you a well informed third eye that will help you price your home at a fair market price.
3. Limited Home Viewing: Buyers want to view a home on their own time schedule. Unfortunately their time schedule does not always coincide with your time schedule. Leave a lockbox or key with your agent so your home can be shown when you are not around. You never know if the one who got away was your buyer.
4. Restrain Emotional Decisions: Don’t allow a few bucks to let the deal fall through. That money will mean very little to you in the long run. Take a look at the big picture and react rationally. Use sound business judgment! .
5. Make Cosmetic Improvements: Prospects make up their minds within the first twenty minutes. First impressions can make all the difference in selling your home. Spending smartly few Dollars on new carpet might add another twenty thousand dollars to the price of your home. Get an objective point of view from your real estate professional. They can provide you with a list of items that will maximize the profit of your home sale.
6. Disclose Property Flaws: Property disclosure laws require sellers to list any flaws required by your province. If you are unaware of flaws or attempt to cover them up, you risk losing the sale and finding yourself in court. Get professional assistance from your agent who can introduce you to qualified inspectors and ensure the smooth sale of your home.
7. For Sale by Owner: Most homeowners who decide to sell their own home do so because they believe they can save the commission paid to the real estate agent. Everything has a price and selling a home carries a high one. The enormous amount of time and effort required to sell a home often surprises the "For Sale by Owner." Furthermore, many costly mistakes can be avoided with the right guidance.
8. Refusing to Trust Your Agent: Would you tell a physician that you’ve decided to run your own tests and come to your own diagnosis? By choosing the right Realtor, you can relax and trust their judgment. The right agent is a valuable team member who will protect your best interests and make your sale as profitable as possible.
9. Know Your Market: Most homes that do not sell in their first period are priced too high. Conversely, most homes that sell quickly are priced too low and cheat the homeowner out of profits. You need to understand the market and evaluate the value of your home based on fact, not gut instinct or conventional wisdom. A professional agent knows the market, just as you know the market for your business.10. Choosing a Realtor Based on Personal Relationships: Home sellers often pick a friend or family member as their agent. Choose an agent with a strong track record and aggressive Marketing Plan. A top producer knows the market well and can generate many buyers. Selling your home is one of the most important decisions you’ll ever make! Base it on good, sound business sense and the rewards will add up.
Before you make one of your most important decisions regarding your home sale shouldn’t you become as informed as possible? By aligning yourself with a top agent you ensure that all the important issues and seemingly insignificant but....very important....details are handled professionally. Your home sale should not be a grueling ordeal. The more informed you are the better chance you have of making a sound business decision. Please contact me and you will have no surprise.!!!!
How to Avoid Costly Housing Mistakes in the Midst of a Divorce
Divorce is a tough situation which opens up many emotional and financial issues to be solved. One of the most important decisions is what to do about the house. In the midst of the heavy emotional and financial turmoil, what you need most is some non-emotional, straight-forward, specific answers. Once you know how a divorce affects your home, your mortgage and taxes, critical decisions are easier. Neutral, third party information can help you make logical, rather than emotional decisions. Probably the first decision is whether you want to continue to living in the house. Will the familiar surroundings bring you comfort and emotional security, or unpleasant memories? Do you want to minimize change by staying where you are, or sell your home and move to a new place that offers a new start?
Only you can answer these questions, but there will almost certainly be some financial repercussions to your decision process. What can you afford? Should you buy or Rent? Can you manage the old house on your new budget? Is refinancing possible? Or is it better to sell and buy? How much house can you buy on your new budget? The purpose of this report is to help you ask the right questions so you can make informed decisions that will be right for your situation.
You have 4 basic housing options when in the midst of a divorce:
It’s important for you to understand the financial implications of each of these scenarios.
1. Sell the House Now and Divide Up the Proceeds
Your primary consideration under these circumstances is to maximize your home’s selling price. I can help you avoid the common mistakes most homeowners make which compromise this outcome. As you work to get your financial affairs in order, make sure you understand what your net proceeds will be – i.e. after selling expenses, and after determining what your split of the proceeds will be. Note that the split may not be 50/50, but rather may depend on the divorce settlement, the source of the original down payment, and the legislative property laws in your area.
2. Buy Out Your Spouse
If you intend to keep the house yourself, you’ll have to determine how you’ll continue to meet your monthly financial obligations, if you now only have one salary. If you used two incomes to quality for the old loan, refinancing on your own might be a challenge.
3. Have Your Spouse Buy You Out
If you are the one who is leaving, you have the opportunity to start again in new surroundings with cash in your pocket. However, be aware that if the old home loan is not refinanced, most lenders will consider both you and your spouse as original co-signers to be liable for the mortgage. This liability may make qualifying for a new mortgage difficult for you if you decide to purchase a home, even though you won’t have legal ownership.
4. Retain Joint Ownership
Some divorcing couples postpone a financial decision with respect to the home and retain joint ownership for a period of time even though only one spouse lives there. While this temporary situation means you have no immediate worries in this regard, keep your eye on tax considerations which may change from the time of your divorce to the time of the ultimate sale.
When You Decide to Sell
If you and your spouse decide to sell your home, it will be important to work together through a professional to maximize your return. Differences aside, you both should be present when a listing contract is put together. Both of you should understand and sign this contract, and both should be active in the ultimate negotiations. I do have extensive experience in dealing with such unfortunate situations and will be happy to provide all possible assistance. Please contact me for more details.
When You Buy Your Next Home
Use the proceeds from your previous home or buy-out to determine an affordable price range for your next home. Maintain a clear focus on getting the right home to suit your new situation. You may wish to review with an agent who offers a house-hunting service to help find a home that matches your new home-buying criteria.
One of the most pressing concerns for Canadians today is tax. The Government is able to tax income, consumption and capital. With income taxes at onerous levels and consumption taxes like GST and PST extremely unpopular, taxes on capital are likely to be examined more closely. It is unlikely that the government has failed to notice that during the next two decades or so $1 trillion in assets will pass from the over 55 generation to their children. Given the record of past governments in these matters, there is little doubt that this intergenerational asset transfer will be subject to increased taxation in the future.
Capital gains taxes were introduced in 1972. The inclusion rate (the amount of the gain that is subject to income tax) was initially 50% then 66% in 1988, 75% in 1990 and back to 50% since 2000). It is reasonable to assume the rate might increase. During the same time period, the applicable exemptions on capital gains have also been changing. The $500,000 exemption introduced in 1985 was capped at $100,000 for individuals in 1988 restricted with regard to real estate investments in 1992 and then removed completely as far as individuals are concerned. It’s likely the government will consider further tinkering with the exemptions as well.
There is NO CAPITAL GAIN tax on disposition of a principal residence in Canada.
3. Factors based to determine the Capital Gain Tax:- Over the years, Capital Gain Tax has been determined based on a number of factors such as the intention of the taxpayer, relationship to the taxpayer's business, frequency of transactions, length of time held, nature of the transaction and objects of the corporation. Should a debate proceed to the Tax Court of Canada, the Court will consider relevant factors concerning taxpayer conduct before, during, and after the period under appeal. Certain factors carry more weight in the process.
4. Some possible exemption:- Profits would likely be taxed as regular business income if a taxpayer buys and sells real estate on a regular basis. However, if the taxpayer can prove that these dispositions were a planned and necessary part of a total investment program, then there may be a case for capital gains treatment of the profit. In the case of farmlands, if the taxpayer purchased or inherited the land and lived on it for a period of time, a disposition of the property will most likely be regarded as a capital gain. Up until 1982, a couple could own two properties, e.g. the home primarily lived in, and a recreational property for example, and each designate one of the properties as his or her principal residence, and therefore sell or transfer both properties tax-free. The federal government changed the tax laws as of 1982, so there can only be one principal residence for tax purposes.
However, let’s say that you do not have any children, or your children do not want to use your vacation property as they own their own second properties, or live too far away geographically. In this situation, passing the vacation property down through the generations is not an option. You wish to sell it for your retirement, lifestyle, or financial needs. Maybe due to health reasons, you do not use the property much anymore, or it is becoming too costly to maintain.
You could still have some tax saving options available. Depending on your circumstances you might be able to designate one of your two properties as your principal residence for tax purposes. In fact you may have several residences that you ordinarily inhabit and can designate any one as your principal residence for each of the years you own them, but just one principal residence per year.
For example, if you owned a Whistler, B.C., chalet that had appreciated $2 million over 15 years, that originally cost you $500,000, that would be a $1.5 million capital gain. If the residence you lived in primarily was located in Chilliwack, B.C., that cost you $100,000 five years ago, and is now worth $300,000, that would be a $200,000 capital gain. If you deemed or designated your Whistler property as your principal residence for tax purposes when it was sold in 2006, you would not have to pay capital gains tax.
What about your Chilliwack property in this scenario? When it was sold, you would calculate the portion of the time you held the property prior to the sale of the Whistler property, e.g. five years, and add one year. Then calculate the total number of years before you sold the Chilliwack property. For example, if you sold the Chilliwack property in 2016 and therefore had held it for 15 years in total, the portion of capital gains that you would need to declare would be 5 years + 1 = 6 over 15 years, or 6/15th of the capital gains on sale. If it sold for a $500,000 gain, you would need to declare a gain of approximately $200,000, and pay tax on 50% of that gain, e.g. $100,000. Depending on your personal taxable income and marginal tax rates in that taxation year, and based on tax advice, you might have to pay up to $50,000 for the property sale.
5. Who should report to Canada Revenue Agency:- The Income Tax Act does not specifically set out whether or not a gain or loss is capital in nature. The taxpayer is responsible for reporting the gain as income or capital gain. This report may then be challenged by the Canada Customs and Revenue Agency with the onus of proof on the taxpayer.
6. Relationship to the Taxpayer's Business:- The Tax Court will undoubtedly classify profits as taxable under ordinary business income when a taxpayer uses expertise acquired in regular business activity to generate a profit on the purchase/sale of similar or related commodities. The court also looks at the time and attention the taxpayer spent on the transaction. Real Estate transactions of contractors, renovators, brokers, (agents) salespeople, and appraisers have typically fallen under close scrutiny.
7. Frequency of Transactions:- Revenue Canada will assess how often the taxpayer engages in the sale of capital property. Usually, frequency of such occurrences suggests the carrying on of a business for profit. Assessment as ordinary business income will be the result. However, even an isolated transaction can be so judged, given the right set of circumstances.
8. Nature of Transaction and Assets:- Taxability as income may be indicated if the asset cannot normally be used either personally or for investments purposes. Mortgages are often judged under this test. If the mortgages are purchased at substantial discounts or have a short maturity date, the mortgagee may be viewed as being in a business that realizes profit from the transaction, thus invoking business income as opposed to capital gain.
Appropriate expert advice from a Chartered Accountant should be sought in regard to capital Gains issues and exemptions. Please contact me should you have a question in this regard.