Olivia Chow: Land transfer Tax Increase to Fund School Nutrition

With the mayoral race heating up in Toronto, and the candidates trying to convince voters that they are best for the job, Toronto mayoralty candidate Olivia Chow recently proclaimed that if elected, she will raise the city’s land transfer tax by one per cent to fund a school nutrition program. Types of Ownership

Now, before everyone in Toronto gasps, according to Ms. Chow, the proposed increase will only apply to transactions that exceed $2 million.  She added that Chow said the tax would apply to only a fraction of annual real-estate transactions in Toronto. Since September 2013, 473 homes and 56 condos sold for more than $2 million.  According to Chow, her plan will make the system “more progressive.” She said people paying more than $2 million for a home can afford an increase in the land transfer tax. Chow says the increase will raise about $20 million a year.

For those that aren’t familiar, click here for more information about Land Transfer Tax.  A quick refresher, Toronto’s Municipal Land Transfer Tax (MLTT) is paid by a purchaser of a home or business in the city. Toronto is the only municipality in Canada with a MLTT and it’s paid in addition to the provincial land transfer tax, which is slightly higher.

As it stands today, the purchaser of a house with a $2,000,000 sale price would pay $72,200 in land transfer taxes, specifically, $35,725.00 for the Toronto Land Transfer Tax and $36,475.00 for the Ontario Land Transfer Tax.  

EDIT:  Her plan is actually for a 1 percentage point hike, not just a 1 per cent hike — which is a substantial difference.

People buying a $2,000,000 home would pay 56 per cent more than they do now, $55,725 instead of $35,725. Which would bring the total Land Transfer Tax to $92,740.00 compared to the $72,200 they would currently be paying. 

My prediction is that if this (or something like it) were to pass, it would hurt the just over $2,000,000.00 (namely the $2-2.2 million) real estate market, as people in that market would likely try to only spend $1,999,999.00 to avoid the extra $20,000.00 in closing costs.  Or it would drive people out of the city into often larger, more luxurious homes for the same 2 million dollar plus price tag, but likely with more land and/or home. 

The Oct. 27 election is now less than two months away.  Some of you may recall my previous blog post regarding the possibility of eliminating or reducing the MLTT (click here). 

One thing is certain, this remains a hot button election issue.  Do you think Toronto should increase or decrease the municipal land transfer tax? Or, should they keep it the way it is?

Whatever your opinion on the issue, for those that live in Toronto, let your voice be heard, and vote on October 27th.

Toronto Real Estate – House v. Condominium Which has been the Better Investment?

A recent article by Tasmin McMahon in Mcleans Magazine looked into whether historically  houses or condominiums were a better investment by neighborhood.

The article compares the prices across different Toronto neighborhoods since 1996 (accounting for inflation). under construction

So what was happening in the various neighborhoods.  While it is obvious that the supply of houses (particularly detached) in Toronto is finite, and condominiums continue to be built, some neighborhoods have been better to the condominium owner than the house owners. 

Click here for the full article and comparison.  In addition to some great interactive maps which show how the prices have changed in various Toronto neighborhoods particularly comparing the housing and condominium markets.

“It would be easy to expect that a rising tide lifts all boats: when buyers flock to neighbourhoods for the amenities and the transit, prices of all types of housing should rise at roughly the same rate, even if condos cost much less than detached homes.

Clearly that isn’t the case in most parts of the city. “

It was surprising to see, and certainly something worth considering if you are planning on investing in the future.  Overall, houses have increased more than condominiums, however, it  the article shows, it depends where.

However, it goes without saying that  investments are never guaranteed, and past performance never guarantees future performance.

Toronto Real Estate – Resale Homes Jump another 10% in July

Toronto Real Estate – Average Price of Detached Home climbs to $880,433

Despite many market analysts saying that the sky is falling in Toronto’s real estate market – it showed no sign of slowing down in July.  As noted in the recent CBC article by Susan Pigg:

” Toronto’s hot real estate market showed no signs of slowing down in July, as the number of home resales surged 10 per cent from the same month a year earlier.”

According to the Toronto Real Estate Board  9,198 homes were bought and sold in the GTA in July, making it the second best July sales result on record.  

“Sales were up strongly for most major home types and market conditions actually tightened, with sales growth outpacing listings growth. The result was average price growth well above the rate of inflation,” said board president Paul Etherington

Toronto Real Estate Prices - Climbing

The average sales price was up 7.5 per cent to $550,700, with the biggest increase occurring in the average selling price of.detached houses.

  • Detached homes have  increased 11% year-over-year to an average of $880,433.  
  • Condominium prices in Toronto increased 4.7 %to $379,000. 

The MLS home price index, which measures the rate at which housing prices change over time by tracking price changes in “typical” homes, showed similar strength. In the Greater Toronto Area, the composite resale home changed hands for $513,400, up 7.9 per cent from a year earlier.   

What do you think — Is this a housing bubble about to pop, or just a new reality?  There are no easy answers, and certainly there are people who vehemently believe both sides of the coin. 

Challenges of Selling a Stigmatized Property – Buyer Beware Calgary murder home’s MLS listing

What is a stigmatized property?

A stigmatized property is a place that buyers or tenants may shun for example because it was the location of a crime, or a property which may be haunted.

Currently, only Quebec is the only place in Canada where disclosure laws oblige a seller to reveal a past murder.  In the United States most states require sellers to disclose a suicide or murder that occurred on the property within the past three years. stigmatized property

Selling a Stigmatized Property.

Recently, a home was put on the market in Calgary.  This wouldn’t be much of a story, except, this home happens to be the site of a stabbing spree in April 15th where five students died.  The listing itself makes no mention of the murder.

The MLS listing states the following:

“The location of this property could not be better and it awaits your personal touch to turn it into something GREAT!” 

“With ample space inside, while located on a MASSIVE lot in a great community, this property has tons of potential for the right person/investor.

“It has a few updates, but needs some work to turn it into the gem it can be.

“It possesses the AMAZING basics you cannot add on later: location, great structure, huge corner lot and big beautiful trees. Complete with 4 bedrooms, this property has all the right bones for you and your family.”

The memorials for the five murdered students are still on the property. In case you are interested, the house which is located in the Brentwood area of Calgary was listed for $489,000.00.

However, this stigma can affect property values?  I would say yes, however, if you didn’t know about it, and paid full “value”, you could be in for a shock when you try to sell down the road.

The onus is on purchasers to ask the right question.  Caveat Emptor or buyer beware applies.  While the sellers have no obligation to volunteer the information, they are not permitted to lie when asked a direct question.  Asking the right questions becomes very important.  Keep in mind, that the agent themselves may not know that the property may be stigmatized.

Neighbours on the other hand can be a great tool when trying to find out information about a property.

Do you think that sellers should have to disclose if a murder or suicide occurred on the property or whether the property is haunted?

Toronto Real Estate – As Affordable As A French Castle

Yes you read the title correctly.  

No, you don’t need to readjust your monitors.  The title is indeed correct.  

castleI recently came across an article from ivillage by Emma Leith.  The title of the Article Says it all “Realty Check:  A House in Toronto is Now as Affordable as a French Castle.”  I highly recommend that you take a look.  It shows how far approximately £740,561 (approximately 1.3 Million Canadian Dollars) will  get you as compared to the recent fixer upper in Lawrence Park.  Particularly after this home in Lawrence Park stirred controversy after receiving 72 offers and selling for 195% of the asking price.  Yes, that happened.  

Now, I am assuming that you have looked at the the 9 castles that you could purchase for approximately 1.3 Million Canadian dollars (or less).

In an attempt to make you (or myself)  feel better, I should say that as noted in the article, these castles likely need work (but the home on Lawrence Park was a fixer upper as well).  

While these castles are in the countryside and not in Paris, some of them are breathtaking.  I am partial to the B&B. Who am I kidding, I would gladly take any of them as long as they have electricity. 

So for those that are trying to jump into Toronto Real Estate, but have had always had dreams of living in a castle, now your drams could come true –  same price.  

Which castle would you choose?

 

 

 

Toronto Real Estate: April Saw Prices Continue to Increase

Average Price of Single Home in Toronto increases by 13%

Supply and Demand.  In a capitalist society, in theory, this is what dictates prices.  It makes sense, less supply, higher prices; too much supply decreases prices.Toronto Real Estate

This concept, a shortage of listings, is what is being blamed for the steady rise of Toronto real estate prices.   In fact, in April active listings were down 8.4%. 

Here are the April numbers according to TREB:

  • The average sale price of a detached home in the City of Toronto was$965,670.
  • The average sale price of a semi is $702,332
  • In the 905 –the average sale price was $645,179

You will recall my recent blog post  that in the first half of April, according to TREB the average price of a single family detached home in Toronto was $1,012,172.00.

What or who is to blame for the shortage of supply. 

Some people blame the double Land Transfer Tax.  Others blame the fact that while the price of your current home has appreciated, so has the competition, so there is nowhere to move.  The third theory is that frenzied purchasers are desperate to buy a home before they are “priced out” of the market.  Likely, it’s a mix of all three.  What is certain, is that real estate prices in Toronto continue to rise, and this summer will likely see a continued increase in prices.

Toronto is catching up to Vancouver, which has the highest real estate values in the Country.    

Condominium: Owners Allege Didn’t Get What Promised

New Condominium:  When you don’t get what you were promised

Or Led to Believe

Wendy Ji, purchased a condominium unit Emerald City Condominiums at Don Mills Road and Sheppard Avenue in 2010 for $460,000.00.  One of the reasons she bought from this development was the advertised “easy underground access” to the Sheppard subway line and the proximity to Fairview Mall.  This was advertized in the sales brochures.  Ms. Ji believed that she would be able to access the subway through the condominium itself, without having to go outside.  A promotional video for the project showed a subway train pulling into a station with stairs marked Emerald City. 

In February, when the purchased closed, and she went into her new condominium, she discovered that there was no tunnel to the subway, as she alleges she was lead to believe. Condominium

Ms. Ji along with some 60 other residents have commenced a class action lawsuit against the development seeking a 10-15% rebate, saying the lack of direct subway access has devalued their units. 

The only way she could get access to the Don Mills Subway station was by walking outside across Sheppard Avenue or through the TTC pathways that ended in outdoor mall parking lots. 

As almost all contracts for new constuction, the agreement of purchase and sale contained the usual clauses stating that the builder chan change the plans and specifications of the building at its sole discretion or as required by the government, as long as it is not a materal change. This would include anythign that is promised in the sales brochure.

As noted in a Toronto Star Article by Susan Pigg, the lawyer for condo developer Elad disputes the claim saying, “there was never any representation that there would be underground access” from the condo building to the subway or directly to Fairview Mall: Both are easy to reach by walking out the lobby doors and six metres to the subway entrance right out front.

“The station isn’t far. It’s not going to kill me to walk there. But it’s the failure of the promise and the fact we paid a premium for that building because it was supposed to have underground access… Most people would just accept it and keep complaining, but this just pushed my buttons and, I thought, we have to speak up for ourselves.” said Ji in an interview with the Star.

Who Owns the Tree Growing on a Boundary?

One Tree – Two Neighbors – Big Problems!

We have all heard the old addage good fences make good neighbours.  But what about trees? Trees can sometimes make good fences, but they don’t always make for happy neighbours.

Katherine Hartley is neighbours with Hilary Cunningham and Stephen Scharper (the “Scharpers”).

Katherine Hartley wanted to cut down a mature Norway maple whose trunk grew at the boundary with her neighbours.  The Scharpers were opposed to the destruction of the tree.  Ms Hartley sought and received a permit from the city of Toronto and notified her next-door neighbour that she planned to cut down the maple.boundary tree

Ms. Hartley argues the tree is entirely on her property, is unhealthy and a safety risk.  The Scharpers maintain the tree is perfectly healthy, safe and cannot be easily replaced.

This tree has lead to a drawn out legal battle between these neighbours regarding the fate of this Norway Maple tree.

At issue in this matter is the right of the Scharpers to assert an ownership right to a Norway Maple Tree that the respondents assert straddles the property line between the applicant’s and the respondents’ back yards. More specifically, the issue is whether the Sharpers enjoy an ownership right to the tree at all and therefore whether they can be heard to object to Ms. Hartley’s intention to have the tree removed.

In May of 2013 Justice J. Patrick Moore, the presiding Judge at the Superior Court of Justice who heard this dispute decided that a “boundary tree” (a tree whose trunk straddles a property line) is jointly owned by both property owners.  Therefore, it would require the consent of both neighbours in order to cut it down.  What was most interesting is that Justice Moore found that the tree was a “boundary” tree because part of the trunk rose over the property boundary, whether or not the trunk was on both properties at ground level.

This decision was upheld by the Ontario Court of Appeal in December of 2013.

This can prove to be problematic.  It is easy to foresee how the canopy of a mature tree may extend into a neighbour’s property.  Or, how the root system may begin to creep into the neighbour’s lawn.  However, if the simple act of a tree ageing will lead to co-ownership, it is also easy to foresee disputes about how to deal with that same tree.

 

 

Latent Defects – What About a Haunted Building?

Is a Haunted Property a Latent Defect? 

The Facts of the Case

In September of 2010 the plaintiff purchased a commercial property in Kitchener from the defendant.  On December 28, 2010 an article appeared in the local Kitchener newspaper. Mr. Kramer, a director of the defendant, was quoted as saying the following about the subject property, to the newspaper reporter:

and it’s haunted”, “I have heard this from a couple of people – up on the third floor, there is an office up there and they said some days you see somebody moving around inside of there and there is nobody there” & “we used to make jokes that Jimmy Hoffa was in the basement … It’s a labyrinth in there”.

It should be noted that there is almost no case law on the stigmatization of property in Canada and whether or not a vendor is obligated to disclose it.

The plaintiff put forward no evidence that anyone had died in the building whether from natural causes or some criminal act.  Further, the plaintiff’s testimpny was that he has never seen a ghost, did not believe there was a ghost and that all conversations about the property being haunted were a joke and were not serious.

Haunted BuildingJustice Sloan questioned how the plaintiff would provide evidence as to the existence of a ghost.

The Court looked at two previous.  The first was a 2006 Small Claims Court case from the province of Québec, Knight v Dionne where the Court decided that where the son of the vendor had taken his own life 10 years earlier in a personal residence, that fact did not have to be disclosed to the purchaser.

The second decision was Guglielmi v Russo, which was an appeal from the Small Claims Court in 2010.   Justice Swinton quotes

“… A latent defect of quality going to fitness for habitation and which is either unknown to the vendor or such as does not to make him chargeable with concealment or reckless disregard of its truth or falsity will not support any claim of redress by the purchaser.” 

Justice Swinton goes on to state:  

“In any event the vendor is not liable for damages for a latent defect of which he has knowledge unless it renders the premises unfit for habitation or dangerous.”

 The Decision:

In 2013, after hearing this evidence, Justice Sloan dismissed the case that this “haunted” commercial property had a latent defect. 

The plaintiff was not satisfied with this decision, and appealed Justice Sloan’s decision to the Court of Appeal.  Not surprisingly, the Court of Appeal dismissed the plaintiff’s appeal. 

For more information about patent and latent defects , and what must be disclosed to potential homebuyers, Click Here. 

Should Toronto Eliminate the Municipal Land Transfer Tax?

Toronto Real Estate – Land Transfer Tax

The City collects revenue from property taxation. Toronto real estate Transactions with closing dates after February 1, 2008 were charged a Municipal Land Transfer Tax (MLTT).

According to a recent article by Susan Pigg at the Toronto Star, a Report commissioned by the Ontario Real Estate Association claims that municipal home and sales levy has led to a 2.3 Billion dollar drop in economic activity and repealing it would create 12,000 new jobs in the next 5 years.  

“It’s bad for our economy and bad for homebuyers,” says Costa Poulopoulos, president of the Ontario Real Estate Association.  (Who, for full disclosure’s sake, commissioned the report.)

Toronto Real Estate land transfer tax

According to the Study,  Toronto has seen an estimated decline of more than 38,000 home transactions since the tax was imposed in 2008, making home ownership more expensive and Toronto the only city in Canada where homebuyers are double-taxed: they have to pay both a municipal and a provincial land transfer tax on the purchase of a home.

Furhter, the report states that the loss of sales has translated into a roughly $2.3-billion drop in economic activity in Toronto since 2008, and a $1.2-billion reduction in GDP. There would be nearly 15,000 more jobs in sectors from real estate to law to furniture and appliances stores without the Toronto-only land transfer tax.

The economic analysis was done by Altus Group Economic Consulting.  The study relied heavily on two previous studies: a 2012 C.D. Howe Institute report that estimated the impact of the tax on housing transactions, as well as a 2013 study for the Canadian Real Estate Association that examined the economic impact of a typical house transaction in Ontario.

Altus researchers then took those reports one step further, looking back and also ahead at the economic fallout of the tax.

The study went on to note that the economic damage is much bigger than the gain for the city, the average revenue the municipal land transfer tax generated each year since 2008 has been $270.2 million.

The annual take now is about $350 million a year, thanks largely to soaring house prices. That’s close to double the amount collected in 2008.

Toronto Mayor Rob Ford had long vowed to eliminate the municipal land transfer tax.  However, when faced with strong resistance to getting rid of the revenue stream for the city, he talked about reducing it by 5 or 10 per cent instead. He has yet to follow through with either eliminating or reducing the Toronto Land Transfer Tax.  A recent Toronto Star Article suggested that it should be made an election issue for the upcoming mayoral election.  

Land transfer taxes now add up to more than $14,000 in upfront costs on a $550,000 home purchase in Toronto — about $7,500 of that being the provincial tax and $6,700 the city tax.

“This research proves that the (municipal tax) is doing more harm than good where our economy is concerned,” said Poulopoulos. “It gets in the way of the economic spinoff that occurs when homes are purchased and sold.”
The real estate umbrella group commissioned the study, hoping to make repealing the tax both a municipal and a provincial election concern, and to get out front of the issue before any other Ontario municipalities, such as Missississauga, move to implement their own version of the tax.  The study is being released along with a new Ipsos Reid survey that found 85% of Toronto residents think the tax makes it harder to become homeowners, and 72% said the upfront costs would come at the expense of spending on other economic generators, such as renovations, furniture or new appliances for their new home.

Will Toronto Eliminate the Municipal Land Transfer Tax?

At the end of the day, whether it be repealed or decreased will likely be a decision of the new mayor of Toronto.  It will be interesting as the mayoral race progressing to see where they all stand on the issue.

Will it happen?  Who knows.  We were already promised by the current mayor that the tax would be eliminated.

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