Toronto Condo and Real Estate Blog

A reduction in the GST from 6 per cent to 5 per cent was announced by the federal government on October 30, 2007. With regard to the purchase price of residential properties, GST only applies to sales of newly constructed and substantially renovated homes. GST is not applied to the purchase price of resale homes. The reduced rate will become effective on January 1, 2008; however, the reduced rate will apply to the purchase price of new homes immediately, subject to transitional rules detailed below.

(Note: This summary has been reviewed by the Canadian Real Estate Association for accuracy).

Purchase Price of New Homes

Ownership or Possession Transferred before January 1, 2008:
Generally, the 6 per cent rate will apply if ownership of the property, or possession of it under the agreement of purchase and sale, is transferred to the buyer before January 1, 2008.

Ownership and Possession Transferred on or after January 1, 2008:
The 5 per cent rate will apply if both ownership of the property and possession of it under the agreement are transferred to the buyer on or after January 1, 2008. Note the special transitional rule for new residential housing below.

Sales of New Housing under Written Agreements Entered Into on or before October 30, 2007 Where Both Ownership and Possession Transferred on or after January 1, 2008. The Following Rules Apply:
Agreements of Purchase and Sale entered into on or before October 30, 2007 but after May 2, 2006, the 6 per cent rate will apply. Agreements of Purchase and Sale entered into on or before May 2, 2006, the 7 per cent rate will apply.

In both of these circumstances, the purchaser will be entitled to file a claim directly with the Canada Revenue Agency to be paid a Transitional Rebate that reflects the GST rate reduction to 5 per cent, net of any corresponding rebate adjustment.

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Contact the Jeffrey Team for more information - 416-388-1960

By James Bradshaw - Globe and Mail

Toronto real estate sales continued their record-breaking pace in November, according to figures released yesterday, but opinions differ as to whether the growth was bolstered by a rush to close sales before Toronto’s new land-transfer tax takes effect.

The average sale price of a Toronto home last month was nearly $420,000. The purchaser of such a property on a deal closing after Feb. 1, 2008, would owe $4,125 in municipal property transfer tax on top of the $4,875 currently due to the province. (A first-time buyer would pay only $400 on the municipal portion as they are exempt from the first $400,000 of the purchase price.)

Von Palmer, government and media-relations officer for the Toronto Real Estate Board, said his organization believes the looming tax has played a role in November’s strong sales, although the effect is difficult to measure.

“Obviously it’s speculation at this point,” he said. “It’s anecdotal evidence, but a lot of clients are asking questions - they’re interested in the deadlines.”

The 16% increase in Toronto real estate sales over November, 2006, is not exceptional in a banner year where eight of eleven months have seen record-breaking sales. Mr. Palmer says the real indicator is November’s 23% growth in the 416 area code, where the tax applies, compared with only 11% in the 905 region.

“You’re seeing a rush in the 416 ahead of the tax coming into effect,” he said. “Can we peg that to the fact that there’s a land-transfer tax? Very difficult to say.”

Shelley Carroll, Toronto budget chief, was skeptical about whether the looming tax has had a significant effect.

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With weeks remaining, 2007 has already become the best year on record for real estate sales in Toronto and in Winnipeg.

“So far this year, 84,994 properties have changed hands, as compared with 84,145 sales in 2005, our previous best year,” says the President of the Toronto Real Estate Board, Maureen O’Neill. With 3,544 transactions reported by the Toronto Real Estate Board to mid-month, November sales are also up 5%, compared with the same period last year.

The current average price is $393,084, a 9% increase over the first half of November, 2006. The year-to-date average price stands at $374,678, up 6% over the $352,807 recorded during the first 11½ months of 2006.

The Winnipeg REALTORS® Association reports that MLS® sales surpassed the 2 billion dollar mark for the first time in the 104 year history of the Board. That mark was set on November 2nd.

“To indicate how active October 2007 was, the equivalent of 87% of the listings that were entered on the MLS® that month sold. 57% of the entire MLS® inventory turned over as well says the President of the Winnipeg REALTORS® Association, Wes Schollenberg.

“Houses in Winnipeg this year are selling on average for 4% above their list price. October’s $200 million plus sales activity made it the sixth month with more than $200 million in MLS® sales. Last year we only had two months like that, and there were none in 2005″ Schollenberg added.

Another important factor in Winnipeg’s record-setting year is the significant increase in condominium sales. In October, condo sales reported through the Winnipeg MLS®  were nearly double the number for the same month last year.

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Contact the Jeffrey Team for more information - 416-388-1960