Search Results for: karen davis real estate toronto
Except for some first-time buyers, levy is now a fact of life
By Kathy Flaxman – Globe and Mail
Like many people who were house-hunting as 2008 approached, Sherille Layton and her husband, Edward, wanted to stay ahead of Toronto’s new land-transfer tax. They wound up signing an agreement to buy a North Toronto home, closed the deal, and even moved in — all before Christmas.
Ms. Layton was well aware that had they waited until January to buy the house on Erskine Avenue, and pushed the closing date to Feb. 1 or after, they would have had to pay the new tax on top of a selling price of more than $800,000, and the provincial land-transfer tax.
She figures they saved a cool $13,000 thanks to the good timing.
“That’s an awful lot of extra money,” she says.
Now that the tax is a reality — it came into effect on Feb. 1 — home buyers other than some first-time purchasers won’t be able to avoid it as the Laytons did.
But there are some things buyers should keep in mind when they are figuring out their overall financing arrangements.
The new tax, which was passed by council in October, generated a lot of opposition when Mayor David Miller introduced it last summer. He argued that the additional revenue was badly needed by the cash-strapped city to maintain services and fund new projects.
But some groups — including the Toronto real estate industry — condemned the tax.
Ms. Layton calls the new measure, “a crazy tax that doesn’t make any sense.
“Buyers have spent ages saving and have set aside their closing costs and worked-out budgets. This tax throws quite a spanner in the works,” she says. For some potential owners, “the extra $4,000 or $5,000″ in tax may be just what puts owning a home out of reach, Ms. Layton adds.
“The market has been very busy so far this winter,” she says. “In February, we will start to see what the effect [of the new tax] will be.”
Under the new bylaw, buyers will pay 0.5% on the first $55,000 of their home’s value, 1% between $55,000 and $400,000, and 2% on any amount over $400,000.
There is one group that can avoid the tax, or at least a part of it: first-time buyers. They are eligible for rebates of up to $3,725 on residences costing up to $400,000. The provision covers homes with one but no more than two self-contained units under one ownership — a detached house, semi-detached single-family residence, townhouse, row house, duplex or condominium. That includes a home with a second suite, for instance, but not a triplex.
For a buyer whose budget leaves no room to manoeuvre, some lending institutions will, for a limited time, cover it — in the form of a loan — if the purchaser negotiates a mortgage with them.
TD Canada Trust, for instance, will cover the tax to a maximum of $15,000 if a customer agrees to a five– or seven-year fixed mortgage. The offer, which is good until March 21, is meant to help consumers “make the purchase they had hoped to and not miss this home-buying opportunity,” says Joan Dal Bianco, vice-president for real estate-secured products for TD Financial Group.
“We decided not to make it specifically tied to the amount of the tax, but to give 1.5% in cash back to help the consumer meet the land-transfer tax increase [on top of the existing Ontario land-transfer tax],” Ms. Dal Bianco explains. “If they happen to have found the funds elsewhere, they can use the [new] funds for some other purpose.”
The Bank of Montreal will cover the tax for up to 1.5% of the mortgage amount for regular customers who take out a new fixed-rate, closed mortgage with a minimum five-year term.
“The funds go to the lawyer and they can close their transaction,” BMO mortgage expert John Turner says. “If they submit an offer to us before Feb. 29, because of our rate guaranty program, the property does not have to close until 90 days after Feb. 29.”
But some tax experts urge consumers to make sure they understand the nature of these offers.
Broker Paula Roberts of Mortgage Intelligence sees merit in them, with a proviso. “This type of product does help, and a number of financial institutions are offering them, but the cost of borrowing the money will be built into the rate charged for the loan. In one case, the rate charged is about 40 basis points higher.
“There are a lot of ways that people in the business are suggesting to get buyers into the market and this type of financing is one,” she adds. “As a broker, I can offer products from a number of financial institutions and I educate the client, too. Hopefully, consumers will sit down with someone who knows something about mortgages and have all their options explained.”
Giles Osborne, Toronto-based manager of Parker Prins Seel Lebano, Chartered Accountants, stresses that “this type of product is not something that is black or white, ‘Yes, it’s good, or no, it’s bad.’ If people need the funds, then the funds are available. But what I think is important is that people understand the interest rate they are actually paying on the extra money on top of their mortgage.”
He also points out that the smaller the loan, the higher the interest rate.
“The customer is actually getting an unsecured loan and the rates reflect the amount of the loan and the fact that that this is not like a mortgage secured by the house itself,” he says.
“Whether someone should take advantage of products like these really depends on what other sources of funds they have available,” Mr. Osborne advises. “I understand the motivation of the client. On an expensive house, it’s a lot of cash to come up with. I would recommend that purchasers, if they are creditworthy, who are negotiating their mortgage, even in this instance, try to negotiate the interest rate. Try to reduce the extra basis points downward.”
How will the new tax impact the Toronto real estate market? Some of those in the business say that sales could be affected for a while, but, like the federal goods and services tax, this tax will eventually be considered a normal thing.
“I’m sure that in a matter of months it will become a sad fact of life and will be absorbed by the equity in the transaction,” says Karen Davis of Sutton Group-Bayview Realty Inc.
Dorothy Wong of ReMax Goldenway Realty Inc. doesn’t mince words: “The Toronto real estate market is so hot and so rich right now that those who wish to live in Toronto will pay the tax. Just like smokers who cry about cigarette prices, they will pay to continue their habit regardless of all the tobacco tax increases and price increases,” she says.
By Kathy Flaxman – Globe and Mail
On Sumach Street in the picturesque Cabbagetown enclave of Don Vale, the home of Rollo Myers and Linda Schultz is a feast for the eyes, with its lavish gingerbread trim and carefully preserved brickwork.
The house is among Toronto’s enviable stock of heritage properties, some of them officially designated as such and others simply listed as architecturally or historically significant. It is estimated that there are more than 8,000 structures in the two categories, including private homes, commercial buildings and landmarks such as Old City Hall.
Searching out these properties and going through the heritage-designation process is highly rewarding for some. Mr. Myers, for instance, has done it several times, and his experiences eventually prompted him to take a permanent job in the building preservation field. But for anyone who gains heritage status for their home, there are serious restrictions on what you can do to them. And a designation or listing may reduce the pool of potential buyers when it comes time to sell.
If a property is designated, it has a legal status that is part of the title. Simply listing a house does not carry quite the same legal implications. In both cases, however, should the owner wish to make alterations, the building permit application will be flagged and then reviewed by the city’s preservation staff. Renovations or changes must be appropriate to a property’s character, and demolitions are almost never allowed.
Catherine Nasmith, president of the Architectural Conservancy of Ontario, is a lawyer who specializes in heritage properties. She takes on a number of unpaid and time-consuming roles to ensure that the city’s heritage buildings do not wind up as a pile of rubble in a landfill.
“A city can’t be treated as disposable,” Ms. Nasmith stresses. “There seems to be a notion that we have the right to demolish. But buildings should not be treated as garbage. People should keep in mind that a 20-foot [wide] building two or three stories high in a landfill is the equivalent of three million pop cans!”
The process of getting a house designated is initiated by the owner, or perhaps a member of the historical society or the city’s preservation staff. Grant money is often available for renovations once a home is given that status, a strong motivating factor for many owners to start the designation process. Although there is no money in Toronto’s coffers for these grants at the moment, new money will be available in 2008. (Houses that are only listed as architecturally significant are not eligible for grants.)
Mr. Myers’s experiences as an owner of historically important properties seem to indicate the process can be addictive. When he bought a house on Amelia Street in the 1960s, had it designated as a heritage property and then renovated it, he became fascinated with its architecture and design details. Other homes followed, culminating in he and his wife’s current showpiece.
His interest led him to take a job with the Architectural Conservancy of Ontario, where he is currently manager of its central office.
“I didn’t purposely set out to restore heritage homes,” he says. “I just had an amazing old house to work on. I then bought another home â€” a bigger, massive project. I saw what others were doing and I got advice on historical buildings.
“Old buildings can look dirty and unappealing, but once you begin to take away the grime and restore some of the beautiful features, the value of the work becomes clear. I did a lot of the work on my properties myself and I didn’t restore things to museum-like state, but I enjoyed delighting myself and my neighbours. I just wanted to do a nice job.”
While many agree that a heritage designation or listing make a property more valuable, some say these homes may be harder to sell.
“Being historically designated adds value to a property,” Marlene Auspitz of Royal LePage Real Estate Services Ltd. says.
“People, at least in downtown Toronto where my partner Shantoo Patel and I work, are proud of a heritage designation,” Ms. Auspitz says. “It contributes to the betterment of a neighbourhood as well, especially if there are a number of surrounding houses with a historical label. More care is taken in restorations, and owners do not fear that someone will renovate or build a monstrosity.”
Ms. Nasmith concurs: “Heritage designation increases property values, stabilizes communities and ensures people make only positive changes.”
Not everyone totally agrees. Karen Davis, an agent with Sutton Group-Bayview Realty Inc., says: “Historical designation can detract from the value of a property as there are usually many restrictions on what you can do to renovate the property. You must be willing to get preapproval from the governing body for your home-improvement plans. Usually the best buyer for these homes is someone who wants to keep the original character intact. It does limit the number of appropriate buyers.”
But for people such as Mr. Myers, protecting heritage properties is a labour of love, and in his case, a calling. These days, he is not only championing Cabbagetown homes, but Old Fort York and Toronto’s Old Town (home of the first parliament buildings), to name just two of his causes.
And he’s passed this love on to his daughter, Amelia, who with her husband, Matt Cheval, is renovating an 1894 cottage blocks away from the Cathedral Church of St. James on Morse Street.
“This property was once a boys’ shelter,” Mr. Cheval notes. “Because I have a design/build business, we can take on a project like this.
“Both Amelia and I grew up in places that were old, needed fixing up and had a character you won’t find in any suburban new home.”Mr. Patel adds: “It is my feeling that heritage– or historical-designated properties act like a lamp post shedding light to many, and reminding us of what the pioneers and the people who came after the pioneers had gone through, whether hardships or opulence. These designations create a good base of appreciation and pride.”
The internet is an excellent place to investigate what’s involved in buying, owning or ogling a heritage property. Some good websites include:
www.toronto.ca/heritage-preservation (city of Toronto heritage preservation services)
www.culture.gov.on.ca/ (Ontario Ministry of Culture)
www.cabbagetownpa.ca (Cabbagetown Preservation Association)
www.arconserv.ca/preservation_works (The Architectural Conservancy of Ontario)
www.builtheritagenews.ca (Built Heritage News, published by Catherine Nasmith Architect)