April 2010 Newsletter
In this Issue:
Our Economy is Heating Up
Variable or Fixed – which way to go?
How will HST affect the Cost of Home Purchases?
How the New Mortgage Rules Could Affect Your Mortgage
Tax time once again
If you are thinking of selling your business
You can now visit us at any of these Social Media sites:
Ken Campbell is a Business and Real Estate Sales Representative with expertise in M&A ($1m+), Residential Listings, Multiplexes and Long-term Care Facilities, with an area focus on the GTA. You may access past issues right here.
Our Economy is Heating up
It is heating up pretty fast and the best or worse, depending on how you look at it, is that the infrastructure money that the Government offered almost a year ago is now going to hit the streets (so to speak) adding fuel to the fire. Watch rates carefully as the Bank of Canada is going to be hard pressed to wait until July to make a change (even though it is the Government’s own money that will be creating a good percentage of the heat).
Variable or Fixed – Which way to go?
Depending on how much longer your mortgage is for, (and your variable or fixed rate option) you have to figure out mathematically whether to stay variable or go fixed. My estimate is Bank of Canada will raise rates in ¼ point increments up to a full point between June and December. If there is a significant spread between your variable and fixed rate you will need to mathematically decide, based on the time left on your mortgage, if, or when, it makes sense to go fixed. But, even the analysts don’t know for sure.
How will HST affect the Cost of Home Purchases?
New homes: While the rate will go up to 13% from the current 5% the Ontario Government will rebate 75% of the PST portion, costing you an extra 2%. The GST is already included in the price of a new home so the extra 2% on a $300,000 new home will be $6,000.
Resale homes: The HST will not be applied to resales as the GST is not applied now. However, things like Legal Fees, Real Estate Commissions and Home Inspections which now have a 5% rate will increase to 13%. For a seller, the tax will increase on a $300,000 sale by about $1,300 (legals, real estate commission). For a buyer the extra cost will be about $100 legals and home inspection).
How the New Mortgage Rules Could Affect Your Mortgage
Ministry of Finance has introduced new mortgage lending rules to prevent the creation of a housing bubble similar to the one in the United States. Here are the new rules (which affect insured mortgages only, i.e. less than 20% down payment):
Effective April 9th: Self employed will require 10% to purchase a home (from 5% currently) and can refinance up to 85% of home value (from 90% currently).
Effective April 9th: Commissioned applicants will not be considered under the self employed program. They have to show their income.
Effective April 19th: Canadians will be able to refinance their homes up to 90% of the current market value (from 95% currently).
Effective April 19th: Investment (rental properties) will require 20% down payment. Cottages or second homes, as long as the owner can prove they plan to occupy the property temporarily will not require the 20% down payment.
Effective April 19th: For all variable mortgages, regardless of term, and for all fixed mortgages less than 5 year term will use the higher of the contract rate or posted rate to qualify.
Tax time once again
April 30th is the last day to file if you owe the Government money. If you don’t file by that date you will insure you receive a penalty of 5% on the outstanding balance plus interest of about 1% per month. However, if you have been late in the recent past, you could receive a penalty of up to 50% on the outstanding balance.
Sole Proprietors and their spouses (partners) tax payments are due by April 30th but the actual returns are only due on June 15th.
If you have any questions call Liberty Tax Service East Toronto, 416-406-9990 or email at gerry_campbell@msn.com. They will be pleased to answer your tax questions.
If you are thinking of selling your business
The process to sell a business is not a quick and easy matter. First, we have to normalize the financials to ensure that the expenses and net operating income (NOI) is arrived at without any personal expenses included. Then based on the NOI, the type of business and the five year average NOI, we can put a selling value on the business. In this market it takes about 8-10 months to sell a business. Therefore how your business is marketed for sale is a very important component in choosing an Agent to handle the transaction for you.
You can now visit us at any of these Social Media sites:
Facebook: http://www.facebook.com/#!/profile.php?v=info&id=692880483
LinkedIn: http://www.linkedin.com/profile?viewProfile=&key=13905914&locale=en_US&trk=tab_pro
Yelp:http://www.yelp.ca/user_details?userid=RyHLMXKApDMSWXgCmdI18w&fsid=QZF0O3M6ZxGZqA_9zquzYA
Active Rain: http://activerain.com/kencampbell56
____________________________________
Ken Campbell, Real Estate Sales Representative
Residential, Commercial, Investment
Royal LePage Homeward, Brokerage 1858 Queen St. E., Toronto, ON M4L 1H1
416-698-2090 F: 416-693-4284,
Direct phone: 416-553-6376, kencampbell56@gmail.com, http://www.kencampbellrealestate.com
