Spring will soon be sprung and for those looking to buy or sell a home, it may very well be the hottest time in the market to do so.
If you are like most people, chances are you are looking to achieve the highest offer in the shortest amount of time.
Selling your home isn’t always easy if you want to sell quickly for the highest price. It takes a bit of work but the payoff is usually always worth it.
Read on to find out what it takes to prepare for that all important move!
The Government of Canada and the Government of Ontario have signed a Comprehensive Integrated Tax Coordination Agreement for the implementation of HST in Ontario. The HST will come into effect in Ontario on July 1, 2010, at a rate of 13%, consisting of a 5% federal part (equivalent to the existing GST) and an 8% provincial part. While most GST registered entities can claim the GST/HST paid on services as an Input Tax Credit, no such relief exists when the client is an end consumer. Therefore, during the transitional period, it is important to be as accurate as possible when assessing which tax rate applies to services for the end consumer who is most sensitive to the incremental 8% cost.
The following are the key rules that will determine how the GST/HST will apply to commissions charged for real estate services.
CRA’s official response to us is as follows:
“Whether HST applies on an amount is a question of fact and determined on a case by case basis. REALTORS® often charge a service fee for arranging for the sale of a vendor’s property. A common question from REAL TORS® is how they determine the portion of their services performed on or after July 1, 2010. For example, a REALTOR® and a vendor enter into a listing agreement on May 1, 2010 (the listing date) and the property is conditionally sold on July 15, 2010 (i.e., a firm sale date) but the sale does not become final until August 15, 2010 (i.e., the closing date). The portion of a REALTOR®’s services performed on or after July 1, 2010 may not necessarily be determined by the firm sale date or the closing date. Realtors should determine the portion of their services performed on or after July 1, 2010 in a fair and reasonable manner.”
Another example:
The determination based on our checklist, and point 3 above, is that this deal was 95% complete prior to the July 1 deadline. The remaining 5% being left for closing day activities (from a Realtor®’s perspective, lawyers are a different matter)
This client would only be charged GST on the commission payable.
Another example:
According to our checklist, and point 4 above, 75% of the work was done before June 30, 25% after July 1.
Client would be charged GST on 75% of the commission payable, and HST on 25% of the commission payable.
Determination of percentage of work done will vary from brokerage to brokerage. The above examples are based on our in-house checklist.
Alexx
The perfect home to own in Oakville if you want to sell quick and get multiple offers looks like this.
The location of the house is on an over-sized property, preferably backing onto a greenbelt. If the house is older then 8 years it will be renovated, and if it is substantially older it will have had an extensive renovation (kitchen & bathrooms). The listing price will be very competitive usually at the price that the last comparable home sold at, or even slightly below. The home will likely be a detached house with three bedrooms or more.
Finally, it will be staged by a professional, who knows how to show off the home’s greatest selling features, and de-emphasize its detractors.
| Price Range | Listed | Sold | At or Above List | Current Inventory | Cancelled |
|---|---|---|---|---|---|
| Leases | 27 | 12 | 9 | 90 | 3 |
| $100K to $500K | 64 | 26 | 5 | 331 | 21 |
| $500K to $1M | 74 | 24 | 4 | 380 | 30 |
| $1M to $2M | 20 | 3 | 1 | 150 | 6 |
| $2M plus | 3 | 0 | 0 | 96 | 0 |
There were a total of 198 new listings and 67 sold listing of which 18 went for at or above the list price. Both listings and solds are slightly down from the previous week but are still extremely strong. The inventory for all price ranges are healthy, providing buyers with a good selection.
A new – but important – addition to the Oakville Real Estate grid is the cancelled listing column. When looking at this statistic it is important to realize that not every home that gets listed is sold. Unsold homes are either cancelled by the seller or the listing expires and the seller decides not to re-list.
Effective July 1, the much-talked-about Harmonized Sales Tax (HST) will come into full effect in Ontario, blending the GST and the PST into a single 13% tax.
For businesses, the HST brings relief, as it transfers some burden to consumers. Under the new law, businesses will be able to recover the HST they pay to suppliers and on other goods and services.
For consumers, the HST means that items previously exempt from PST will now be taxed a total of 13%, costing the average household an additional $738 annually. Under the new law, 17% of consumer purchases will be affected, including real estate commissions.
When it comes to real estate transactions, there are two ways HST will have an impact: Firstly, on the price of a new, from the builder, home, secondly, on commission payable on resale homes.
For new homes purchased from a builder, HST will be applicable on the purchase price of the home, albeit new homes purchased as primary residences across all price ranges will qualify for a rebate of up to $24,000 of the 8% provincial component of the HST. The rebate is calculated from a stepped scale, and a series of thresholds. For a more detailed explanation of the intricacies of the program, see http://www.rev.gov.on.ca/en/taxchange/homebuyers.html
For resale homes, GST and, now, HST apply to real estate commissions only, as it is a service being provided to the consumer, not to the price of the home. Let’s look at a scenario to analyze the actual impact of this change on a resale home. We’ll be selling a $400,000 home, paying 5% commission total (2.5% for listing agent, 2.5% for buyer’s agent):
|
With GST |
|
With HST |
|
|
Sale Price |
$ 400,000.00 |
$ 400,000.00 |
|
|
5% Commission |
$ 20,000.00 |
$ 20,000.00 |
|
|
5% Commission including Tax |
$ 21,000.00 |
$ 22,600.00 |
|
|
Additional Cost to Seller with HST vs GST |
$ 1,600.00 |
In this case, the additional cost to the Seller is $1,600 or 0.4% of the sale price of the home. From this, we can come up with a rule of thumb for a typical transaction where 5% is the total commission charged (2.5% for listing agent, 2.5% for buyer’s agent), the impact of HST will be $400 for every $100,000 of property value.
While it is an additional cost to sellers, one that is not welcomed by most (all) accounts, the actual impact of the HST is small in comparison to the value of your home. There are a plethora of other factors that can cost you more on the sale of your home than this tax, and that should always be kept in perspective. A dirty carpet, a cluttered closet, a messy yard, to mention a few, will all cost you more than 0.4% of your home’s sale value.
NOTE for Buyers: If you are purchasing a resale home, you do not pay tax on it! This is a common misunderstanding when speaking of how HST will impact real estate.
Ontario Premier Dalton McGuinty says that the HST is a sacrifice consumers must make in order to invest in a better future. McGuinty says that the new tax will help businesses stay competitive, a big step in building a stronger economy. Services that will see increases in taxation include dry cleaning, landscaping, electricity and heating, esthetics, and fitness training. Hotel rooms, magazine subscriptions, gasoline, vitamins, athletic facility memberships, and cigarettes are some of the products that will now be taxed at 13%.
Ontario isn’t the only province to adopt a harmonized sales tax. HST was implemented in Newfoundland, New Brunswick and Nova Scotia in 1997. In British Columbia, a 12% HST will go into effect on July 1.
To learn more about how the HST will affect businesses and consumers, visit the Ontario Ministry of Revenue’s online resource at www.rev.gov.on.ca/en
What’s moving what’s not, and the answer is leases along with properties priced to sell below $800,000.00. So if you are looking to buy in this price point, and you want the perfect house (move in ready from top to bottom), then you are likely going to be in a bidding war or paying top dollar.
If on the other hand you’re willing to overlook the carpeting and a 1970′s basement, then you’ll be in the driver’s seat when it comes to price. So how do you take that home that you’ve so comfortably living in for the last 5 to 25 years and make it ready for market (have a stager go through your home). You’ll likely feel uncomfortable once they are finished but, if you do what they suggest you’re on your way to a positive Oakville real estate experience.
During this past week we’ve had 224 new listings and 107 sales. So here are the statistics for this week:
| Price Range | Listed | Sold | At or above list |
|---|---|---|---|
| Leased | 23 | 14 | 9 |
| $100K to $500K | 78 | 48 | 14 |
| $500K to $1M | 90 | 35 | 5 |
| $1M to $2M | 17 | 8 | 0 |
| $2M plus | 6 | 2 | 0 |
This week we saw a couple of $2M plus properties sell, and steady sales in the $1M to $2M category. This is a great sign, since it was only a few months ago virtually nothing in the $1M area was selling.
Oakville continues to be an excellent community with a great variety of homes. The most expensive listing was a $4.5M detached two storey, 6 bedroom, 5 bathroom home in Old Oakville. The least expensive Oakville listing was a $184,900 condo apartment with 2 bedrooms and 1 bathroom in Central Oakville.
Follow
Subscribe