Monday, April 29, 2013

Rental Apartment Finance Guideline Update 5.2013

Product:  Rental financing
In addition to max. 75%LTV on a rental unit. We’ve made some changes to our policy. Here it goes:

For the purpose of confirming gross rental income, expired leases can be accepted with the addition of one of the following:
·         Signed acknowledgement from the tenant confirming rental/lease agreement is still in effect; or
·         Copies of the last 3 months of cancelled cheques; or
·         Evidence of the last 3 months of rental deposits in the account
If applicant owns 1 rental property (maximum 1 unit), either:
·         50% of the confirmed gross rental income can be included as income and full principal, interest, (property) taxes and heating (PITH) for the subject rental included in liabilities; or  Rental worksheet can be used to calculate the rental property Debt Service Ratio Owner occupied rental properties included
Opinion of Market Rent is acceptable for purchase and refinance transactions up to 65% LTV

Td economics:
·         The past week saw the TSX, most commodity prices and the Canadian dollar versus the U.S. dollar, all make up ground. However, all three still remain underwater so far in 2013. That is consistent with Canada’s economic under performance versus the United States.  
·         February’s retail sales data were consistent with a more modest performance in consumer spending north of the border, as trend sales have slowed in both real and nominal terms. Moreover, the lack of pricing power at the retail level speaks to increased competition in the face of softening demand.  
·         This difficult retailing environment is likely having an influence on small business confidence, which slipped further in April, according to the CFIB’s Business Barometer. Particularly since insufficient domestic de­mand is cited as the main limitation to small business growth.

Have a great week!

Romy Alegria | Manager, MMS | TD Canada Trust
P: 416.278.2540 | F: 1-866.222.5708

 There you have it!

New guidelines for a Rental ( Investor) Purchase of a Toronto Condo Unit.
Downpayment are firmly at 25% or at 35% with Opinion of Value Letters.

Are you looking for an investment to hold long term?

Vacancies are continuing at 1.5% or less.

Friday, April 26, 2013

Landlord Tenant Tribunal - Representation

As an owner investor of a condominium unit you may represent yourself at a Landlord and Tenant Tribunal Hearing.   This is governed by the laws of the Residential Tenancies Act

All the reference Material and Forms you require is searchable on this site.

Previously a NON licensed person could represent you. This is now been changed to be;
a) Non Paid PRO Bono Representative
b) Paralegal
c) Lawyer

Where Property Managers of larger rental companies could previously attend the tribunal they are now required to be licensed and Insured (Law Society Members).  

You can prepare your own paperwork but be informed you may need additional help.

Even though I have attended at hundred of Landlord Tenant dispute resolutions and Mediations I am not a licensed paralegal (grandfathered).  I can however recommend quality experienced people.

Thursday, April 25, 2013

Rental Increases AS Market will absorb

If its built after 1991
There are no landlord Tenant limits for increasing rents.
It is whatever the market will bare.

“I was shocked, and all my friends who live in condos were shocked, to find out that we are powerless.” The now-renamed Residential Tenancies Act sets out tenant protections for all rental units across Ontario, but rent control provisions only apply to buildings occupied before Nov. 1, 1991.

That’s turned out to be great news for condo investors, allowing them to pass on escalating maintenance fees and other costs almost directly to their tenants. But for a growing number of condo tenants, it’s making for an uncertain future.

If your hydro costs, property taxes and maintenance fees increase   you are welcome add that to the rental increase.

What can I answer for you? 

Phantom Mortgages explained

Toronto Skyline 2020
When you purchase a NEW condo you have 10 days to "escape the contract"  Period of Rescission.

They are only holding your $ 2,000 deposit
If you continue your staged deposits over the next 30 - 60  - 90    OR 30 - 90 - 180 days is;

5% of the Purchase Price (less the $2,000 deposit)

5% at agreed date by post dated cheque

Next 5% at agreed date by post dated cheque.

You effectively have a 15% down payment into your condo purchase at they will build it.

When you have been notified of your OCCUPANCY DATE   you will now commence to pay estimated maintenance,  ( Toronto average is $ 0.58 per square foot ) Estimated Property Taxes and Phantom Rent.

Your Phantom RENT is calculated as Purchase Price less your down payment then at the rate of interest contained in your contract. (payable monthly)

If you wish to pay cash; you must advise your builder at the PURCHASE POINT in Time or it does not count.

Lets try a sample calculation

Purchase Price                  $ 400,000
Downpayment   15%               60,000
Net Outstanding                 $ 340,000

Taken at a simple interest rate of 3% would be rent of (340k X 3 %)  divided by 365 Times 30 days would be $ 838.35 per month.

Your Tenant may move in at the Occupancy Date

It may take the condo  6 months to a year to collect all the paper work for Registration.

At Registration and Hand Over ( meeting ) you have already closed and are given control (elect your) Board of Directors.

Do you have a specific question you would like answered?

Wednesday, April 24, 2013

Flipping is Taxable -

You purchased a Toronto Condo Unit five years ago.
You purchased the unit and intended to live there;
You moved in upon Registration and moved out 15 days later.
You changed your Driver's License Information.

You didn't sell you other primary residence did you?


Condominium Sales Could Lead to Large Tax Bills
Posted by Keir WilmutIf you sold a condominium in Canada’s booming housing market, don’t count your profit just yet – the Canada Revenue Agency could soon be knocking on your door with a large tax bill.Canadians typically don’t have to pay taxes on the profit we earn when we sell our homes – as long as the home was our “principal residence.” To qualify as a principal residence, the CRA considers factors including whether a person lived in the home, and whether it was designated as a principal residence.However, the CRA – in what has been dubbed the “Condo Project” – is increasingly challenging Canadians’ designation of their condominium unit as their principal residence.The distinction can result in a significant tax bill. If you bought a condominium for $300,000 and sold it for $500,000, as long as it qualifies as your principal residence you don’t have to pay any taxes on your $200,000 profit.However, if the CRA deems that condominium unit to have been an investment property, you would have to pay tax on this gain. In the highest tax bracket, this could result in a tax bill of $46,000!Making matters worse, if the CRA determines that you were in the business of buying and selling condominium units, the tax bill could be $92,000. If they find evidence that you made a false disclosure, they could levy fines bringing the total tax bill to a whopping $138,000!Red flags that might lead the CRA to take a closer look at the sale of a unit include:§ an owner who sells a unit shortly after registration, even if he or she had signed a purchase agreement years in advance;
§ an owner who says he or she intended to move into a condominium unit, but subsequently changed his or her mind;
§ an owner who purchased a condominium unit before it was built and then sold his or her right to buy that unit pursuant to an assignment clause; and
§ an owner who buys and sells multiple condominium units.
Even moving into a condominium may not be enough to satisfy the CRA. One woman purchased a condominium in 2006, and moved in in 2011. However, after moving in she decided it was too small, and moved out fifteen days later. The CRA hit her with a bill for $72,000 in tax, and $36,000 in penalties.If you get hit with an unexpected tax bill, or if you are considering selling a condominium unit you meant to move into but never quite did, we recommend you talk to a lawyer.

Stan Gelman  a Real Estate Specialist in Toronto and Wise Lawyer specifically advised me that unless I reside in the property for a minimum of one year  CRA would be seeking profit as I am not exempt.

How many of you are in that situation?