October 23, 2007 -- Toronto City Council has approved a municipal land transfer tax that will be levied on top of the
provincial land transfer tax. TREB worked very hard to oppose this tax and commends the efforts of REALTORS® on this
issue. TREB took a strong position to oppose this tax as unfair in principle and refused to compromise. As a direct result
of this strong position, City Council was forced to make a number of amendments to the City’s original proposal,
including rebates for first-time buyers, a reduced rate, and grandfathering for existing transactions.
The City has not yet provided detailed information on administration or implementation issues. The following is based
on currently available information. Some information from the City is available here.
What was approved by City Council?
A second land transfer tax, on top of the provincial land transfer tax, at the following rates:
Residential:
0.5% of the amount of the purchase price up to and including $55,000
1% of the amount of the purchase price between $55,000 and $400,000
2% of the amount of the purchase price above $400,000
Commercial / Industrial / Etc.:
0.5% of the amount of the purchase price up to and including $55,000
1% of the amount of the purchase price between $55,000 and $400,000
1.5% of the amount between $400,000 and $40 million
1% of the amount above $40 million
When does this take effect?
February 1, 2008.
Are existing transactions grandfathered?
Yes. Any transactions where the purchaser and vendor have entered into an Agreement of Purchase and Sale for the
property prior to December 31, 2007 will be rebated the full amount of the Toronto land transfer tax. The City has not yet
provided clarification on how rebates will be administered. If your clients have concerns, they should check with their
lawyer. Once the City of Toronto provides clarification, more information will be provided.
What about Agreements of Purchase and Sale signed after December 31, 2007 with closing dates
before February 1, 2008?
Purchasers with a Purchase and Sale agreement signed after December 31, 2007 with a closing before February 1,
2008 will not be required to pay the Toronto Land Transfer tax.
What about Agreements of Purchase and Sale signed after December 31, 2007 with closing dates
on or after February 1, 2008?
Purchasers with a Purchase and Sale agreement signed after December 31, 2007 with a closing on or after February 1,
2008 will be required to pay the full Toronto Land Transfer tax.
Where does this apply?
The Toronto land transfer tax only applies to transactions within the City of Toronto. This does NOT apply to property
transactions outside of the City of Toronto.
Are first time home buyers affected?
First time home buyers of new AND re-sale homes will receive a rebate of the Toronto land transfer tax of up to $3,725
(this equals a 100% rebate on homes purchased for up to $400,000). The City has not yet provided clarification on how
rebates will be administered. If your clients have concerns, they should check with their lawyer. Once the City of Toronto
provides clarification, more information will be provided.
If you have questions, contact the City of Toronto at Access Toronto at 416-338-0338.
1. The first step is to meet and discuss your wants and needs and for me to explain the entire buying process to you.
2. You must visit with your lender to obtain mortgage pre-approval as soon as you can.
3. Thoroughly search and find the home that you want to purchase.
4. You make your offer to purchase property. Often the the offer would contain conditions such as:
i) Confirmation of mortgage final approval
ii) Home inspection approval
5. The Offer is negotiated to acceptable terms and conditions for you.
6. Seller accepts your offer to purchase.
7. Deposit placed "in trust". The deposit is usually between $5,000 and $10,000 depending upon the property value.
8. Condition removal process: This typically takes from 5 to 10 business days and in the following order. If any of the
conditions are found unacceptable to you, the sale is voided.
9. i) Have the home inspected by a inspection professional & approval.
ii) Other conditions met & approved.
iii) Confirmation of mortgage final approval
10. Waiver of conditions; as each condition is met you must remove (waive) the condition from the Offer to Purchase
within the predetermined condition removal time period. If written waivers are not completed and presented to the Seller
within the time frame allowed, the agreement of purchase and sale may be voided.
11. Usual time frame is 3 to 12 days from the time the Offer is accepted to remove all conditions.
What are the typical Real Estate transaction costs?
Deposit
The deposit is part of the Purchase Price and will be required by your Selling Agent usually upon acceptance of the
offer. Generally five to ten percent is the expected amount.
Home Inspection
A home inspection has become almost standard in the freehold and condominium townhome purchase. An inspection
usually costs between $275 and $350 for most homes but increases with the cost of the home over $300,000.
Survey
You, your bank and/or your lawyer want to know exactly what it is that you are buying. A survey that shows the lot
dimensions and the location of any structures is very important. If the Vendor does not have a current survey or if the
vendor will not give representations and warranties on closing and your bank is insistent then you may be required to have
a new survey drawn up. Title insurance is now available in Canada and can often be used in place of a new survey,
typical cost is $300 to $400 for title insurance. Your lawyer can best advise you on which route to go.
Legal Fees
You will need a lawyer to search the title and cover all the legal matters. Rates vary greatly, starting at about $450 for the
lawyer's time. In addition you must pay for the disbursements which the lawyer pays on your behalf. The average total bill
should run to approximately $1100 - $1200. Shop around! Call some lawyers and get quotes for comparison.
Following is a list of common disbursements:
• search title.
• gas, hydro, water and tax certificates.
• sheriff's certificates as to executions.
• zoning compliance certificate.
• estoppel certificate (if a condominium), photocopy and long distance etc.
• sub search before closing.
• land transfer tax.
• register deed.
• register mortgage.
• survey.
Mortgage Loan Insurance and Application Fee
If you obtain a high ratio mortgage ( a mortgage where you pay less than 25% down payment) you will have to buy
mortgage loan insurance from CMHC or a private company. If you qualify for a 5% down payment, CMHC charges an
insurance fee that equals 3.75% of the mortgage. If you put 10% or 15% down, your insurance fees will decrease to 2.5%
and 2% respectively. The insurance premium is usually added to your mortgage principal amount on closing, this way
you do not have to come up with the additional amount of the insurance premium.
Realty Taxes
If the Vendor has paid the full year's taxes in advance, the Purchaser must reimburse him, adjusted to the date of closing.
This becomes part of the "Adjustment Statement" prepared by your lawyer.
Home Insurance
The house must be insured prior to closing. The annual premium will be about $400.00 and up. Many insurance
companies will not insure homes with less than 100 amp service or with the old style "knob and tube" wiring, which is
present in most older homes. This added cost can be determined during the inspection.
Moving Costs
Vary depends on how much of the moving is done by yourself.
GST On New Homes
The 7% GST applies to new housing, however, there is a rebate (to the builder) up to a maximum of 2.5% on homes
which cost less than $450,000.
Can I buy a home with no money down?
Yes. Canada Mortgage and Housing Corp. previously would generally not guarantee mortgages
unless buyers put up at least five per cent of the price from their own funds, is dropping that
requirement. Under this new product, effective March 1st, 2004, the down payment can come from
any source such as lender incentives and borrowed funds. However, borrowers will still have to prove
their ability to meet their debt requirements in order to qualify for mortgage insurance. The change
will enable many Canadians to realize their home ownership dream sooner than what would
otherwise be possible.
What are some tips every home buyer should know to get started?
If you think it's about time you bought a home instead of renting, a little homework before you
start looking will increase your odds of finding the best buy for you. Here's how:
Dig up your down payment
Know where your down payment cash will come from. If it's coming from stocks, go ahead and sell
them. If dad is loaning the money, get it in hand so you are ready to go.
Nail down your financing
It's tough to home shop if you don't know what you can afford. Together with a reputable lender, we
can help you determine how much home you can afford and which loan program will maximize your
buying power. By getting pre-approved for a loan, you'll be a better prospect in the seller's eyes.
Take your time
Don't jump at the first home you see. Let us introduce you to different areas and home types to
see what suits your needs the best.
Do your homework
Once you've found the home you want, ask us to run a competitive market analysis of other homes
that have recently sold, so you'll be able to make a sensible offer to purchase.
Enjoy!
With expert assistance and a positive attitude, home shopping can be fun and rewarding.
What can a real estate agent do for me that I can’t do for myself?
As professionals who specialize in real estate, we complete the home-shopping puzzle. We can help
open up the possibilities for your next home with a variety of services: Financing We can help you
evaluate your financial circumstances, help you decide how much house you can afford and help you
select the best financing plan. Housing needs analysis We can help you sort out housing
priorities, the expenses involved in buying a particular home and what steps to take to reach your
goal. Home search We can show you what properties are on the market in your price range and
take you on a guided tour of the homes you're interested in. Contract We can make sure you
understand the terms and conditions of a contract when you are ready to make an offer on a
home. Loan application We can help you select the best financing option, help you choose the
lender with the best rates and service record and help you prepare your mortgage application.
Inspection and Closing We will assist you in a pre-settlement inspection to be sure the terms of the
purchase contract are kept, and we’ll follow through to all the way to settlement. Call us now or send
an e-mail to take advantage of our years of experience helping people find the home they want
and can afford. We'd love to help you, too!
Is it better to buy in a new home area or a resale community?
New or previously owned? Once you've started to look for your next home, you need to decide
whether to look at homes under construction, or for resales in established neighborhoods. Here are
some pros and cons for each type of house. Newly-Constructed Homes Pluses are: You choose
the colors and finishes for floors, bath tiles, appliances, kitchen counters and cabinets. You can opt
to upgrade and select builder options, and often can choose your lot. Everything is clean and new
when you move in. Minuses are: You may not see the home you are buying until the final walk-
through, and may find a number of items that need to be fixed by the builder's maintenance crew.
Often, new-home buyers have to deal with construction traffic, debris, mud, dust and unfinished
roads. Existing Resale Homes Pluses are: You can see the home you are buying, and many
personal touches like drapes and curtains will likely have been added. You can also tell what the
neighborhood will be like by driving through during the day, and how rush hour will be by passing
through in the evening. Minuses are: The seller's tastes may not be yours, and you may need to
do some redecorating to tailor the home to your color scheme. Also, the appliances may be several
years old if they haven't recently been replaced for the sale.
Are there guidelines to how much a buyer should offer?
Now you’ve found the house you want, how much should you offer to pay for it? This can be a tricky
puzzle, because there are no carved-in-stone guidelines. Some homes are overpriced, while others
are a "real steal" at the full asking price. Here are some tips:
Ask your agent for comparables
To determine a fair purchase offer, ask your agent to prepare a written comparative market
analysis showing the sales prices of similar neighborhood homes that sold recently and the asking
prices of comparable homes currently on the market.
Compare the details
To calculate your best offer, compare the features of the home that interests you with the features
of similar homes that have sold recently in the same neighborhood.
Should I ask for a home inspection before I buy?
When buying a home, leave yourself the option to get a second opinion. Consider putting a
contingency clause in your offer that allows you to get a home inspection and cancel the sale if the
results of the inspection are unsatisfactory. If there are serious problems, a home inspection can
prevent some serious hassles.
Who pays for the inspection?
The buyer usually pays for the inspection, which can cost several hundred dollars. The seller
generally wants the inspection completed within a short time period, say five or ten days. For this
reason, when you start shopping for a home, also look around for a good home inspector. Ask your
agent for several names.
Who should attend the inspection?
You. You’ll learn a lot about the house that could soon be your home. If it's practical, your real
estate agent and the seller should also accompany the inspector. Wear old clothes and comfortable
shoes, as a complete inspection goes from attic to basement. The inspector should check for
structural defects, plumbing and wiring problems, dampness in the basement, leaks from the roof,
termites, lead paint, dry rot, energy efficiency and compliance with local building codes. Any visible
and accessible problems should be noted immediately and then included in the report.
What happens if the inspection uncovers problems?
If you put an inspection clause in the contract, you may back out of deal if serious defects are
found. What happens more frequently is the buyer will negotiate with the seller to have the problem
repaired or the sales price adjusted.
We’re in a competitive market. What can I do to make my offer look better than
another buyer’s offer?
It takes more than good luck to get the right home at the right price. One advantage you can have
on your side is a conditional loan pre-approval. When you are pre-approved your offer is more
attractive because the seller doesn't have to wonder if you can afford to buy. The seller will know in
advance that your offer is as good as money in the bank.
Pre-approval versus pre-qualification
A pre-approval is a conditional loan approval from a lender based on your application. Pre-approval
differs from pre-qualification, which is a verbal exchange with a lender about how much you can
probably afford. Pre-qualification does not obligate the bank to make the loan, whereas a pre-
approval is a conditional loan commitment. Final approval is made when both your finances and the
property pass review.
Close the deal faster
Lining up your mortgage loan before you start house hunting could make buying your new home
quicker and easier. A pre-approval can speed closing because most of the paperwork is already in
place for the loan. You have already started to learn about the financing process, and any problems
will have been resolved.
