Don’t rush just to beat the new land-transfer tax
With winter approaching, you should worry more about staying warm than rushing to buy a new home. Do some research first.
I’ve been receiving a lot of e-mails lately as December approaches and many of us have real estate on the mind with the passing of the new Toronto land-transfer tax, the strength of the loonie, the problems down south, and so on.
There is a lot going on shall we say, and the topic of buying or selling has been on many people’s minds. Here are answers to some of the more common questions I’ve been receiving.
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When does the new tax kick in?: In simplest terms, if your closing date is Feb. 1, 2008 or later, you will be liable to pay the new tax, unless you’re a first-time buyer purchasing a home/condo under $400,000, or if you’re buying outside the 416 area.
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Is now a good time to buy?: If you would fall subject to the new tax in February, now is an excellent time to buy. If you’re buying only because you hope to avoid the new tax, so long as you’re not rushing yourself inexcusably, I’d still lean towards buying now. The winter market normally promises a less hectic market and there are normally enough homes/condos available to accommodate most buyers’ needs.
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Is investing in new condos really the greatest thing since sliced bread?: To be perfectly honest, the vast majority of those who invest/buy a downtown condo during the earliest construction phase will make, and have been making, a profit. The problem, is not everyone is aware of all the expenses along the way, or exactly how much profit to expect and in what time frame. It’s important to do your full homework before jumping on this bandwagon. Make sure to buy during the broker’s preview. Make sure you’re aware of exactly how much cash you need as down payment in contrast to buying resale. It can be a great investment, but no investment can be great unless it is first properly understood.
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How do I generate a bidding war for my home/ condo?: For all intents and purposes, bidding wars occur on class-A condo units and houses, downtown Toronto, and that’s it. There are homes outside these parameters that will generate multiple offers but not commonly. You need to have that class-A condo or class-A house, which shows like a dream and is located in the most ideal area, with little comparables. Then it needs to be marketed properly. Aside from being
the proper candidate for a bidding war set-up, the most important part is the price you list it at.
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I’m so confused, how do I decide which building to buy in? Many buyers are getting caught in the storm that is the downtown condo market. You want to make the best decision possible but with so many options, it’s almost impossible to filter through everything. Here’s the trick — you don’t need to filter through everything. Most downtown investments these days are good ones. Figure out the location you want, the specs you want and the price you need. You’ll find the picture becomes a lot clearer from there on in.
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Is the Toronto market going to follow the U.S. into the gutter?: No. The reasons behind the American struggles, the seriously poor sub-prime lending for example, are not nearly as prevalent here. Those in Toronto who are spending money actually make that money.
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How much money do I need to buy?: Keeping the struggles of the U.S. in mind, the real question here is how much do you have to spend? You can buy with zero down, but just because you can doesn’t mean you should. It’s important to sit down and really think about how much you can afford to spend on a monthly basis on your living expenses (mortgage, property taxes, utilities, etc.), and then work backwards from there towards the down payment, monthly mortgage payment and purchase price.
I’m sure there are other questions on your minds. Feel free to e-mail me and I’ll be more than happy to respond.
For any questions/comments on this article or anything in general please feel free to e-mail Amit at amitp@rogers.com. Amit is a Realtor/Developer with Re/Max.
