Before opting for
Do I qualify for a property transfer tax exemption? Most buyers are required to pay land transfer tax when a property title is registered. The tax is generally based on the purchase price of the property, although fair market value can also be used in some situations. The rate differs from province to province. For example, in Manitoba no land trans- fer tax is paid on the first $30,000. In BC, 1% is charged on the first $200,000, and 2% on amounts above that. The rate goes up to 3% for the portion above $2 million. This year, Ontario raised its rates to 2.5% from 2% on amounts exceeding $2 million. Fortunately, a few types of transac-
tions are exempt or carry a reduced rate for Canadian citizens or perma- nent residents, and again, the rules vary by province. Generally, first-time buyers and their partners/spouses do not have to pay the full tax; the same applies in some circumstances to those who are transferring property within a family. For the latter, either the transferor or transferee must generally have lived on the property for a certain time depending on province.
Do I really need a real estate agent? No one is required to use a real estate agent when buying or selling property and they don’t have to accept any offers even when they have signed with a listing agent. Technically, if you breach your contract by selling or buying the property yourself or with another realtor, you could be on the hook for commis- sion to the first agent. However, Chander Chaddah, a broker with Toronto-based Sutton Group-Associates Realty, says this has never happened to him in the 30 years he has been in the business, although he has “fired” clients when he found out they were also looking with other agents. Chaddah advises choosing good agents for all real estate deals
simply because they are the experts. “You wouldn’t operate on yourself or draft your own will — and if you only do a few real estate transactions in your lifetime, how could you possibly know what’s important in the sea of information out there?” he says. “That’s why a good agent is worth the money.” (Commissions across Canada vary but the listing and selling agent each receive
landlord status, find out exactly what you’re taking on.
“You have to expect to be taking calls 24/7 to deal with all kinds of issues”
about 2% to 2.5% on average.) Staging can be a good investment as well, and the expense is often covered by the agent if it’s negoti- ated into the arrangement. Once the deal is done, a lawyer or
notary prepares your final convey- ance documents. Having a CPA look over the paperwork, especially if it’s an investment property, is also a good idea. Hawes says clients should do their due diligence when choosing a notary in order to avoid potentially costly mistakes. He recalls one case in Vancouver where the notary failed to learn that a property owner was a nonresident and should have remitted more than $600,000 in withholding taxes to the CRA. Aſter the sale, the pur- chasers were hit with the tax bill, although they later successfully sued the notary.
Should I manage my own property? Despite the horror stories about delinquent tenants, managing your own property can provide a greater sense of control over your overall finances. Before you opt for land- lord status, however, you should find out exactly what you’re taking
on, advises Victoria Vladimirova, owner of Vicole Real Estate Management & Consulting in Montreal. “You have to know the tenant/landlord laws really well and you have to expect you’ll be taking calls 24/7 to deal with all kinds of issues.” In such cases, patience really is a virtue, she says. For residential properties in particular, Vladimirova says it’s
critical to establish good relationships with tenants if you want to receive the rent on time. “Whenever you have a personal approach to your property it will generate money, but it takes time,” she says. Even for those who prefer to pass the headaches along to someone else to manage, Vladimirova says not to focus solely on the finances. “Go visit the property and see who lives there before buying. And bring along someone with experience in renting who will know what to look for when it comes to potential problems.”
ROSALIND STEFANAC is a freelance writer in Toronto NOVEMBER 2017 | CPA MAGAZINE | 33
Pepifoto/iStock/ modified by Kevin Pudsey
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