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Real Estate and the HST – What You Need to Know

Posted by James Osmar | Posted in Real Estate Articles | Posted on 28-01-2010

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The provincial and federal governments will combine the 7% provincial sales tax (PST) and the 5% federal Goods and Services Tax (GST) into a 12% Harmonized Sales Tax (HST) on July 1, 2010. Now is the time to start preparing for this change. As a rule of thumb, the GST rules that now apply to residential property will also apply under the HST.

New Housing Rebate
Homebuyers may be eligible for a provincial New Housing Rebate if they buy, as their primary residence:
- a new home together with land;
- a new home together with leased land;
- a new mobile home or float home;
- a new home purchased through shares in a housing
cooperative; or
- a home constructed or substantially renovated (more than • 90%) by the owner-builder.

Buyers of new homes will be eligible for a rebate of 71.43% of the provincial portion (7% of the HST’s 12%) of the HST paid on the new home up to a maximum rebate of $26,250. Homes prices at more than $525,000 will be eligible for a flat rebate of $26,250.
*The federal GST New Housing Rebate is 36% of the tax paid on the first $350,000 of the home price. The GST rebate is phased out for homes priced between $350,000 and $450,000.
Note: the provincial New Housing Rebate is limited to primary residences. Recreational property not used as a primary residence does not qualify.

Leased land rebate
If the client is a residential builder or developer, a rebate will also be available for leased land used for residential purposes up to a maximum of $8,663 (33% of $26,250). For multiple residential lots or sites in a residential trailer park, the maximum rebate of $8,663 applies to each lot or site.

Presales
Agreements signed before November 18, 2009

If your clients buy a presale residential property and they have an agreement dated on or before November 18, 2009 and if they take ownership or possession before July 1, 2010, they will not pay the HST and will not be eligible for a New Housing Rebate. They will pay the GST.
If your clients buy a presale property and the agreement is • dated on or before November 18, 2009 and they take ownership or possession after July 1, 2010, they will not pay the HST and will not be eligible for a New Housing Rebate. They will pay the GST.

Agreements signed after November 18, 2009
If your clients buy a presale property and the agreement is • dated after November 18, 2009 and they take ownership or possession before July 1, 2010, they will not pay the HST and will not be eligible for a New Housing Rebate. They will pay the GST.
If your clients buy a presale property and the agreement of purchase and sale is dated after November 18, 2009 and they take ownership or possession after July 1, 2010, they will pay the HST and may be eligible for a New Housing Rebate.

Vacant land
Whether your clients pay the HST depends on who they buy the land from.
If your clients buy a lot from an individual (not a developer) • who has never used it for business purposes, your client will be exempt from paying the HST.
If your clients buy the lot from an individual who has subdivided it into more than two lots (three or more lots), or from a developer, your clients will pay the 5% GST if the possession date is before July 2010, even if the title transfers after July 1, 2010. If possession is transferred after July 1, 2010, your clients will pay the 12% HST.
If your clients plan to build a home, if the majority (90%) is completed after July 1, 2010, they will pay the HST. They may be able to recover a portion of the HST through the New Housing Rebate.
If your clients are selling personal use vacant land and the sale is now exempt from the GST, the sale will be exempt from the HST after June 30, 2010.

New Rental Housing Rebate
There is an enhanced provincial New Rental Housing rebate. If your clients construct or substantially renovate a residential property to rent to tenants, your clients may be eligible for a rebate up to $26,250 on units priced up to $525,000. There is a flat rebate of $26,250 for units priced above $525,000.
To qualify, the home must be used as a rental unit or as a primary residence by the owner for at least one year. Eligible units include:
- a detached, attached or condominium apartment, with or without a legal secondary suite;
- a mobile or float home;
- units in a multiple unit building including long-term care residential facilities; or
- the land component of a single-unit or multiple-unit building where the land is leased or is a housing cooperative.

Homebuyers will not be eligible for any housing rebate if they buy a new property which is not their principal residence and they don’t rent it.
But, if your clients buy a new rental apartment building and rent all of the units, they will be eligible for a New Rental Housing Rebate for each unit up to a maximum rebate of $26,250 per unit.
If clients build or substantially renovate a rental property, they will be required to self-assess and pay the GST before July 2010 and the HST after June 2010.

Will residential landlords pay the HST?
If your clients now pay the GST, they will pay the HST on maintenance, electricity, cable television and other services provided to tenants.
Your clients will not be able to claim input tax credits and will not be allowed to recover the HST from tenants because owning residential rental property is an exempt activity and landlords can’t register for the GST/HST.

Parking spaces
If you rent a parking space the HST will apply as of July 1, 2010.

Resale homes
The HST applies to new homes. It does not apply to resale homes.

Buying either a new or a resale home
The 12% HST will be charged on a range of goods and services including:
- home renovations;
- energy efficient appliances, insulation, windows and doors;
- heating and electricity bills, telephone, cable;
- closing costs such as appraisals and inspections;
- moving costs; and •
- Real Estate Professional fees or commissions.

Transitional rules for Real Estate Professional Commissions and Fees
The HST will apply to Real Estate Professional services performed on or after July 1, 2010. If 90% or more of the services are performed
before July 1, 2010, the HST will not apply. The GST will still apply before July 1, 2010.
Example: a Real Estate Professional performs services from May 1, 2010 to July 1, 2010, the property sale closes July 31, 2010 and the commission is due then. Two-thirds of the services were performed before June 30, 2010 and one-third from July 1, 2010 to July 31, 2010. The Real Estate Professional will charge GST on two-thirds of the amount charged for their services and the HST on the remaining one-third.

IMPORTANT DATES

May 1, 2010• – the HST will apply to amounts that are paid or payable on or after this date for goods or services
provided on or after July 1, 2010.
July 1, 2010• – the HST rate will be 12% (5% federal + 7% provincial). The PST will be eliminated.
July 1, 2010 • – the HST will not apply to a service where most (90% or more) is completed before July 2010.

The HST is not the PTT
The Property Transfer Tax (PTT) is a separate provincial tax on all property transfers. The rate is 1% on the first $200,000 and 2% on the remainder of the property price and charged on the price of the property before the GST/HST is applied. Eligible first-time home buyers may qualify for a PTT exemption.
For information about the PTT: http://www.sbr.gov.bc.ca/individuals/Property_Taxes/Property_Transfer_Tax/ptt.htm
Online Resources
For information about the GST/HST phone the Canada Revenue
Agency at 1.800.959.8287 or visit: www.Real Estate Professionallink.ca. Go to Lobbying and Legislation and then Harmonized Sales Tax Resources.

http://ClientContactBlog.com <<<<---- CLICK HERE

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Google Sites Accounts for 41 Percent of U.S. Online Video Market

Posted by James Osmar | Posted in Real Estate Articles | Posted on 04-05-2009

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Google Sites Accounts for 41 Percent of U.S. Online Video Market

In March, Google Sites once again ranked as the top U.S. video property with 5.9 billion videos viewed (40.9 percent online video market share), with YouTube.com accounting for more than 99 percent of all videos viewed at the property. Fox Interactive Media ranked second with 437 million videos (3.0 percent), followed by Hulu with 380 million (2.6 percent) and Yahoo! Sites with 335 million (2.3 percent). March represented the first time Hulu has cracked the top three in the ranking of videos viewed.

Top U.S. Online Video Properties* by Videos Viewed

March 2009

Total U.S. – Home/Work/University Locations

Source: comScore Video Metrix

Property

Videos

(000)

Share (%) of

Videos

Total Internet

14,468,345

100.0

Google Sites

5,919,530

40.9

Fox Interactive Media

437,098

3.0

Hulu

380,102

2.6

Yahoo! Sites

334,724

2.3

Microsoft Sites

288,239

2.0

Viacom Digital

277,753

1.9

CBS Interactive

191,686

1.3

Turner Network

167,323

1.2

Disney Online

125,248

0.9

AOL LLC

105,237

0.7

*Rankings based on video content sites; excludes video server networks.  Online video includes both streaming and progressive download video.

Google Sites Eclipses 100 Million Viewer Threshold Once Again

Nearly 150 million U.S. Internet users watched an average of 97 videos per viewer in March. Google Sites eclipsed the 100 million online video viewer threshold once again, after first achieving the milestone in December 2008. Fox Interactive ranked second with 55.2 million viewers, followed by Yahoo! Sites (42.5 million) and Hulu (41.6 million).

Top U.S. Online Video Properties* by Unique Viewers

March 2009

Total U.S. – Home/Work/University Locations

Source: comScore Video Metrix

Property

Unique Viewers (000)

Average Videos per Viewer

Total Internet

149,410

96.8

Google Sites

100,382

59.0

Fox Interactive Media

55,156

7.9

Yahoo! Sites

42,524

7.9

Hulu

41,564

9.1

CBS Interactive

35,400

5.4

Microsoft Sites

32,194

9.0

Viacom Digital

27,168

10.2

AOL LLC

22,349

4.7

Turner Network

19,644

8.5

Disney Online

12,965

9.7

*Rankings based on video content sites; excludes video server networks.  Online video includes both streaming and progressive download video.

Other notable findings from March 2009 include:

  • 77.8 percent of the total U.S. Internet audience viewed online video.
  • The average online video viewer watched 327 minutes of video, or nearly 5.5 hours.
  • 99.7 million viewers watched 5.9 billion videos on YouTube.com (59.1 videos per viewer).
  • 47.4 million viewers watched 349 million videos on MySpace.com (7.4 videos per viewer).
  • Hulu accounted for 2.6 percent of videos viewed, but 4.9 percent of all minutes spent watching online video.
  • The duration of the average online video was 3.4 minutes.

About comScore
comScore, Inc. (NASDAQ: SCOR) is a global leader in measuring the digital world and preferred source of digital marketing intelligence. For more information, please visit www.comscore.com/companyinfo

WE ENCOURAGE YOUR COMMENTS

In Front of the Camera

Posted by James Osmar | Posted in Real Estate Videos | Posted on 12-01-2009

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A video used to be embedded here but the service that it was hosted on has shut down.

The first 20 seconds is the hardest... after that it's easy selling. As a Real Estate Professional all you have to try to do is put yourself in the same frame of mind that you would be at a listing presentation. Or, when you you are on the phone prospecting. Selling real estate via video is a natural... it is another great strategic selling tool

The Headlines Screamed

Posted by James Osmar | Posted in Real Estate Articles | Posted on 19-12-2008

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If the cup of coffee you were drinking on Tuesday morning didn't wake you up, the headline on the front page of the Globe and Mail most surely did.

The headlines screamed "Housing sales hit 20-year low as real estate slump widens" followed by huge sub-head noting an 11 per cent decline in prices and a 44 per cent drop in Ontario housing sales in large RED print, based on the December 15th press release issued by the Canadian Real Estate Association.

The only problem with the article is that it is incorrect. In the third paragraph, the author writes "Between May and November, the average price of an existing home in Canada fell by 11 per cent, matching the drop in 1990 that coincided with the onset of a painful recession. Housing prices would go on to fall about 20 per cent and it would be another decade before they managed to make new highs."

Unfortunately for the Globe, there was no 20 per cent drop. According to the Canadian Real Estate Association, the Canadian average price actually rose approximately 15 per cent from 1990 to 2000. There were three moderate dips in housing values in the decade – 1990 (3.4 per cent), 1995 (4.6 per cent), and 1998 (1.5 per cent). Average price in Canada has climbed consistently since 1998. It's also important to note that the decline in national housing values have typically been modest and have bounced back almost immediately. Finally there are no two consecutive years of falling prices.

While the national housing picture has been a picture of stability, average housing values in Ontario have seen slightly more volatility over the past 27 years. There have been six decreases in average price noted – with five of the six occurring between 1990 and 1996. Prices fell 17 per cent during that time frame, after climbing a phenomenal 70 per cent between 1986 to 1989 ($107,158 to $182,186). Residential average price has been on an upward trajectory since 1996 – the longest uninterrupted period of growth since 1980.

Based on our comments, the Globe and Mail has printed a correction in this morning‘s newspaper, page A2

So now that the folks at the Globe have been straightened out, we shift our focus to the challenges today’s economic realities are bringing to the housing market. Truth be told, there is not a sector - not even gold - that has not been hard hit by economic turmoil in recent months. Real estate has held up remarkably well, in light of current market realities. We need to see some economic stability - and a recovery in consumer confidence levels - before we can expect housing markets to rebound. Job security will be key.

Inventory will also play an important role. If inventory levels subside, we could see stability return to housing values. To illustrate, new listings fell seven per cent in the Greater Toronto Area in November. If this trend continues, and existing inventory is absorbed, housing values may remain relatively stable in the year ahead.

I'd like to conclude today's communication with the story of a hot dog vendor in Chicago who sold the very best hot dogs by the side of the road. His business was booming, people loved his hot dogs, and his business steadily increases month after month. The man loved his business and believed in the need to provide great food at a great price.

This man was so busy advertising and selling his hot dogs and making lots of money, that he didn't even have time to read the newspaper or listen to the radio. Consequently, he never heard a word about a predicted recession or the need to cut back to save for the potential economic slowdown. As long as he continued to offer his delicious hot dogs, his customers bought them. He kept selling, and they kept buying.

Then one day his college educated son told him that an economic recession was surely coming. His son told him that people wouldn't have enough money to buy his hot dogs. The successful hot dog vendor believed this, so on his son’s advice, he cut back on his advertising. Additionally, he started ordering less supplies and product, because after all, people would be cutting back soon.

He even went so far as to take down many of the billboards that lead to his roadside stand. And sure enough, people stopped coming to him. People stopped buying his hot dogs, and he eventually went broke.

Then he thought to himself. "How smart my son is in predicting this."

Don't be influenced by what you read in the newspapers or hear on your television. It's true that market conditions have changed, but human nature has not. Real estate is one of the largest investments people will make in their lifetime. It's also one of the safest. Get out and spread the word. If you bought a home in 1980 worth $67,000, that property is valued at over $300,000 today – an increase of 350 per cent and the profit is capital gains exempt. It's no wonder that Canada has one of the highest home ownership rates in the world, at close to 70 per cent.

No matter what the investment community will tell you, you can't live in your mutual fund.

Wishing you all a happy and healthy holiday season and I look forward to seeing you at the RE/MAX Kick-Start Rally January 19-20th, 2009. This year's event is one that you won't want to miss!

Sincerely,

Michael Polzler
Executive Vice President and Regional Director
RE/MAX Ontario-Atlantic Canada Inc.