The Interest Rate Spring War Has Arrived, Lower Rates to Come

Hi Abbotsford, Chilliwack and Mission mortgage clients! We have good news for you. Rates appear to be dropping further, therefore this may be an opportune time to renegotiate and secure a mortgage. If you’ve considered buying, refinancing or renewing your mortgage, we suggest giving our team a call so we can look at your current mortgage and see if it’s worth making a move.  Here are a few reasons why we believe now would be a good time to review your mortgage or for home buyers, a good reason to consider purchasing while rates are at historical lows.

  • A shifting economy will push the BOC (Bank of Canada) to lower interest rates further
  • Negative growth in demand over the last two quarters
  • The BOC has recently moved to a more neutral bias, rather than tightening
  • US Federal Reserve has entertained the idea to make a cut mid way through 2019, Canada generally follows
  • Recessionary conditions in other parts of the world will likely influence Canada

We have a seasoned mortgage consultant on our team who specializes in placing those looking to refinance, in a strategic mortgage plan during the spring rate wars that take place every year. We are prepared to work hard on your behalf because feeling a little more financially free, or paying off your mortgage sooner, is a priority to each one of our team members.

Give us a call for your complimentary mortgage review.

Source: https://www.mortgagebrokernews.ca/news/boc-will-likely-cut-interest-rates-next–economist-255388.aspx

First-Time Home Buyers’ Tax Credit

 

Abbotsford, BC – If you are a first-time home buyer and recently purchased a home, we encourage you to speak with your Abbotsford mortgage broker as you may qualify for a tax credit up to $5,000, which can reduce your taxes by $750. The home buyers tax credit was introduced to assist first time home buyers purchase a home.

There is also a a credit for those with or living with those with disabilities.

For more information on the First-Time Home Buyers’ tax credit visit Canada Revenue Agency., or follow this link: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-369-home-buyers-amount.html

Capital Gains Tax – 3 Facts You Should Know

Capital Gains Tax – 3 Facts You Should Know

In the heat of the housing market, the media drew a lot of attention towards real estate “flipping” in BC. Buyers and sellers were purchasing properties and reselling for a profit, not before long the government implemented policies that required a lot more disclosure throughout the buying and selling transaction as well as distinguishing an individual’s primary residence. The government wanted to make it easier to track properties turned rentals, recreational homes or even a little of both. As a result, they hired an undisclosed number of works at the CRA (Canada Revenue Agency) to investigate these “tax cheats”. Below we’ve disclosed the top 3 facts you should know about Capital Gains Tax, #3 could save you thousands!

 

 1. What is it?

Capital gains tax is based on an increase in value of real estate or an investment. It applies to real estate that is not considered your primary residence and to stocks held in a non-registered investment account. This “gain” may be short term or long term and is not realized until the asset is “sold”. Capital gains tax is applied when the investment or real estate is worth more at the selling point than it was at the time of purchase.

*Capital Gains Tax must be claimed on income taxes and paid during the income tax year you’re filing

2. How is it calculated?

The total net gain is divided by 2 (50%) and then added to your income. It can also be split between spouses if the asset it jointly held. The gain is calculated at the time it’s sold and is added onto the asset owner(s) total income for that year.

Example:

John and Jane bought a rental condo in 2011 for $200,000 in Abbotsford, BC. In 2017 they decided to cash in on their gains and were able to resell their rental property for $400,000.

Sale price 2017: $400,000

Deduct the following:

  • Original purchase price: $200,000
  • Legal and realtor fees (from original purchase AND resale): $20,000
  • Property transfer tax (only if it was not deducted on 2011 income tax)

Total deductions: $220,000

Profit: $180,000

Capital gain: $180,000/2 (50% capital gain) = $90,000

*Since the property was purchased equally between John and Jane, the total capital gain will be split between the both parties.

John’s income in 2017: $90,000 + $45,000 = total income in 2017: $135,000

Jane’s income in 2017: $90,000 + $45,000 = total income in 2017: $135,000

Per asset owner: $45,000 x 36.5% (new tax bracket) = $16,425

Taxes owing for each asset owner = $16,425

3. How can you avoid it?

Putting money into a Registered Retirement Savings Plan (RRSP) can help you avoid paying this hefty tax.

Using the example above: Assuming they have the contribution room to do this, if John and Jane invest $45,000 into their own individual RRSP account, they would avoid paying the entire tax hit while still having it available at their disposal and best of all…tax free.

This is an excellent way to jump start your retirement savings all while getting out of having to the pay the government a hefty chunk of change.

 

Home Owner Grant – Online Application

With the first official day of summer just one week away, like most of us, we’re all waiting in anticipation to rid ourselves of responsibility and enjoy those longer evenings and sunny days. If you have kids you might find yourself scrambling to register them for camp or anything under the sun to keep them occupied over the summer holidays. However, before we all get into vacation mode, there is one more “adulting” duty to be attended to, your Home Owners Grant.

To make your life a little easier we’ve gone ahead and included each city’s online Home Owners Grant application form below. To avoid 5% late payment penalty on the HOG portion of your taxes, ensure you have your HOG submitted prior to July 2nd 2018. Please note, you will need your tax notice to complete the online form.

Abbotsford

Burnaby

Chilliwack

Coquitlam

Delta

Hope

Langley

Maple Ridge

Mission

New Westminster

North Vancouver

Pitt Meadows

Port Coqtuilam

Port Moody

Richmond

Surrey

Township of Langley

Vancouver

West Vancouver

White Rock

 

Basic Grant:

If your property has an assessed value of $1,650,000 or less, you may be eligible to claim the full grant amount of $570.

 

If your property’s assessment value is $1,650,000 or greater, you may qualify for a reduced grant amount. The grant is reduced by $5 for every $1,000 above the assessed value and completely eliminated at an assessed value above $1,764,000.

 

Additional Grant:

If you are 65 years of age or older, you may be eligible for an additional grant of $275. The Additional Home Owners Grant is completely eliminated if your property has an assessed value above $1,819,000.