Tag Archives: First Time Home Buyers

Manitoba Land Transfer Tax (LTT) not a fee but a source of revenue?

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Based from the analysis made by the WinnipegREALTORS, the provincial government’s land transfer tax (LTT) has burdened home buyers since it was first implement in 1987. The amount of LTT a home buyer now pays has increased tenfold since the implementation of the tax. Take for example, if you purchased a house back in 1987 at $82,000 you have to pay $260 to the local government to settle the acquisition of the new title.

In 2011, if you bought a house amounting to $249,000, the land transfer tax required to be paid by the buyer is $2,630. You might as well say $2,700, as another $70 registration fee is required for registering the land title.

“It is to imagine that when they introduced the land transfer tax that they intended it to raise so much revenue, and not to remain similar to a user fee as it was at the beginning, ” said Claude Davis, chair of WinnipegREALTORS civic and legislative affairs committee.

One reason the LTT is so punitive is that the government has never indexed it to home price increases since the tax was first implemented in 1987. Instead, the government increased the tax percentage from 1.5 per cent to two per cent for any dollar amount over $200,000. As a result, for every $50,000 in property value above $200,000, the government collects an additional $1,000. This is why in 2010, despite MLS home sales being down in comparison to 2009, the provincial government took in an additional $3.6 million based on MLS home sales alone.

WinnipegREALTORS has already pointed out to the government that the land transfer tax is an impediment to housing affordability, especially for first time home buyers who do not have the benefit of any equity in a home.

Sales for entry levels homes in 2010 plummeted 35 per cent in comparison to 2009. While there is no way to attribute the decrease entirely to the LTT, as the highest rate two per cent does not kick in until after $200,000, any additional closing cost can be enough to prevent a first-time buyer from having the money needed to purchase a home.

Winnipeg’s current sellers’ market is well entrenched in part due to a lack of rental accommodations and strong immigration numbers. Anything the provincial government can do to loosen up badly needed rental units for newcomers would be welcomed. Freeing up occupied rental units by encouraging home ownership is one solution.

In British Columbia and Ontario, where unreasonably high land transfer taxes are also levied on home buyers, at least they recognize the difficult first’s time buyers experience and offer generous exemptions for this group. But there is no first time home buyer exemption in Manitoba.

The government has to keep in mind that even home sale in Manitoba generates economic activities of $40,000. The government also should appreciate that most buyers would use any savings they realize from relied on the land transfer tax back in their newly-purchased homes. Consider what economists are saying about this year’s MPI rebate: the best thing for the economy is for people to spend. That is clearly what most home buyers will given some relief.

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RCMP mount up for checkstop season

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‘Tis the season for family gatherings, celebrations and checkstops.

Manitoba’s RCMP detachments begin their annual Christmas checkstop campaign today, joining other police agencies in the province, including Winnipeg police.

The RCMP campaign runs until Jan. 4. Officers will be looking for impaired drivers and people who aren’t wearing a seatbelt in locations across Manitoba. Police are urging people to buckle up and not get behind the wheel if they’ve been drinking.

Tories propose land-tax relief

The Manitoba Tories proposed a new law yesterday that would exempt first-time home buyers from the land transfer tax.

Tory finance critic Rick Borotsik introduced a private member’s bill yesterday that would allow anyone who had not previously owned a property, or whose spouse has not previously owned a property, to be exempt from paying the tax, which usually adds a few thousand dollars to a real estate purchase. Borotsik said his bill has the support of realtors’ associations in the province.

Finance Minister Rosann Wowchuk suggested the bill won’t make the cut as their focus has been on personal income tax and school tax.

Fire victim identity confirmed

Police have confirmed the victim of a fatal house fire in Winnipeg earlier this week is a widower whose wife died last spring.

Millard Haluk, 71, and his pet dog died in the blaze, which was accidental, police said. A fire official previously said the cause was electrical in nature. The fire, at Haluk’s Elmwood home at 598 Talbot Ave., was reported Monday at 6:50 a.m.

Haluk’s body was found near the back of the house on the main floor. It appeared the fire started at the rear.

Friends said Haluk was a hoarder who collected so many objects there was little room to move in the home.

This raised questions whether the home’s condition prevented his escape. Damage is estimated at $250,000, police said.

Friends said Haluk had been heartbroken and depressed since his 62-year-old wife, June, died in May.

http://www.winnipegsun.com/news/manitoba/2009/12/04/12033021-sun.html

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First-time home buyers willing to carry more debt

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“A lot of people assume that younger Canadians buying their first home in a city would naturally choose the affordable condo option, but this study shows that this isn’t the case,” said Chris Wisniewski, group product manager, Real Estate Secured Lending, TD Canada Trust. “Buying in the city often means choosing an older home that needs work, so many are looking at renovating soon after they purchase.”
WinnipegREALTORS® has noted the revitalization of older neighbourhoods resulting from an influx of young home buyers.
“Young first-time buyers are looking at established neighbourhoods with affordable homes, and are buying these homes with financial assistance from their parents,” said WinnipegREALTORS® market analyst Peter Squire.
“While some are looking for that perfect house, many are willing to put sweat-equity into a fixer-upper in an older established neighborhood,” he added
When today’s 55-plus Canadians bought their first home, paying off their mortgage was a top priority To day, according to the TD Canada Trust survey, slightly less than half of young Canadian adults agree that paying off their mortgage is a first priority, compared to 64 per cent of Canadians over 55, according to the TD Canada Trust survey.
In Winnipeg, Squire said many young first-time buyers are now willing to carry more debt, especially when two working adults are the home buyers.
For Canadians across all generations, their home is their biggest investment. The study found eighty- eight per cent of Canadian adults 18 to 34, 87 per cent of Canadians 35 to 54, and 78 per cent of those 55-plus all agreed that their first home was an investment for the future. Sixty-four per cent of younger Canadian adults aged 18 to 34 said they put all their savings into their first home compared to 62 per cent of Canadians aged 55-plus arid 54 per cent of Canadians aged 35 to 54.
The research revealed that when it comes to getting a mortgage, young adults tend to shop around more than their older counterparts did. Sixty-two per cent of older Canadians were loyal to their own bank and received financing where they were already a customer, compared to 36 per cent of younger homeowners who were more likely to shop around and take recommendations.
“There are so many different options available now, and easier access to information with the use of the internet, that it’s no wonder today’s first-time home buyer shops around a bit more,” added Wisniewski.
“It’s a great idea to look around and see what’s available. Thirty years ago when people were looking for financing, they usually had limited choice. Now there are many options to explore with your bank, including a variety of fixed-rate mortgages, variable-rate mortgages, and even green mortgages for buyers who want to lessen their footprint on the environment.”

“A lot of people assume that younger Canadians buying their first home in a city would naturally choose the affordable condo option, but this study shows that this isn’t the case,” said Chris Wisniewski, group product manager, Real Estate Secured Lending, TD Canada Trust. “Buying in the city often means choosing an older home that needs work, so many are looking at renovating soon after they purchase.”

WinnipegREALTORS® has noted the revitalization of older neighbourhoods resulting from an influx of young home buyers.

“Young first-time buyers are looking at established neighbourhoods with affordable homes, and are buying these homes with financial assistance from their parents,” said WinnipegREALTORS® market analyst Peter Squire.

“While some are looking for that perfect house, many are willing to put sweat-equity into a fixer-upper in an older established neighborhood,” he added

When today’s 55-plus Canadians bought their first home, paying off their mortgage was a top priority To day, according to the TD Canada Trust survey, slightly less than half of young Canadian adults agree that paying off their mortgage is a first priority, compared to 64 per cent of Canadians over 55, according to the TD Canada Trust survey.

In Winnipeg, Squire said many young first-time buyers are now willing to carry more debt, especially when two working adults are the home buyers.

For Canadians across all generations, their home is their biggest investment. The study found eighty- eight per cent of Canadian adults 18 to 34, 87 per cent of Canadians 35 to 54, and 78 per cent of those 55-plus all agreed that their first home was an investment for the future. Sixty-four per cent of younger Canadian adults aged 18 to 34 said they put all their savings into their first home compared to 62 per cent of Canadians aged 55-plus arid 54 per cent of Canadians aged 35 to 54.

The research revealed that when it comes to getting a mortgage, young adults tend to shop around more than their older counterparts did. Sixty-two per cent of older Canadians were loyal to their own bank and received financing where they were already a customer, compared to 36 per cent of younger homeowners who were more likely to shop around and take recommendations.

“There are so many different options available now, and easier access to information with the use of the internet, that it’s no wonder today’s first-time home buyer shops around a bit more,” added Wisniewski.

“It’s a great idea to look around and see what’s available. Thirty years ago when people were looking for financing, they usually had limited choice. Now there are many options to explore with your bank, including a variety of fixed-rate mortgages, variable-rate mortgages, and even green mortgages for buyers who want to lessen their footprint on the environment.”

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Transfer tax slammed

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Realtors call for exemptions, reductions

Winnipeg’s realtors have asked the province to consider exemptions and reductions to the land transfer tax, which the agents say is an impediment to some would-be homebuyers.

The provincial government keeps a registry of land titles and requires people to pay to transfer the title when they buy a property. That tax can run into the thousands of dollars. The Winnipeg Realtors Association says that can cause some prospective homebuyers to delay an entry into the housing market as they save up enough for the land transfer tax, which is paid up front as part of the closing costs of a sale.

“We feel it’s a very regressive, negative tax,” said Don Cook, chair of civic and legislative affairs for the Winnipeg Realtors Association. “The government’s really getting a good take on it right now.”

A spokeswoman for provincial Finance Minister Greg Selinger said the government has projected it will bring in $43.6 million from the tax this fiscal year, which ends March 31. The cost of administering the land transfers is about 1% of that revenue, she said, meaning about 99% of it goes into the government’s general coffers.

Suggestions

Cook said the realtors met with Selinger on Feb. 18 with a list of suggestions for changes, including an exemption for first-time buyers and affordable housing program participants. Ontario and B.C. exempt first-time home buyers, while Saskatchewan and Alberta have no land transfer tax at all, the Winnipeg Realtors Association said.

Cook said the realtors also suggested changing the rates in Manitoba.

Currently, Manitobans pay nothing on the first $30,000 of sale price, 0.5% from $30,000 to $90,000, 1% from $90,000 to $150,000, 1.5% from $150,000 to $200,000, and 2% on the portion above $200,000.

The realtors have suggested charging 0.5% up to $100,000, 1% up to $200,000, 1.5% up to $500,000 and a cap at the half-million mark. “We’re hopeful it will happen,” Cook said.

However, Selinger’s spokeswoman said the NDP government is “prioritizing initiatives that will stimulate our economy” and focusing on tax measures contained in last fall’s throne speech. The speech made no mention of land transfer tax.

She said the government has instead eased the property tax burden by eliminating the education support levy and increasing the education property tax credit over the past few years.

http://www.winnipegsun.com/news/winnipeg/2009/03/09/8677276-sun.html

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