Tag Archives: Manitoba

Manitoba’s housing affordability improves noticeably in the third quarter: RBC Economics

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Manitoba’s housing affordability experienced some of the most noticeable improvements in the country during the third quarter of 2011, according to the latest Housing Trends and Affordability Report issued today by RBC Economics. Homeownership costs in the province fell, as mortgage rates eased and home prices reversed some of the record-breaking gains made in the second quarter.

“Manitoba’s affordability levels continue to stand near their historic norms – a telltale sign that homeownership in the province is reasonably achievable,” said Robert Hogue, senior economist, RBC. “Homebuyers took advantage of this more affordable market in the third quarter, pushing home resales higher by 5.3 per cent.”

RBC’s housing affordability measures for Manitoba, which capture the provinces proportion of pre-tax household income needed to service the costs of owning a home at the going market value, decreased across all housing types in the third quarter of 2011 (a decrease represents a gain in affordability). The measure for the benchmark detached bungalow in the province fell to 35.6 per cent (a decrease of 1.2 percentage points from the previous quarter), the standard condominium to 21.4 (down 0.5 percentage points) and the standard two-storey home to 37.9 per cent (a decrease of 1.5 percentage points).

RBC’s housing affordability measure for the benchmark detached bungalow in Canada’s largest cities is as follows: Vancouver 90.6 per cent (down 1.5 percentage points from the previous quarter), Toronto 52.1 per cent (up 0.1 percentage points), Montreal 40.9 per cent (down 1.3 percentage points), Ottawa 40.8 per cent (down 0.6 percentage points), Calgary 37.6 per cent (up 0.5 percentage points) and Edmonton 33.2 per cent (down 0.6 percentage points).

The RBC Housing Affordability Measure, which has been compiled since 1985, is based on the costs of owning a detached bungalow, a reasonable property benchmark for the housing market in Canada. Alternative housing types are also presented including a standard two-storey home and a standard condominium. The higher the reading, the more costly it is to afford a home. For example, an affordability reading of 50 per cent means that the homeownership costs, including mortage payments, utilities and property taxes, take up 50 per cent of a typical household’s monthly pre-taxed income.

http://www.newswire.ca/en/story/884395/manitoba-s-housing-affordability-improves-noticeably-in-the-third-quarter-rbc-economics

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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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Tax strategy Inheritance, cottages and capital-gains tax

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The tax consequences of owning homes and cottages have been a recurring theme in recent reader letters. Here are two of the latest.

Q: “My mother died recently and my father will inherit all her assets. The principal residence is in her name and comprises more than 50 acres in Quebec. There is a holiday property in Manitoba in his name. Will he be responsible for any capitalgains taxes on the Quebec property? Will the children who are his heirs owe taxes in either province?”

A: Nick Moraitis, partner at accounting firm Fuller Landau, said that since your father inherited everything, he is considered to have acquired all your mother’s assets at her cost and there should be no income tax due. Upon his death, however, all the assets will be considered sold at fair market value, including the Quebec and Manitoba properties, and his estate will be responsible for the taxes. “The father can claim the principal-residence exemption for either property if they were inhabited by him, his wife or his children during the relevant years, but there are some restrictions,” Moraitis noted. “The exemption is limited to property not exceeding a half-hectare (about 1.235 acres) unless the taxpayer can show the property contributed to the use and enjoyment of the housing unit. If, for instance, township bylaws required minimum lot sizes of 50 acres, then you could argue you needed the 50 acres for use and enjoyment of the property. But if the lot size was not mandated, only a portion of the value of the Quebec property covering the value of the buildings and one-half hectare of land is eligible for the exemption and the rest subject to capital-gains tax.” Ideally, the exemption would be applied to the property with the higher capital gain. In Canada, couples have been able to designate only one principal residence since 1982, but if your parents owned both properties prior to 1982, an individual exemption could be claimed on both properties for the prior years, Moraitis noted.

Q: “I have a primary city residence and two country cottages. I have willed both cottages to my two daughters. Each will take over the ownership of one. Will capital-gains tax be due only if they sell them?”

A: Unfortunately, no. When you die, you’ll be considered to have disposed of all assets, and the principal-residence exemption will cover only one property. The difference between what you paid and the market value of the others (less the cost of renovations), will be 50 per cent taxable. That’s a debt for your estate, and hopefully there’ll be enough other assets to cover it without having to sell either cottage.

The Gazette invites reader questions on tax and investment matters. If you’d like your query addressed, send it to Paul Delean, Gazette Business Reporter, Suite 200, 1010 Ste. Catherine St. W., Montreal,

http://www.montrealgazette.com/business/strategy+Inheritance+cottages+capital+gains/5595790/story.html

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Manitoba housing affordability in the neutral zone

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Although it became a little more difficult to own a home in Manitoba, housing affordability remained neutral in the second quarter of 2011, according to the latest Housing Trends and Affordability report issued today by RBC Economics Research.

RBC’s housing affordability measures for Manitoba rose between 0.7 and 1.2 percentage points in the quarter but remained either below or just slightly above their long-term averages. These levels keep Manitoba in the middle of the pack relative to the rest of Canada.

“Modest deterioration in Manitoba’s measures could have contributed to some cooling in home resale activity during the spring. However, major flooding in the province likely caused more significant disruption in certain areas,” said Robert Hogue, senior economist, RBC.

Prior to spring, Manitoba’s housing market registered its best first quarter ever for existing home sales (on a seasonally adjusted basis), led by strong gains in Winnipeg.

RBC’s housing affordability measures for Manitoba, which capture the province’s proportion of pre-tax household income needed to service the costs of owning a home at the going market value, increased modestly across all housing types in the second quarter of 2011 (a rise represents a loss in affordability). The measure for the benchmark detached bungalow in the province rose significantly to 36.6 per cent (an increase of 1.2 percentage points from the previous quarter), the standard condominium to 21.8 per cent (up 0.7 percentage points) and the standard two-storey home to 39.2 per cent (a gain of 1.0 percentage point).

http://www.newswire.ca/en/releases/archive/August2011/22/c5125.html

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Have you paid your property taxes?

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The City of Winnipeg is offering “Drive-By Drop Off” payment of property taxes in advance of the deadline to pay Thursday.

Tuesday to Thursday, city staff will accept payments outside of the Assessment and Taxation Department at the corner of James Avenue and King Street from 8:30 a.m. until 4:30 p.m. To pay your bill this way, bring your tax bill and a cheque or money order — not cash.

Cash will be accepted in person at City Hall, 510 Main Street or at the Bilingual Service Centre, 614 Des Meurons. Winnipeg taxpayers can also make payments though their financial instituion or by courier, or take advantage of the city’s Tax Instalment Payment Plan.

“It’s important for property owners to make their payments by the June 30 deadline, to avoid penalties for late payment,” Nelson Karpa, city assessor in the assessment and taxation department, said in a release.

For more information on payment options please contact 311 or toll free at 1-877-311-4974 or 311@winnipeg.ca.

http://www.winnipegsun.com/2011/06/27/have-you-paid-your-property-taxes

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Manitoba’s Housing Affordability Remains Steady Amid Sound Market Conditions: Rbc Economics

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Manitoba’s housing market continued on the straight and narrow in the early part of 2011, according to the latest Housing Trends and Affordability report released today by RBC Economics. Housing affordability remains attractive in the province, with little change registered in the first quarter.

“Mounting homebuyer demand continued to be met with an equal-sized increase in homes being put out for sale,” said Robert Hogue, senior economist, RBC. “This sense of balance across Manitoba kept property value appreciation under control.”

The RBC report indicates that home prices changed little in the first quarter. Prices rose modestly for detached bungalows and two-storey homes, while edging lower for condominium apartments (following a sizeable gain in the previous quarter).

The RBC housing affordability measures for Manitoba, which capture the province’s proportion of pre-tax household income needed to service the cost of owning a home, were mixed in the first quarter of 2011 (an increase in measure means that owning a home is less affordable). The measure for the benchmark detached bungalow rose by 0.1 of a percentage point to 34.1 per cent and declined by 0.2 of a percentage point for condominium apartments to 20.3 per cent. The measure remained even for two-storey homes at 36.8 per cent.

“Manitoba is still one of only two provincial markets in Canada, along with Alberta, where measures have remained below long-term averages for all housing categories that we track,” added Hogue.

The majority of Canadian markets experienced weakened affordability in the first quarter of 2011. Most notable was the sizeable deterioration in British Columbia. More specifically, Vancouver saw significant gains in property values, which drove the already elevated cost of homeownership even higher. Quebec’s homebuyers also faced noticeable rises in ownership costs, while those in Atlantic Canada saw their affordability advantage somewhat diminish. The picture remained mixed in other areas of the country, with Ontario, Alberta and Saskatchewan experiencing ups and downs in ownership costs, depending on the housing type.

“Despite the latest erosion in affordability, provincial levels generally continue to stand near their long-term averages, suggesting that owning a home remains affordable or, at worst, slightly unaffordable across Canada – with Vancouver being a notable exception,” said Hogue.

RBC’s housing affordability measure for a detached bungalow in
Canada’s largest cities is as follows: Vancouver 72.1 per cent (up 3.4 percentage points from the last quarter), Toronto 47.5 per cent (up 0.8 of a percentage point), Montreal 43.1 per cent (up 2.0 percentage points), Ottawa 39.0 per cent (up 0.4 of a percentage point), Calgary 35.9 per cent (up 0.9 of a percentage point) andEdmonton 31.5 per cent (up 0.5 of a percentage point).

http://www.newswire.ca/en/releases/archive/May2011/20/c6373.html

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Home ownership has its tax breaks

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With spring comes the official launch of house hunting season. So, what better time to ensure that you are maximizing the tax benefits associated with home ownership, especially since the 2010 tax return filing deadline is fast approaching.

If you purchased a new home in 2010, don’t forget to claim the relatively new Home Buyers’ Tax Credit. Introduced in 2009, this non-refundable tax credit is based on a $5,000 amount for first-time homebuyers which, at the 15% federal credit rate, is worth $750.

Interestingly, you are considered a first-time homebuyer if neither you nor your spouse or partner owned and lived in another home in the calendar year of purchase or any of the four preceding calendar years. In other words, you could have owned a home previously, but if you sold it and then perhaps rented for four years or so, you still may qualify as a first-time homebuyer for the purpose of claiming the credit if you bought a home in 2010.

Did you use the Home Buyers’ Plan when purchasing your home? Under the HBP, a first-time homebuyer can withdraw up to $25,000 from her RRSP to purchase a home without having to pay tax on that withdrawal. Any funds withdrawn must be repaid over a maximum of 15 years or the amount not repaid in a year is added to the participant’s income for that year.

If you participated in the HBP previously and were required to make a repayment for 2010, be sure to designate a portion of your RRSP contributions as a HBP repayment on Schedule 7 of your personal tax return, under “PART B – Repayments under the HBP…”

You may also be able to get some tax relief from your property taxes, depending on your province of residence. Quebec provides a refund for property tax paid during the year, while both Ontario and Manitoba provide a tax credit for property tax or rent paid during the year.

Still have a mortgage? If so, have you considered whether you could restructure your financial affairs to make your mortgage interest effectively tax deductible?

If you have non-registered investments, consider selling them to pay off your mortgage (non-deductible debt) and then borrowing back the funds for investment purposes (tax-deductible debt). This allows you to effectively write off what otherwise would have been non-deductible personal mortgage interest.

This strategy has often be referred to as the “Singleton Shuffle,” because it was named after Vancouver lawyer John Singleton’s 2001 Supreme Court victory, which upheld the notion that you can rearrange your financial affairs in a tax-efficient manner so as to make your interest on investment loans tax-deductible.

Before doing so, be sure to consider any tax consequences of selling your non-registered investments along with any prepayment fees associated with paying off your mortgage early.

Finally, if you sold your home in 2010, the good news is that the gain is likely tax-free, provided you didn’t also own a second home.

The principal residence exemption (“PRE”), if available, can shelter the gain on a principal residence from capital gains tax. A principal residence can include either your main home or a vacation property, even if it’s not where you primarily live during the year as long as you “ordinarily inhabit” it at some point during the year.

The CRA assumes that if no gain is reported on your return for the year of sale, the PRE has been used to eliminate the gain and therefore, no other property (such as the vacation property) can be designated for the years in which the PRE was presumed to be claimed on the sold property.

As a result, a conscious decision should be made as to whether the gain should be reported, as failure to report jeopardizes claiming the PRE in the future on the sale of your other property for the years in which you owned both properties.

http://www.financialpost.com/personal-finance/Home+ownership+breaks/4584249/story.html

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Almost half ‘Tobans OK with taxes

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The percentage of homeowners in Manitoba and Saskatchewan who feel their municipal taxes are fair is higher than the Canadian average.

A poll released Monday by Leger Marketing showed 60% of Canadians surveyed felt their municipal taxes were too high, while 37% said they felt the taxation level was about right. Only 1% said taxes were too low.

In Manitoba and Saskatchewan — the two provinces were grouped in the survey — only 54% said their municipal taxes were too high, while 43% said they were about right.

“A lot of people think they’re getting a fair shake-up,” said Dave Scholz, vice-president of Leger Marketing. “Municipal leaders will take out of this poll whatever they like, but this lets them know they’re not on a bad path in terms of where they’re going.”

Winnipeg Mayor Sam Katz said the poll demonstrates to him the importance of not increasing property taxes, a form of revenue he has repeatedly called “regressive.”

http://www.winnipegsun.com/news/manitoba/2011/03/07/17525801.html

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Realtors suggests answers to rental unit shortage

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Coming from WinnipegREALTORS’ recent 6-page discussion paper, “Manitoba needs to move away from the current rent control regime if it wants to improve vacancy rates and better prepare for future immigrant-driven growth.” In line with this, the said report paper also mentions about numerous quoted studies that show controls discourage construction of rental units.

Even if there is an urge to eliminate control, the people behind the report suggests a short-term compromise to applied but this is softer form of controls that temporarily exempt newly vacated rental units to allow market rents to climb to more realistic levels. That would reduce the gap between market rates and the price developers have to charge for newly constructed units. But a tough persuasion is anticipated to be done to get the government in the new plan.

Family Services and Consumer Affairs Minister Gord Mackintosh contradicts many of the points cited in the Realtors’ paper.

“We’ve just received an outside independent expert analysis that showed rent regulation was not the culprit for low vacancy rates,” he said.

Mackintosh stressed that more apartments are on-going with their construction in the province today than at any time since Manitoba started keeping such records in the 1980s. In Saskatchewan, where there are no rent controls, the vacancy rate is about as low as it is in Manitoba.

The group behind the discussion paper, anticipated variety of opinions and claim that a compromise solution isn’t impossible

“There is no silver bullet and there will be no overnight success here. It’s going to take awhile — months, maybe even years. But we have a problem here and we have to start somewhere.”

They are hoping to meet officials concern to work out appropriate solutions.

“Hopefully some of the solutions we put forward in the discussion paper will be considered,” he said. “Doing more of the same is not an option.”

Two other key recommendations are the introduction of a provincial portable shelter allowance to help low-income earners cope with rising rental rates and new property tax credits to encourage investors to built more moderate to low-income rental units.

Manitoba Housing and Community Development representative Minister Kerri Irvin-Ross said the province is already working to set up a broad working group to discuss the rental housing shortage. It will include landlords, housing advocates, tenants and other public and private sector players.

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Manitoba drops small business tax to zero

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December 1 marks the day that Manitoba transforms into a zero-per-cent small-business tax rate province in Canada.

This move by the Manitoban government was commended by Catherine Swift, president of the Canadian Federation of Independent Business (CFIB). It allows small business to keep more of their profits and reinvest in their companies, their employees and their communities.

Similar t to the personal income tax system, all business pay a reduced provincial corporate income tax rate up to a provincial threshold, which varies between $ 400,000 and $ 500,000. After that threshold, the higher general corporate tax rate applies.

But make no mistake—businesses in Manitoba still pay a host of taxes and contribute to the functioning of government. Nonetheless, this is a step in the right direction.

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