June 17, 2013 Issue 73

WHAT’S INSIDE: Can you Avoid Capital Gains Tax? PAGE 8

HOMES FOR SALE Grimsby, Lincoln, West Lincoln & Niagara Listings PAGE 5

HOMES FOR SALE Hamilton, Stoney Creek, Ancaster, Dundas & Glanbrook Listings PAGE 9

June 17, 2013 - Vol 52b

Rob Golfi Sales Representative

8 Kidd Avenue, Grimsby, ON See page 5 for details.

HOME EVALUATION NO COST • NO OBLIGATION

905-575-7700 • 905-945-0188

Page 2

The Golfi Team Real Estate Market Watch

About Rob Golfi

June 17, 2013

How a House Sale Repair Clause led to a Law Suit

Rob and Sue Golfi

Since the inception of his career in 1997, Rob Golfi has recognized that understanding his clients’ needs is essential to providing excellent service. Married 25 year with four children, Rob understands a family’s wants and needs.

As business grew, Rob assembled the Golfi Team in an effort to maintain the same level of professionalism clients have come to expect. Shortly thereafter in 2003, the team received the prestigious honour of being among the top 100 Real Estate Teams for RE/MAX Canada, and this status continues to date.

Rob’s experience and aggressive negotiating skills have earned him every major honour awarded by RE/MAX, including President’s Club, 100% Club, Platinum Club, Chairman’s Club, Hall of Fame in 2003, the Lifetime Achievement Award in 2006, his SRES® designation in 2009 and the Diamond Club Award in 2010. Having worked with many of the industry’s professionals over the years, he has the necessary edge to best negotiate the sale of your home.

Any agent can list your house, but Rob’s knowledge, extensive marketing background and dedication gives clients peace of mind when dealing with the single most important investment in their lives. With years of combined experience, the Golfi Team can provide your home with a level of exposure that most agents cannot. Utilizing a team approach also means that they will likely find a purchaser to buy your home sooner, rather than waiting for other agents to approach you with potential buyers.

Ranked in the top 5 of nearly 2,000 sales agents in the HamiltonBurlington and Niagara areas, listing with Rob and the Golfi Team is the right choice when choosing someone to represent your best interest.

M

ost home sale deals are conditional on the buyer being satisfied with an inspection. If the inspector finds problems that are big enough, the buyer usually wants them corrected in order to go through with the deal.

As the following case shows, if you are not careful about how you word the repair clause, you might end up in court.

In June, 2004 Mark Rosenhek agreed to pay Elizabeth and Angelo Breda $1.995 million for their house on Doncliffe Dr. in Toronto. The Bredas had built the home in 1997 and lived there for seven years before putting it up for sale.

The agreement was conditional on a home inspection. The home had two spots where the roof was flat, not sloped and the inspector noticed that water was pooling on the flat roof area. He noted the pooling could later lead to leaks.

There were a few other small items identified in the inspection, including a broken window, flue caps for the chimney and some minor electrical repairs. The parties revisited the sale agreement and Rosenhek signed a waiver that said the deal would proceed as long as the Bredas repaired the deficiencies before closing.

The deal closed in September, 2004.

Neither Rosenhek, nor his lawyer, asked before closing if the repairs had been made. After he moved in, Rosenhek did notice when looking out a bedroom window that water was ponding on the flat roof.

He did not contact the Bredas for three years when a leak appeared in the dining room ceiling beneath the flat root.

Rosenhek got a repair quote which was

more than $20,000 to replace the flat roofs with a sloping roof. He sued the Bredas for the cost.

In a June, 2012 decision Judge Laurence Patillo of the Ontario Superior Court decided that any repair obligations ended when the deal closed. It was up to the buyers to inquire about the status of the repairs and make any complaints on or before closing.

He accepted the Bredas’ evidence that agreed-upon repairs had been completed before closing.

Sellers, buyers and real estate agents are sometimes confused about how to deal with repair obligations. The best way is to get an estimate and give the buyer a credit for the amount on closing. Let the buyer fix it after closing. Otherwise, there are almost always arguments over whether the work was done correctly.

Buyers are also often mistaken, thinking that they can hold back money on closing if repairs are not completed as promised. In most cases, the buyer has to close and sue for the cost of repairs later.

If you want the ability to hold back money, then a clause must be inserted into your contract in the first place that says specifically that money will be held back until both parties, acting reasonably, determine whether the repairs have been adequately completed.

Make sure you are properly protected before signing any real estate contract, to avoid unnecessary court proceedings later.

Mark Weisleder is a Toronto real estate lawyer. Contact him at mark@markweisleder.com

Record Number of Sales in May

T

he REALTORS® Association of Hamilton-Burlington (RAHB) reported a record 1599 sales of all property types listed through the RAHB Multiple Listing Service® (MLS®). The previous record was 1598 sales in June of 2009.

There were 2,268 properties listed in May, a small increase over May of last year. All property sales increased by 3.4 per cent over the same month last year.

The average sale price of $423,542 was an increase of 12.2 per cent from the previous May. “May was a stellar month for sales of all property types,” said RAHB CEO Ross Godsoe. “We started to see move-

ment in the market in April and that continued through May, resulting in a record number of all property sales.”

Seasonally adjusted sales of residential properties were 1.5 per cent higher than the same month last year, with the average sale price up 12.3 per cent for the month. Seasonally adjusted numbers of new listings were 3.4 per cent higher than the same month last year.

Actual overall residential sales were three per cent higher than the previous year at the same time. Residential freehold sales were 3.6 per cent higher than last year while the condominium market saw an increase in sales of almost one per cent. The average sale price of freehold

properties showed an increase of 12.3 per cent over the same month last year; the condominium market saw an increase of 14.1 per cent when compared to the same period last year.

“The jump in the average sale price should not be taken as an indication that the Greater Hamilton, Burlington and outlying areas have become unaffordable”, added Godsoe. “A closer look at the sales activity in the various communities which make up our market area shows a wide variety of price ranges.”

The average sale price is based on the total dollar volume of all residential properties sold. Average sale price information can be useful in establishing long

www. GolfiTeam .com

term trends, but should not be used as an indicator that specific properties have increased or decreased in value.

The average days on market increased from 38 days to 39 days in the freehold market but decreased from 44 days to 37 for condominiums.

Year to date, listings are down 2.1 per cent compared to the same period last year, while sales are 4.6 per cent lower.

The average sale price for the first five months of the year is 7.5 per cent higher than the same period last year.

June 17, 2013

The Golfi Team Real Estate Market Watch

Page 3

FREE HOME EVALUATION

Your home could be worth more than you think!

Call the GOLFI TEAM 905-575-7700 • 905-945-0188

Outstanding Team. Exceptional Results.

1

Burlington Burlington

Freelton Free eel elton ton

Waterdown Waterdown Wa

Dundas Du undas

HAMILTON BURLINGTON & NIAGARA

Hamilton Hamililton

Ancaster Ancaster

Mount Mo ount Hope Ho ope e

Stoney Stoney Creek Creek eek

Grimsby Grimsby

Lincoln Lincoln

Binbrook Bin inbrookk

West WestLincoln Lincoln

Niagara Niagaaraa Niaga on onthe the St.St Lake St. Lake Catharines Cath Ca a rines atha

Thorold Thorold

Pelham Pelham

Niagara Niagara Falls Falls

Welland Welland Wainfleet Wa Wainfleet

Port Port Colborne Colborne

100%

RE/MAX TEAM WORLDWIDE

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RE/MAX TEAM

Inducted 2003

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How The Golfi Team Did in 2012: ✓ Number Of Homes Sold in 2012: 313 ✓ List Price To Sold Price Ratio: 98% ✓ Average Days On Market: 39

2010-2012

Information based on recorded commissions paid between January and December 2012 from the REALTORS® Association of Hamilton-Burlington. Rankings are compiled from figures submitted by regional and local offices.

Rob Golfi

Sales Representative

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Sales Representative

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Sales Representative

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Wendy Murray-Nicholson Sales Representative

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Sales Representative

Kristina King

Sales Representative

Call Today 905-575-7700

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Sales Representative

Lynn Page

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Page 4

The Golfi Team Real Estate Market Watch

June 17, 2013

Municipal Year-to-Date Statistics May 2012 vs May 2013 P R E S E N T E D

B Y

T H E

G O L F I

T E A M

YTD Comparison May 2013 / 2012

AREA

Based on sales data on all home sales from May 2012 vs May 2013, REALTORS Association of Hamilton-Burlington

Listed YTD

Expired YTD

Sold YTD

Average Selling Price

Average Days on Market

Selling % of List Price

ANCASTER (DISTRICT 42)

2013 2012

446 357

58 55

268 228

$469,743 $451,249

55 47

98% 98%

BURLINGTON (DIST. 30 to 36 & 38)

2013 2012

1982 1917

151 109

1344 1499

$483,963 $453,643

32 29

98% 99%

DUNDAS (DISTRICT 41)

2013 2012

186 187

9 20

149 172

$376,357 $365,526

47 55

98% 98%

GLANBROOK (DISTRICT 53)

2013 2012

287 245

39 28

180 160

$333,328 $338,649

64 52

98% 98%

GRIMSBY (DISTRICT 54,55)

2013 2012

264 257

34 37

167 183

$352,224 $334,433

52 54

98% 97%

HAMILTON EAST (DIST. 23,24,27,28,29)

2013 2012

482 460

44 61

349 375

$203,865 $197,739

38 46

97% 97%

HAMILTON WEST (DIST. 10, 11, 12)

2013 2012

417 441

37 43

277 344

$316,267 $287,590

39 46

99% 98%

HAMILTON MTN (DIST. 15,16,17,18,25,26)

2013 2012

1018 1049

92 127

784 832

$279,154 $266,338

37 41

98% 98%

HAMILTON CTRL (DIST. 13,14,20,21,22)

2013 2012

688 647

106 136

497 475

$172,281 $160,395

44 47

97% 97%

BEAMSVILLE (DISTRICT 981)

2013 2012

112 96

9 22

73 70

$293,578 $272,205

47 44

98% 98%

WEST LINCOLN (DISTRICT 56, 982)

2013 2012

53 50

6 7

29 29

$392,947 $364,555

77 74

97% 97%

SMITHVILLE (DISTRICT 57)

2013 2012

46 56

3 11

27 33

$257,249 $274,648

55 69

97% 97%

STONEY CREEK (DISTRICT 50,51,52)

2013 2012

614 603

69 81

398 463

$325,929 $313,351

41 49

98% 98%

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June 17, 2013

The Golfi Team Real Estate Market Watch

Grimsby, Lincoln West Lincoln & Niagara

Rob Golfi*

beAmsville

Page 5

$369,500

Grimsby

$329,900

beAmsville

$399,900

Grimsby

$649,900

2705 Campden Road

8 Kidd Avenue

4359 Tamarac Avenue

511 Main Street West

One floor family living in serene setting. Home boasts 3+1 bedrooms eat-in kitchen, huge basement rec room with walkout to patio. Large above ground pool & oversized garage. Updated, windows, exterior doors, furnace, roof, pool & cistern.

CHARACTER AND CHARM – Fantastic 4 bedrm home in the heart of Grimsby. New maple country style kitchen with stainless steel appliances, updated bathroom with claw tub, original oak & plank floors, updated shingles & plywood, mostly updated vinyl windows, new furnace 07, new wiring.

QUIET COURT LOCATION – This 4 bedrm 2 storey home has everything you’re looking for, open concept, gorgeous hardwood floors in living/ dining room & family room, gas fireplace, 3 tier patio deck in landscaped back yard, new shingles in 2011, updated vinyl windows, & oversized lot.

If quality is important, this house is for you! Custom built home in 2004 sitting on ½ acre features maple kitchen w/granite counters, cove ceilings w/pot lights, Brazilian cherry hardwd flrs, professionally finished basement w/fireplace, oversized dble car garage, concrete drive & back patio.

$1,398.91 per/mth P&i / O.A.C.

$1,248.99 per/mth P&i / O.A.C.

$1,514.01 per/mth P&i / O.A.C.

$2,457.83 per/mth P&i / O.A.C.

Grimsby

$345,000

Grimsby

$299,900

Grimsby

$324,900

20 Tami Crescent

48 Park Rd North

26 Brierwood Avenue

BEAUTIFULLY MAINTAINED & UPDATED-Quiet court location with easy access to QEW features custom kitch w/pine cabinets, gorgeous bamboo floors, updated bathrm, professionally finished basement w/wood fireplace & brick facing, mostly updated vinyl windows, fenced yard, new shingles in 2008, furnace in 2005.

RENO DONE RIGHT!! Rebuilt from the studs, basically a new home!! Country cozy w/50x125 ft. lot & over 80 ft. driveway w/parking for 10. Located across from a park, this 3 bedrm bungalow offers 1100 sq.ft. of updates! Show & Sell!

AMAZING IN EVERY RESPECT IN THIS PROPERTY – Bungalow in immaculate condition, features beautiful oak kitch cabinets, gorgeous hardwd flrs, all vinyl windows, professionally finished basement with walk out to back yard, new shingles 2013, close to shopping & quick access to QEW.

$1,135.41 per/mth P&i / O.A.C.

$1,230.06 per/mth P&i / O.A.C.

$1,304.74 per/mth P&i / O.A.C.

niAGArA-On-the-lAke

$259,900

vinelAnd

$499,900

smithville

$444,900

beAmsville

$312,000

4084 Barry Drive CLASSIC 3LVL SIDE SPLIT–sitting on large 68x128 foot lot w/detached oversized double car garage, features sun room addition, new shingles 2009, mostly vinyl window, oak kitchen cabinets, finished basement, updated bathroom, hardwood floors, & professionally landscape yard. $1,179.94 per/mth P&i / O.A.C.

Grimsby

$265,000

24 Robertson Road

3905 Cody Trail

55 Las Road

49 Cline Mountain Rd. S.

Updated throughout and located in a fabulous area! This property features an eat-in kitchen with pantry, hardwood, living room/dining room with gas fireplace, master with ensuite and custom walk-in closet, fully finished lower level with wet bar and office. Updates include: shingles ‘12, new A/C ’11, concrete steps and side drive ’10. Unpack and start enjoying! $982.91 per/mth P&i / O.A.C.

PRESTIGIOUS BUNGALOW WILL TAKE YOU BY SURPRISE! – This custom built has all the luxury you want & more! Hardwd flrs, custom kitch cabinetry w/stone counters, breakfast bar, crown moulding, master bedrm w/rich hotel style ensuite, & covered patio. Still time for you to choose your colours!

PRESTIGIOUS BUNGALOW WILL TAKE YOU BY SURPRISE! – This custom built has all the luxury you want & more! Hardwd flrs, custom kitch cabinetry w/stone counters, breakfast bar, crown moulding, master bedrm w/rich hotel style ensuite, & covered patio. Still time for you to choose your colours!

AFFORDABLE, & ADORABLE 4 BEDRM HOME – Features bright hardwood floors through-out, updated kitchen with backsplash, separate dining room with sliding doors leading to fenced and spacious back yard, shingles 6yrs. new, mostly vinyl windows, finished rec-room in basement, quick access to QEW.

beAmsville

$989,900

$1,890.55 per/mth P&i / O.A.C.

vinelAnd

$229,900

$1,684.38 per/mth P&i / O.A.C.

st. CAthArines

$259,900

$1,002.19 per/mth P&i / O.A.C.

vinelAnd

$264,900

4895 Lister Road

3956 Durban Lane

55 Longfellow Avenue

3506 Rittenhouse Rd

WATERFRONT ON 1 ACRE: This 3450 sqft. custom built raised ranch features a self-contained in-law with separate entrance, all brick construction, large 22x22 patio deck, finished basement with walk out & extra bedrms and baths, and workshop. Shore protection in place.

Adult Lifestyle custom built home backing onto greenspace.

Open concept, hardwd & fireplace in living room. Walk-out to multi-level deck, custom, extra deep garage with backyard access. Home is on leased land

Great Location! Features updated kitchen with backsplash, ceramic floors & walk-out to multi-level deck & children’s play center. Main floor complete w/5 pc bath, powder room and 9ft. ceilings. Basement has ample storage, rec room with option for additional bedroom and rough-in for bath.

Updated 3+1 bed bungalow with large living room, eat-in kitchen with 3 new appl. New roof 2012, newer furnace, CA, windows, exterior doors & maintenane-free facia, soffits & eaves. Basement re-done with large rec room & additionall bedroom.

$3,743.66 per/mth P&i / O.A.C.

$869.45 per/mth P&i / O.A.C.

$983.97 per/mth P&i / O.A.C.

$1,002.90 per/mth P&i / O.A.C.

West linCOln

$359,900

st. CAthArines

$394,500

beAmsville

$599,000

niArGArA-On-the-lAke $289,000

8530 Silver Street

8 Westport Avenue

4130 St. George’s Drive

38 Niagara on the Green

CHARACTER HOME Circa 1865 – Sitting on 1.22 Acres, 4 bedrm, 2 bathrms, over $200,000 in updates, beautiful pine plank flrs, large country size kitchen, updated vinyl windows, newer furnace & C/air, inground pool, 20x32 ft hobby barn + dble car garage 15 min drive to Hamilton.

Prestigious area, walking distance to Port Dalhousie. Impressive open concept layout. Main level has hardwood flooring, living room with a wood burning fireplace, large family room surrounds eat-in kitchen w/plenty of countertops, cabinets, pot drawers & pantry storage. 2 patio doors lead to deck and private backyard.

New Hampton Model home! 3000 sq.ft. of pure luxury, loaded w/upgrades. Open concept w/hardwood, ceramic & porcelain flrs. Kitchen w/granite counters, glass backsplash & island. DR boasts coffered ceilings & wainscoting.

Master bdrm w/double walk in closets & spa bathroom.

$1,436.73 per/mth P&i / O.A.C.

$1,550.18 per/mth P&i / O.A.C.

$2,265.33 per/mth P&i / O.A.C.

Fully finished w/loads of upgrades 3+1 BR townhouse located in the beautiful Niagara on the Green neighbourhood. Features dining rm, formal living rm, eat in kitch, main flr ldry, 3 BRs & 2 full baths on the upper level, finished basement complete w/BR, 4pc bath, & rec rm.

Nothing to do but move in!

Call Today 905-945-0188

$1,092.62 per/mth P&i / O.A.C.

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Page 8

The Golfi Team Real Estate Market Watch

Can you Avoid Capital Gains Tax? W

hen you buy real estate you expect that, over time, it will appreciate in value. If you sell that property for more than you paid, you will have an appreciable gain in value and this triggers a taxable capital gain for the Canada Revenue Agency (CRA).

According to my accountant, this isn’t necessarily a problem. His rationale: If you owe tax it means you’ve made money. And capital gains are taxed at only half your marginal tax rate—one of the more favourable tax treatments offered by the CRA. The real quandary, for most readers, is how to calculate this capital gains tax when the sale of the property is a tad more complicated than selling your principal home.

For that reason, I address some of the more interesting questions readers have sent regarding the sale of property and how to calculate the taxes owed on their capital gains.

Claiming investment expenses Recently a reader, who had bought and rented out a condo as an investment, asked if he could claim the condo’s special assessment bill as an expense against the potential capital gains tax he’d owe once he sold the condo.

“He’s mixing apples with oranges,” says Albert Luk, lawyer with Devry Frank LLP, a Toronto-based law firm. You can’t claim business expenses against a capital gain—you can only claim deductions against business income (or annual expenses against annual rental income). If you want to reduce your capital gain you need a capital loss—such as selling stock that dropped in value.

Every investor has to make a decision, says Luk, either claim expenses and report the sale as income, or eat the expenses and sell the property as an investment, enabling it to qualify for the preferential capital gains tax treatment.

I won a home!

For the fortunate few, lottery wins are not taxable. That’s great news for one reader who wrote in asking how to calculate the capital gains tax on the sale of a home they won in a regional lottery.

“If you don’t already own a principal residence, the home can be sheltered from taxable gains through the principal residence exemption,” explains Scott Plaskett, president of IRONSHIELD Financial Planning, a fee-only firm in Toronto’s west-end.

If you already own a home, and decide to sell your winnings, the CRA will calculate your capital gains based on the difference in current market value of when you won the home versus when you sold the home. The longer you wait, the greater chance you’ll owe capital gains tax.

“I had a client who won a home in the Princess Margaret lottery,” says Plaskett. The client already had a principal residence and, though appreciative, wanted to sell the winning home quickly. The client sold and paid no tax, as the capital gain was almost nil from when he won to when he sold. “He was just tired of cutting the lawn.”

Renting out your basement Many readers want to know if their home will continue to qualify for the principal residence exemption if they rent out a portion of their house. Their concern is prompted by stories of people who lost this exemption after years of renting out their basement.

While it’s true—you can lose your principal residence exemption—it really only happens if you rent out more than 50% of your home, or when you decide to claim capital cost allowance on the portion of your home that is the rental.

The CRA recognizes that, over time, depreciable property will become obsolete. Believe it or not, this also applies to real estate. Because of this you are well within your right to offset this loss in value by deducting the depreciation over a period of several years. This deduction is the capital cost allowance (CCA). However, if you claim CCA on your home, you are effectively telling the taxman that this property is used to produce income, and you use lose the opportunity to claim a capital gain, which is taxed much more favourably than income.

But what if you buy a duplex or fourplex and live in one unit while renting out the others? Can you deduct costs, including CCA, to offset the rental income you collect each year and still claim a principal residence exemption? Yes: but you’ll need to clearly document what portion is for personal use and what portion is rental. Only deduct expenses for the rental portion. When you sell, you can claim the principal residence exemption for the portion that was for personal use. To understand how this all works, consider the following: • Buy a duplex for $400,000.

• Rent out one unit (for $1,500 per month) and live in another.

• Each year you report your annual rental income (about $18,000) and then offset these earnings with expenses associated with the unit.

Remember: you cannot deduct expenses, including CCA, for the personal portion of the duplex.

• •

After four years you sell the duplex for $500,000.

Because 50% of the property is used for personal use, you can shelter 50% of the $100,000 capital gain.

But be forewarned: CRA is cracking down on income generated from real estate, and in order to qualify for the principal residence exemption no more than 50% of a principal home can be used for rental purposes. For people thinking of buying and investing homes with a personal use portion you may want to seek out professional advice.

Gifting property (and avoiding probate) In Canada, you can give gifts to loved ones without tax implications (at least for the recipient).

However, this doesn’t mean you can completely avoid taxes when you gift money, stocks, shares or property. “There are tax implications on gifted property as the CRA sees this as a transfer of ownership, which is a deemed disposition,” explains Plaskett.

Still, many parents consider gifting property either upon death or before (by adding adult children to the title) as a great way to transfer property and avoid probate and other taxes.

“Because Canada doesn’t have a gift tax, like the U.S., people often get caught in tax traps when they start gifting without knowing the implications,” explains Luk. If a parent gifts an adult-child real estate, the CRA considers this transfer of ownership as a disposition: a virtual sale of the property at fair market value. As a result the parent will owe taxes on any appreciable gain on the property (from when they

would “make it a tax-free transaction,” says Plaskett.

Anyone interested in pursuing this type of gift should talk to a professional, as the CRA may have different rules depending on whether you sever the land before or after you build the two homes.

One building, two uses (business and residential units) Those interested in diversifying their type of real property holdings may have considered (or already bought) a mixed residential/commercial unit.

But when it comes time to sell there can be some confusion on how the capital gains tax will be applied.

“Whenever you have a mixed usage property you want to keep meticulous records,” says Plaskett.

“Particularly regarding the value of the building or each unit during times of usage change.”

This will require owner to pay for an assessment or ask a realtor to provide a market comparison analysis and an evaluation of the fair market value of the building at each stage, says Plaskett.

By valuing each unit during each phase of use, you can determine your adjusted cost base (ACB)—a tax term that refers to the change in an asset’s book value.

For example, say you buy a home for $250,000 and live in it for five years before deciding to buy a larger property and keeping your initial home as a rental property.

Since you’ve changed the use of the initial house you are subject to capital gains taxes, but since it was your primary residence you can claim the exemption. This won’t work, though, when you go to sell this property a few years later. The good news:

bought the property to when they gifted the property).

The parent can avoid these taxes if the gifted property qualifies for the principal residence exemption.

However, the adult-child will have to pay capital gains tax on the property should they decide to sell (and if they already own their own principal residence). The quicker one sells, however, the lower the chances of a capital gain, and the lower the chances of taxes owed. That’s because the capital gain is only calculated from the point of inheritance to the point of disposition. Add your adult-child to title years before you die and you’ll simply be increasing the potential for a capital gain and for taxes owed on that gain.

“It gets even more complicated if you gift property to a spouse or a related minor child,” says Luk, where the gifter may be hit with “an unexpected tax consequence known as the attribution rule.” This is when income, dividends and capital gains are attributed back to the gifter. “The take-away is that not all gifts can be given tax-free, even if there is no gift tax, per se.”

Sever land Another option some readers have considered is to sever their land and to build two houses—keeping one home as their primary residence and gifting the other house to either a family member or the builder.

“This is a tricky timing issue,” says Plaskett.

Anytime there is a change of use in a property the CRA considers this a deemed disposition. If the land originally housed their principal residence, then the gifters are sheltered from capital gains tax. However, the recipient—whether it’s a family member or the builder—would be subject to capital gains taxes if they built and then sold the additional home. That means if a builder built the two homes for $1.1 million, and then took possession of one and sold it for $750,000, the builder would owe tax on the $200,000 capital gain. Worse: because of the builder’s profession, this gain could actually be considered business income by the CRA, which eliminates the capital gain tax treatment on the sale of the house and forces the builder to pay his full marginal rate on the $200,000 profit.

If, however, the recipient chose to keep and inhabit the home as their primary residence, this

You can reduce the taxes owed by determining your ACB for the property.

By obtaining a valuation of the property at the time it stopped being your primary residence, you can shelter those capital gains from future tax repercussions. Here’s how it works: • Buy a home for $250,000 and live in it for five years.

• Transition the home from residence to rental property.

• At that time, obtain a fair market value report (either from an appraiser or a Realtor) that values your home at $350,000.

• Sell the rental property three years later for $400,000.

• You will only owe tax only on $50,000, as the additional $100,000 gain is sheltered using the principal residence exemption.

Now, it doesn’t matter if the property is separated into different residential units, or commercial and residential units, the same principles apply.

Be forewarned: the ACB calculation can get a bit tricky. For instance: • You buy a duplex for $750,000.

• You move into one unit and rent out the other.

• A few years later you move out of your unit and rent it out.

• At that time you obtain a fair market value report from a Realtor, which states that the property is currently worth $1 million.

• A year later you sell the duplex for $1.1 million.

In this example, only the $600,000 gain would be taxable at half your marginal rate, says Plaskett, as the principal residence portion of the building would be exempt.

Whether or not you made money can get even trickier if your ACB is lower than the current market value of the asset. “Always ask yourself: what did you take out of your jeans to invest,” says Plaskett. “And don’t forget: Anything you receive—whether it’s interest, rental income, or dividend—is part of your investment return.”

www.golfiteam.com

June 17, 2013

Tenants in common When a married or common-law couple owns a home together the ownership is known as joint tenancy. This allows for the automatic transfer of the property to a surviving spouse without penalty or prior paperwork. (As with anything, this arrangement gets more complicated when you have a mixed or blended family.)

Yet, when adult children inherit a property they become tenants in common. This type of ownership allows two or more people to have equal ownership interests in a property. Unlike joint tenants, however, each can choose the beneficiary that inherits their portion of the property, should they die. Where appropriate, tenants in common may also choose to sell their portion of the property, without consent from the other owners. And tenants in common ownership is not limited to people who inherit property. Many investors also opt for this type of ownership when there are two or more investors in one property.

When it comes to calculating tax, though, each tenant in common is on their own. “Everyone has their own adjusted cost base,” says Plaskett.

For instance, if two adult children inherit a property with a fair market value of $1 million and then rent it out, their adjusted cost base would be $500,000 each. A year later, investor A sells his portion of the property to investor B for $750,000. When investor B sells the property for $2 million, she will only pay half her marginal tax rate on $750,000 of the profit, because her ACB is $1.25 million ($500,000 plus $750,000).

Inheriting international property In Canada you’re required to report your worldwide income and assets. Any profit earned on the sale of the foreign property is calculated in the same manner as non-primary residence property sold in Canada.

“Even if you own or inherit a home in Florida that doesn’t mean you avoid taxes,” says Plaskett. But there are ways to avoid taxes on foreign property. “If you put the property into a trust, so you don’t personally own the property, then you don’t have to worry about the capital gains once you sell the property,” explains Plaskett. The trust will pay U.S. tax, but will be exempt from Canadian taxation. Get expert help if you’re thinking of setting up a trust, however, as tax treaties and legal methods of minimizing tax can get complicated.

Getting hitched You’ve fallen in love and you want to move in together, but you both own your own homes, what should you do to minimize taxes?

“There are several options for a couple where each person owns their own principal residence but they want to move in together,” says Albert Luk, lawyers with Devry Frank LLP, a Toronto-based law firm.

The first option is to sell one of the homes. This person could claim the principal residence exemption and avoid paying capital gains taxes. But to qualify for a principal residence exemption you will have to sell the home before getting married (or moving in together). Under tax laws a family unit can designate only one property as their primary residence—and a family unit includes spouses and all dependent children.

The second option is to convert one home into an income producing property by renting it out. You will trigger capital gains taxes but only from the time you started renting out the property to the time you actually dispose of the property. That’s because the CRA considers the change in the use of the property as a deemed disposition—tax talk for a change in use of a property is the equivalent as a sale at the current, fair market value.

If you opt to keep the second home as an income property you can minimize the taxes owed by keeping good records. “Get an appraisal or a property valuation just before you change the use of the property,” says Scott Plaskett, president of IRONSHIELD Financial Planning, a fee-only firm in Toronto’s westend. That way when you go to sell the home, the capital gains tax will be calculated from the time the home became a rental property, not from when you first purchased the house.

Getting divorced A few readers ask what the process is for calculating capital gains tax on a home that was part of divorce proceedings.

If the divorce is short and sweet—and both parties have vacated the home in order to quickly sell the property—then taxes would only be owed from the time the home stopped being a primary residence for the couple until the time the property sold.

The longer it takes to sell the property the greater the chance for potentially higher capital gains taxes being owed. (The assumption being that the property will appreciate over time.)

If, however, one half of the couple continues to live in the property and chooses to buy out the other half, there will be no capital gains tax owed as the home is still being used as a primary residence.

Page 9

The Golfi Team Real Estate Market Watch

Rob Golfi*

stOney Creek

June 17, 2013

Hamilton, Stoney Creek, Ancaster, Dundas & Glanbrook

$439,9000

hAmiltOn eAst

$229,900

stOney Creek

$389,900

stOney Creek

$239,900

3 Riviera Ridge

273 Tolton Avenue

68 Mountain Avenue North

690 Barton Street East

Spectacular, luxurious & Immaculate best describes this awesome beauty, features main flr den, beautiful hardwd , ceramic flrs & new carpeting, large family size kitch, professionally finished basement, new c/air, shingles 5 yrs new, private back yard quick access to QEW.

ALL BRICK BUNGALOW WITH IN-LAW! Neat & clean home features mostly original hardwd on main level, large bright living rm, professionally finished basement w/new maple cabinets, sparkling bathrm , rec-rm & spare bedrm, shingles 6 yrs new, new C/air, fenced yard & close to all amenities.

WHAT A DOLL HOUSE. Beautifully kept home in the heart of Old Stoney Creek, this cozy 4 bedroom home features inlaw set up with separate entrance, many updates include shingles 2012, furnace 2008, updated vinyl windows, beautiful wrap around porch, 25x22 dbl garage/workshop.

WHAT A DOLL HOUSE - Sitting on half acre lot close to all amenities, features updated country style kitchen with oak cabinets, farmers sink and butchers block counter, Reverse Osmosis water filter, mostly updated vinyl windows, shingles & furnace 1 year new, slate flooring, bright main floor laundry, and detached garage. Impeccably clean & maintained!

$1,665.45 per/mth P&i / O.A.C.

$870.39 per/mth P&i / O.A.C.

$1,476.15 per/mth P&i / O.A.C.

$908.25 per/mth P&i / O.A.C.

stOney Creek

$399,900

hAmiltOn eAst

$219,900

hAmiltOn mtn

$199,900

hAmiltOn Ctr

$239,900

6 Lakegate Drive

2588 King Street East

309 East 26th Street

103 Garfield Avenue S

WATERFRONT COMMUNITY. Next to Confederation Park and waterfront trail, features new stylish kitchen with breakfast bar & SS appliances, gorgeous hardwood flrs, fin. basement with bedroom and rec-room, new shingles 2011, oversized garage, fenced yard with large deck. You must see this ranch style home across from the lake.

Renovated 1-1/2 Storey Home! Features bright eat-in kitchen, skylights thru-out, new fooring, beautiful bathrooms, spacious living spaces, lots of storage & yard backing onto ravine. Plenty of parking & close to highway & shopping

Cute as a button! 2 bedroom & 1.5 bathrm w/large garage & lot (39.83’x108’) needs some updating. Roof stripped & reshingled in (‘11), vinyl windows, bathrm (‘10), front porch (‘12).

ATTENTION INVESTORS! Legal non-conforming 2 family dwelling with potential for third unit in basement.

Front & rear drive w/garage. Sold “as is, where is” Needs kitchen & TLC, new main flr bath ’12, beautiful hardwd flrs, lots of character! Potential Galore! Priced for action.

$1,514.01 per/mth P&i / O.A.C.

832.53 per/mth P&i / O.A.C.

$756.81 per/mth P&i / O.A.C.

$908.25 per/mth P&i / O.A.C.

SOLD hAmiltOn eAst

$319,900

159 Adeline Avenue New!! Pick your finishes!! One of a kind 1300 sq.ft. bungalow with double car garage on large 45x107 ft. lot in a neighbourhood friendly East end locale! 3 bedrooms, 2 bathrooms including an ensuite & walk-in closet, 9ft main floor ceilings & main floor laundry.

ONE R E H ANOT

stOney Creek

14 Goldeye Drive 2 Storey, 4 Bedroom, 3.5 bathroom home in sought after Lakepointe Community. Don’t miss out on this top to bottom finished home. Open concept main floor, bedroom level laundry and room for the family to grow! $1,300.58 per/mth P&i / O.A.C.

$1209.82 per/mth P&i / O.A.C.

stOney Creek

$359,900

$343,900

binbrOOk

$384,900

brAntfOrd

$329,900

3 Hollinrake Avenue GORGEOUS HOME, SHOWS 10+++. Empire built and loads of upgrades, carpet only in two bedrooms, granite, fireplace, island in kitchen, mostly finished basement with 2 piece bath, excellent landscaping and fully fenced. Huge master w/ensuite and walk-in closet. Ready to move in condition! $1247.64 per/mth P&i / O.A.C.

hAmiltOn eAst

$194,900

AnCAster

$539,900

34 Norma Crescent Fabulous 2 storey in fantastic location, features gorgeous hardwd in family rm w/wood FP & wet bar, main flr den, upgraded trim on main lvl, new carpeting & under-pad, freshly painted, patterned concrete drive & patio, new shingles ‘09, unspoiled basement w/good ceiling height & access to garage.

$2,041.83 per/mth P&i / O.A.C.

stOney Creek

$479,900

28 Sandy Drive

92 Windwood Drive

2 Melvin Avenue

55 Chiara Drive

BIG HOUSE, SMALL PRICE, fantastic value in this 4 bedrm all brick executive home, features gorgeous hardwd flrs, updated kitchen with glass backsplash, new shingles (07), new furnace (12), vinyl windows, finished basement, sunny sunrm addition, & concrete drive. Close to parks, schools & QEW.

Amazing space in this fabulous 2100 sq.ft. home, features open main floor plan, formal dining rm, showcase gas fireplace in family rm, family size kitch w/patio doors leading to party size deck & fenced in yard, master bedrm w/walk in closet & ensuite w/relaxing roman tub, & finished basement.

GARAGE MADNESS! This property features an oversized brick garage with hydro. Furnace and C/A are rental. Nice lot close to shopping and major bus line, minutes to Redhill and new Center Mall. Updated windows, wiring and plumbing.

SPECTACULAR 4+1 BEDRM - Shows like a dream, features oak kitch w/granite counters & back splash, hardwd flrs w/oak staircase, master bedrm w/2 walk in closets & spa style ensuite, professionally finished basement, & landscaped yard w/35x18 ft. 2 tier deck.

$737.08 per/mth P&i / O.A.C.

$1,814.91 per/mth P&i / O.A.C.

$1,361.09 per/mth P&i / O.A.C.

hAmiltOn eAst

$350,000

$1,455.64 per/mth P&i / O.A.C.

hAmiltOn eAst

$169,900

hAmiltOn mtn

$159,900

stOney Creek

$499,900

867 Beach Blvd.

117 Fairfield Avenue

36 Poplar Avenue

177 Silverlace Circle

WATERFRONT LOT 42.50X149.00 ft.! Build your dream home in trendy Beach Blvd backing onto the Waterfront Trail, fully serviced vacant lot with sewers, water & gas to lot line.

BUNGALOW WITH FAMILY ROOM ADDITION. Two good sized bedrooms w/a large family room, lots of parking, updated windows, shingles, furnace, C/A, kitchen & wiring.

Needs TLC in decorating & cleaning. Great Value. Close to highway access & shopping.

LOCATION, LOCATION! Walk to Juravinski, steps to mountain brow and shopping. Loads of character and perfect for a young couple! This property features beamed ceilings, private back yard, front and back porch, updated 100 amp panel, and kitchen. Great rental location!

BEAUTY, WARMTH & VALUE – All brick, w/top quality finishes, maple kitchen cabinets w/granite counters & breakfast bar, hardwd flrs, fin. basement great for in-law, master bedrm suite w/additional rm - great for dressing rm, den, TV rm or nursery, & grand foyer w/spiral maple staircase.

$678.61 per/mth P&i / O.A.C.

$638.67 per/mth P&i / O.A.C.

$1,892.60 per/mth P&i / O.A.C.

$1,323.65 per/mth P&i / O.A.C.

Call Today 905-575-7700

Page 10

The Golfi Team Real Estate Market Watch

June 17, 2013

Marketplace real estate lawyer

Paul lewis settimi

Barrister, Solicitor and Notary Public Competitive Pricing & Free Estimates

GATEWAY YARD MAINTENANCE

289-273-2951

gateway.yard@gmail.com

Proudly serving grimsby and surrounding areas

8 Main Street East, Suite 303 Hamilton, Ontario L8N 1E8 Bus: 905-527-0808 Fax: 905-527-0774

20 Main Street West Grimsby, Ontario L3M 1R4 Bus: 289-235-7500 Fax: 905-527-0774

paul.settimi@cogeco.net

TAKE THE STRESS OUT OF MOVING!

Clutter Removal & Organizing WE GUIDE YOU THROUGH THE ENTIRE PROCESS Pamela Culp Blanchard Cell: 905-971-9568 www.beclutterfree.ca

David Ryback Regional Sales Manager

Hamilton: 905-573-8776 Grimsby: 905-945-5540 www.harveymoving.com david@harveymoving.com

Jacqueline Paradisi

HOME STAGING

Hardwood Floor Refinishing

The Quick, No-Sanding Solution for Beautiful Hardwood Floors

www.MrSandless.com 1-877-955-9663 • 905-304-3380 • hamilton@mrsandless.com

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Advertise Here for information on advertising in the market Watch, contact

Rose Magro

email: rose@golfiteam.com cell: 905-745-0122

www.golfiteam.com

June 17, 2013

The Golfi Team Real Estate Market Watch

Page 11

COMMERCIAL hAmiltOn Ctr

$289,900

WAterfOrd

$399,900

hAmiltOn mtn

$975,000

beAmsville

$235,000

673 King Street East

0 Mechanic St. West

516-526 Concession Street

4993 King Street

LOCATION LOCATION LOCATION! This incredibly maintained 2200 sq.ft. corner property with commercial frontage and 2 additional apartments features fantastic income, close to Cathedral high school, new roof 4yrs new, 14 ft ceilings, hardwood floors, full basement with newer wiring & parking space in the back.

Parcel located at the corner of Mechanic St. & Norfolk, close to shopping and recreation. Water and sewer at the street. OMB approved 25 townhomes and 5 detached homes building site. Vendor willing to consider severing and selling separately detached home lots.

Become a part of Hamilton arts scene or modify this large space for your own purpose! Total building size: 14,400 sq.ft. 390 seat theatre with an additional 4 residential and 5 commercial units. Projected cap rate of 9.6 % unique property. Do not go direct.

Prime location in downtown core. Storefront with large window, front & back entrances can suit 2 businesses or 1 large one. Parking spaces in rear & municipal parking lot.

New furnace & 2pc bath. 600 sq.ft. of business space with GC zoning, + 800 sq.ft. 2 bedroom apartment on upper level. Tenant pays hydro.

$1,096.36 per/mth P&i / O.A.C.

$1,512.37 per/mth P&i / O.A.C.

$3,687.31 per/mth P&i / O.A.C.

$888.74 per/mth P&i / O.A.C.

FREE HOME EVALUATION

Your home could be worth more than you think!

Call the GOLFI TEAM 905-575-7700 CRoSSWoRD PuzzlE (Solution on Page 9)

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Call Today 905-575-7700

5 6

Fill in the grid above, so that each row of 9 squares, each column of nine and each section of nine (three squares by three) contains the numbers 1 through 9 in any order. There is only one solution for the puzzle and the numbers shown can NOT be changed.

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King St.

Connor Dr. Sales Office

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South Service Rd.

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