On behalf of Quinn Ross of The Ross Firm Professional
Corporation posted in
Residential Real Estate on Thursday, October 6, 2016.
Hot on the heels of Vancouver's recent 15% property transfer
tax on foreign buyers, Ottawa announced on Monday two new rules that will impact real estate
transactions across the country starting October 17. Both are aimed
at reducing risk in superheated housing markets - most notably in
Vancouver and Toronto.
Closing The Loophole On Principal Residence Tax Exemptions
The first rule slaps restrictions on foreign nationals who buy
Canadian property and then avoid paying capital gains by falsely
declaring the home as a primary residence.
Once the new rule kicks in, those who buy homes without being a
Canadian resident at the time of purchase will not be able to claim
the principal residence tax exemption in that year. Only those who
were Canadian residents at both the time of purchase and sale will
be able to make use of the exemption.
Stricter Requirements For Mortgage Approvals
The second rule involves the application of a "stress
test" that, up until now, has been imposed only on insured
mortgages involving small down payments or borrowing terms of less
than five years. But come October 17, all insured mortgages will be
subject to the closer scrutiny.
The test measures an applicant's ability to shoulder their
financial load not only at actual, offered rates, but at the
five-year posted mortgage rates of Canada's Big Five banks -
which, at present, averages 4.64 per cent, according to the Bank of
The change could significantly reduce the amount of home that
Canadians will be approved to buy. It also means that those who
don't pass the test will not qualify for lower, more attractive
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Title requisitions, and responses to title requisitions, are often evidenced by two simple letters back and forth between solicitors; and yet, in the content of those two letters is the meat of the real estate transaction.
Now that the turmoil attendant upon the transference of power from one great party in the State to another has subsided, people may be permitted to devote their minds to a consideration of those sectional questions which are not less important for the welfare of the persons concerned, than are the great national issues upon which they have just pronounced judgment.
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