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A Guide to Preparing Your Roof for a Toronto Winter

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Canadian winters are famously harsh, but along the Golden Horseshoe — where cold air from the north clashes with warm air over Lake Ontario to create what is known as the “Lake Effect” — they are also dangerously unpredictable.

In the Greater Toronto Area, blizzards, whiteouts, and periods of bitter cold can suddenly give way to entire weeks where the temperature rises above zero, a pattern that can place unusual strain on roads, automobiles, and houses.

Unlike other parts of the country, where temperatures drop and stay below zero from November to March, homeowners in places like Pickering, Ajax, Markham and Scarborough must contend with the stress that heavy precipitation and rapid changes in temperature place on their houses. But like most environmental challenges Canadians must weather, preparation is the key.

To that end, here is a brief guide to some of the basic maintenance homeowners in Ontario’s snowbelt should pursue if they want to make their roofs winter-ready.

Prioritize Fall Cleaning

One of the most important but often-overlooked aspects of fall roofing maintenance is cleaning. As the trees shed their leaves, debris collects in gutters and downspouts and drainage systems. On flat and pitched roofs alike, a build-up of organic matter can lead to a range of different problems, from roof leaks and standing water to foundation damage.

Having your roof cleaned in November is a great way to ensure that the autumn debris is dealt with before the snow starts to fall, and will help you avoid problems like ice damming later on in the winter.

Schedule an Inspection

Once your roof is clean, you may want to take the further step of having it inspected for holes, tears, and damaged shingles. To book an inspection, simply get in touch with a roofing company in Ajax with experience servicing homes in your area. Ajax roofers know exactly what weaknesses and signs of stress they need to be on the lookout for, and can help you ensure that your roof will stay watertight through the winter.

Having your roof inspected before winter can also help you determine whether or not it might need to be replaced in the coming year — especially if your roof is reaching the end of its warranty.

Knowing in advance that you may need to book a major renovation project can help you plan for it financially, and will give you time to sort out the insurance and get in touch with Ajax roofers who can advise you on the best materials and style to use.

Ensure Adequate Ventilation

Keeping your attic dry and well-ventilated is never more important than in winter, when warm air rising from inside your home meets the cold outside air and creates condensation. An insufficiently ventilated attic will suffer moisture damage, exacerbate ice damming, and can even become a haven for racoons, opossums, and other types of vermin.

In Canada, most homeowners turn on the heating sometime in October, so if your attic isn’t ventilating properly it will quickly become apparent. If moisture is building up under your rafters, simply get a roofing company to install a few extra vents in the roof deck or ridge.

Nothing weathers a house like a Canadian winter, so if you want to avoid any nasty surprises come February, cleaning and inspecting your roof to make sure it is in good shape for the months to come is essential.

 

 

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Toronto’s Real Estate Board Tells Brokers Stop Showing More Than 2 Years of Sold Data – Better Dwelling

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Toronto’s golden age of real estate brokerage innovation is coming to an abrupt end. Toronto Regional Real Estate Board (TRREB) sent a memo this week, on sold data. The board informed brokers they will only be allowed to show two years of data going forward.

TRREB Ordered To Allow Brokerages To Show Sold Data

The board formerly known as TREB was sued by the competition bureau in 2011. The bureau argued it was anti-competitive to prevent real estate brokers from sharing sold information. This dispute went on for years, until the supreme court finally rejected any appeals in 2018. Shortly after, the board provided member brokers with a data feed, complete with sold data. Almost immediately, this brought Toronto real estate out of the dark ages.

Release of Sold Data Drove Brokerage Innovation

Allowing the display of sold data led brokerages to build a number of Zillow-like products. Some brokers began providing sold data to clients going back over a decade. Toronto’s formerly dated, agent-driven model, was suddenly refreshed. Buyers were able to research, without an agent acting as a direct barrier to information. Unfortunately, that wasn’t TRREB’s intention.

TRREB Memo Demands Halt On Displaying Data Over 2 Years Old

TRREB sent member brokers a reminder this week that included a restriction that was previously unclear. The board notes several restrictions, but the biggest one is how much sold data can be shown. The memo reads, “Only two (2) years of sold data can be displayed or accessed at any time on the VOW, Website, or App.” 

The updated interpretation of the bureau ruling is going to have a big impact. Starting soon, brokerages will restrict sold data to just 2 years. Much of the innovation that allowed people to research on their own will disappear. Instead Toronto will return back to it’s agent-driven model, where individuals have to request details from agents. This coincidentally will also conceal readily available sold data from the 2017 detached frenzy.

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How should your clients own real estate properties? – Advisor.ca

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Principal residence

Under the Canadian tax rules, capital gains realized on the sale of a principal residence are generally exempt from tax if the taxpayer qualifies for the principal residence exemption (PRE). The PRE can only be claimed by individuals and certain trusts (such as alter-ego, joint spousal, and qualified disability trusts) under specific conditions.

Given the costs involved in setting up and maintaining a trust, your clients may prefer personal ownership. However, in some cases, the costs are warranted due to the estate planning benefits of using a trust. For example, if your client wants to leave their property to a disabled child, a trust can be beneficial to ensure that the property is transferred to specific family members when the disabled child dies. Similarly, a trust can be useful in a blended family situation to control how, when and to whom the property is distributed after the surviving spouse dies.

A corporation can’t access the PRE, so any capital gains realized on the sale of the principal residence would be taxable to the corporation at high income tax rates (e.g., 50.17% in Ontario for 2020). In addition, personal use of a corporately owned property by the shareholder would be considered a taxable benefit to the shareholder. This could result in double taxation, as the taxable benefit included on the shareholder’s personal tax return is not deductible to the corporation and there is no step-up to the cost base of the property owned by the corporation. For these reasons, owning a principal residence through a corporation is usually the least tax-efficient approach.

Rental property

Personal ownership

If your client personally owns a rental property, the net rental income would be added to your client’s net income for the year and taxed at their marginal tax rates. In addition, net rental income is also considered “earned income” for the purposes of calculating RRSP contribution room. If your clients are not currently generating the maximum RRSP contribution room through other sources of “earned income,” the added income could be a benefit of owning rental property personally.

If rental expenses are greater than the net rental income in a year due to rental vacancies, the net rental loss may also be deductible against your client’s other sources of income. The deduction would provide tax savings and reduce the cost of maintaining a rental property during a poor rental market. This is generally allowed for real estate operations that are predominantly commercial in nature as opposed to personal or recreational. If the Canada Revenue Agency determines that your client is not primarily carrying on the rental operations to make a profit, then rental expenses either may not be deductible or the deduction may be limited to the extent of rental income generated from the property.

In terms of broader non-tax considerations, personally owned rental property is subject to creditor and spousal claims against your client. If this is a concern, personal ownership of the rental property may not be ideal.

Corporate ownership

If the corporation is not carrying on an active real estate business, any rental income earned inside a corporation is considered passive income and would generally be subject to high income tax rates (e.g., 50.17% in Ontario for 2020). This flat tax rate applies to every dollar of rental income earned inside the corporation and may be much higher than the graduated tax rates your client would have paid when earning the rental income personally. As such, your client may have lower after-tax dollars to reinvest and grow their investments in the corporation.

Passive rental income earned inside a corporation may affect your client’s access to the small business tax rate if their corporation is an active (non-real estate) business. In some situations, your client may decide to own real estate property used in a business through a corporation separate from the active business corporation. This can allow your client to use different ownership structures in each corporation to maximize income-splitting and tax-planning opportunities.

Unlike with personal ownership, net rental losses earned inside the corporation can’t be used to offset other sources of income by the shareholders. As a corporation is a separate entity for tax purposes, these losses are locked inside the corporation and can only be used by the corporation.

Despite the unfavourable tax consequences, a corporation provides some non-tax advantages. For example, a corporation will generally protect your client’s personal assets in the case of any lawsuits or creditor claims against the corporation. In Ontario and B.C., a corporation may allow your client to avoid probate fees or estate administration taxes on the rental property through the use of a secondary will.

However, using a corporation involves annual accounting and tax filing costs which may be greater than the one-time probate fees on the rental property.

Trust ownership

Your client may consider owning rental property through a trust. There are various types of trusts available and each has unique requirements and tax implications.

Unless certain income attribution rules apply, rental income earned inside a trust would generally be subject to the highest marginal tax rate (e.g., 53.53% in Ontario for 2020), and rental losses realized in a trust can’t be allocated to trust beneficiaries and must be used by the trust itself. In most situations, the rental income may be allocated and distributed to a trust beneficiary so that it is taxed at the beneficiary’s marginal tax rates.

A trust is commonly used as an estate planning tool to minimize probate fees because the rental property owned by the trust would not fall into your client’s estate when they die. A trust can also provide protection against creditors and spousal claims. Similar to the option of a corporate ownership, your client should consider the costs involved in setting up and maintaining a trust to determine whether the potential benefits outweigh the costs.

Conclusion

There are various options available when deciding on the ownership of real estate property. It is important for your clients to understand the options available and obtain professional advice to determine which option works best for them.

Vivek Bansal, CPA, CA, is director of tax and estate planning at Mackenzie Investments. He can be reached at vibansal@mackenzieinvestments.com.

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Etobicoke real estate broker combines new office with café amid pandemic – Toronto.com

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Etobicoke real estate broker combines new office with café amid pandemic  Toronto.com



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