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What You Need to Know About Working with a New Home Builder

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You’re in the market for a new house, but you can’t find that perfect dream home in the listings. If you’re tired of the house hunt, you might be thinking about working with a custom home builder in Ontario instead.

A new home builder can put you in the house you always wanted; no renovations needed. But before you dive in, what should you know about working with one?

Why Customize Your Home?

You don’t need to start from scratch to customize your home. Some developers such as Blythwood Homes, a member with The Niagara Home Builders Association, build move-in ready homes with customizable elements, such as flooring, cabinets, countertops, trim styles, closets, showers, and more. You can even do a walk-through at the framing stage and review electrical plans to get the lighting just right. This is a great way to get quality construction and a home that’s tailored to your tastes from the start, and there’s a lot you can customize when you work with the right Niagara home builders.

How Much Do Custom Home Builders Charge Per Square Foot?

That largely depends on both real estate in the region and constructions. More competitive housing markets like urban centres will be more expensive than smaller towns.

 

Construction costs will certainly be a factor, and customizing with luxury fixtures and materials will naturally contribute to the price. New home builders in Ontario pay both hard and soft costs for construction, which include everything from the serviced lot,  construction materials directly related to development, and soft costs like design costs, permits, inspection fees, etc. Some of these expenses change region by region. In Niagara costs per square foot range from $320 to $400 depending on the features and design.

What Are the Ongoing Costs of a Custom Home?

Besides your mortgage payment, if you have one, there are a couple of other ongoing costs that come with homeownership, such as property taxes and maintenance.

When it comes to maintenance, that’s one of the advantages of working with new home builders in Ontario. Your maintenance costs are going to be a lot lower than they would be if you purchased a preowned home. As homes get older, they begin to cost more. The average annual maintenance bill is around $1,100, but that changes considerably depending on the age of the home, quality of the construction, its size, and the climate.

How Long Will It Take to Move In?

That depends on whether you’re buying a fully custom home or customizing elements of a ready-to-go design. You’ll be free to move in sooner if you customize elements like countertops and fixtures rather than buy a lot and hire an architect.

The average time it takes to build a home is 8 to 10 months, but that will vary depending on region, climate, and the builder you’re working with.

Working with a custom home builder ensures you’re moving into a home you’re happy with. It may take a little longer, but it can be worth it if house hunting isn’t for you.

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'We have had record sales,' Real estate market has dramatic rebound in cottage country – CTV News

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PORT CARLING, ONT. —
The real estate market has rebounded since the pandemic first hit, and in Muskoka, the demand for cottages has risen dramatically.

For many Canadians, a cottage by the lake is a dream that more people are trying to make a reality.

“We have had record sales,” said realtor Catharine Inniss, Johnston and Daniel Rushbrooke Realty.

In June 2019, 161 cottages were sold in the District of Muskoka while last month, 278 were sold, which is an increase of 73 per cent year over year.

Jodi Kovitz lives in a condo in downtown Toronto with her daughter and said she’s on the hunt for a Muskoka cottage.

“We’re doing great. We’re healthy, and we live in 11-hundred square feet, and we haven’t really left it for four months,” Kovitz said she’s looking to find her dream cottage.

It’s a trend taking shape across the world.

A recent article in the Wall Street Journal reported 39 per cent of urban dwellers in the United States are thinking about moving somewhere more rural because of the pandemic.

But if you are considering a move, Inniss has some tips, including using a local realtor.

“They know whether there’s flooding, shore allowances, septics, etc.,” she explained.

Inniss added that while properties are moving quickly, there are still plenty out there.

Local real estate agents expect prices to continue to climb slowly and demand in cottage country to remain high through the fall.

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RE/MAX | Investing in Vancouver Real Estate: Yay or Nay? – RE/MAX News

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Despite having about one-fifth of Canada’s population, how did British Columbia avoid both a massive coronavirus outbreak and a provincewide lockdown? Since May, the province has been relaxing COVID-19 pandemic rules, but British Columbia had fewer than many other provinces to begin with as it maintained a lower hospitalization rate than Alberta, Ontario, and Quebec. Overall, the West Coast has maintained a steady steam of good news throughout this public health crisis.

Since the coronavirus was largely contained in B.C., does this mean the Vancouver real estate market was unaffected, too? It has been a bumpy ride, but it appears the worst could be over.

According to the Real Estate Board of Greater Vancouver (REBGV), sales activity in the Greater Vancouver Area in June surged 64.51 per cent, up from the 35.8 per cent gain in May. This is also up 17.62 per cent from the same time a month ago. Prices recorded a modest 3.5 per cent increase from the same time in 2019 as a drop in supply and demand attempted to balance the market. The current MLS Home Price Index composite benchmark price for all residential properties in Metro Vancouver is $1,025,300.

But with the economy – provincially and nationally – starting to reopen, can the Vancouver market return to pre-crisis levels?

Vancouver’s Housing Market

The Canada Mortgage and Housing Corporation (CMHC), the government’s mortgage insurer, forecasts a major drop in the nation’s biggest real estate markets. CMHC projects that Vancouver will face the biggest decline of all, with prices falling 12.35 per cent by 2022 from the 2019 average.

With the increase in sales activity over the last month, not everyone is convinced of a national slowdown. That said, local experts say that it is critical to monitor the data to pinpoint developing trends.

“REALTORS® continue to optimize new technology tools and practices to help their clients meet their housing needs in a safe and responsible way,” said REBGV Chair Colette Gerber in a statement. “Over the last three months, home buyers and sellers have become more comfortable operating within the physical distancing and other safety protocols in place.”

Greater Vancouver is reporting a bump in new listing activity. In June, there were 5,787 new listings, which is up 57.1 per cent from the same time a year ago. These dramatic trends have surprised analysts considering that the spike has occurred so soon after the outbreak. The number of active listings came in at 11,424, up 15.1 per cent from June 2019.

The sales-to-active-listings ratio for June was 21.4 per cent – anything below 12 percent suggests downward pressure on home prices.

Suffice it to say, if you have been waiting to dive into the Vancouver housing market, now could be the best time to dip your toe in real estate investment. The city’s fundamentals are still there:

  • Vancouver is one of the cleanest cities in the world.
  • The city offers moderate temperature seasons all year long.
  • Close proximity to the United States border.
  • Vancouver is a culturally diverse metropolis.
  • Residents can enjoy the myriad of sea-to-sky activities.

And then there are the dollars and cents.

One of the most important factors for any investor right now is how low borrowing costs are. In March, the Bank of Canada (BoC) slashed interest rates by 150 basis points to 0.25%. The new head of the central bank, Tiff Macklem, left rates unchanged at the June monetary policy meeting, suggesting that low rates are here to stay to support the economic recovery. Whether you want to purchase a rental property or you want to take out a loan to renovate a house, financing these endeavours has never been cheaper.

Housing Affordability to Attract More Buyers?

One of Canada’s biggest banks released its housing affordability data for the first quarter of 2020. The Royal Bank of Canada (RBC) noted that Canadian affordability is still getting worse, but Vancouver has seen the largest affordability improvement in the Great White North.

According to RBC, the median Vancouver household now needs 79 per cent, down 4.2 per cent from last year. This is the steepest drop in the country. Although prices are still 30.57 per cent higher than the long-term average, affordability is improving.

This is a positive development for both homebuyers and investors, particularly for millennials. In recent years, this demographic has been driving new trends in the Vancouver housing and condo market.

Vancouver Adapting to COVID-19

Industry insiders say that an essential trend in Vancouver real estate has been homebuyers and sellers adapting to this new COVID-19 society. Whether it is practicing social distancing or embracing more stringent hygiene routines, everyone is doing their part – and this is benefiting the real estate market.

Like other key markets, Vancouver REALTORS® have installed physical distancing mechanisms to abide by the government’s health and safety recommendations. And more people are becoming more comfortable with this new normal for real estate transactions.

In addition to wearing masks, gloves, and limiting contact, agents are taking advantage of digital tools, from business documents to virtual tours. This makes buying and selling real estate in Vancouver still doable, despite a public health crisis still gripping Canada.

A Pre-Pandemic Housing Market

British Columbia is transitioning into the third phase of its reopening plan. Phase three will permit residents to travel across the province as hotels, motels, resorts, and RV parks restart operations. More people will return to work, local economies will be stimulated, and anybody who had suspended plans to buy or sell a home will reconsider their options. Amid low interest rates and pent-up demand, Vancouver real estate is primed to pick up where it left off before the coronavirus pandemic.

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Snowbirds beware: The CRA is hunting for bulk U.S. real estate data to keep tabs on transactions by Canadians – The Province

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If you own foreign commercial property or a rental property in the United States, then the details of that property must be reported.

Postmedia

Failure to file a T1135 can result in harsh penalties, even when the income from the foreign property has been reported

If you own U.S. real estate, whether for personal use or for investment purposes, now may be a good time to ensure that you’re fully compliant with your Canadian tax filing obligations, as it appears that the Canada Revenue Agency may soon be doing some mass sleuthing of publicly-available U.S. property records.

In a Request for Information (RFI) posted online on June 25 entitled “Bulk United States (U.S.) Real Property Data (re Canadian residents),” the CRA announced that it is looking for a provider to supply the Agency with U.S. real property data. In the RFI, the government stated that it is specifically looking for “U.S. real estate and real property data where a Canadian resident is the owner or party to the purchase, sale, or transfer. Real estate and property data is required in bulk form in order to identify current and historical records, mortgage transactions, property taxes, real property records, and deeds.”

The RFI goes on to say that the requested information “will enhance the CRA’s ability to administer tax programs, to enforce the various Tax Acts in order to protect Canada’s revenue base, and to support the CRA’s business and research processes.”

While I try to keep on top of Canadian tax developments, I confess that I do not regularly follow new postings on Buy and Sell, the online Public Works and Government Services procurement site. Rather, I was tipped off to the CRA’s novel request by a recent article by Toronto tax lawyer David Rotfleisch.

Rotfleisch, a certified specialist in taxation, told me in an interview that he was “fascinated by the out-of-the-box thinking by CRA…. There’s obviously some very clever people there on a strategic basis.” Rotfleisch acknowledged that the CRA has, in the past, launched a variety of real estate audit projects, such as going to condo developers and to registry offices to seek out information. “But to expand it to the U.S. is brilliant and really innovative,” Rotfleisch told me. “I am really impressed by whoever at CRA came up with this…. Really, hats off to them.”

In the RFI, it was stated that the CRA would be carrying out a tax review of six years of U.S. real estate transactions in order to find any tax non-compliance by Canadian taxpayers.

In his article, Rotfleisch warns that Canadians who are non-compliant could potentially be reassessed by the CRA as a result of the info it seeks to obtain, and be hit with substantial tax, penalties and interest, as well as face professional and legal fees required to respond and object to such a tax audit. He also warns of the possibility of prosecution for tax fraud or tax evasion.

Let’s review a few areas that may be on the CRA’s radar for review, should it be successful in obtaining bulk U.S. property records.

Unreported foreign property

Regular readers of this column will no doubt be well aware of the requirement to file CRA Form T1135 to report foreign property with a cost of more than $100,000 at any point in the year. While foreign property for this purpose does not include personal use property, meaning that you don’t have to report your Florida condo if it’s solely used as a vacation home and isn’t rented out, if you own foreign commercial property or a rental property, then the details of that property must be reported on the form.

Failure to file the T1135 can result in harsh penalties that can be assessed by the CRA, even when all the income from the foreign property has been reported. The penalty is $25 for each day the form is late, up to a maximum of $2,500 per tax year, plus non-deductible arrears interest.

You may recall a 2018 T1135 case involving a taxpayer who moved to Canada with her husband and three children. She and her husband jointly own a rental property in Michigan, which was their former family home prior to the move. Because of the value of their co-owned home, they were both required to file T1135s. Her husband was aware of this and filed his T1135 with his tax returns for the years in question. He included the rental income from the property on his tax returns.

The taxpayer, however, had no taxable income in 2011 and 2012 and she was therefore not obligated to file tax returns. The taxpayer, therefore, logically, but incorrectly, believed the T1135 filing requirement did not apply to her. In 2014, the taxpayer decided to file  tax returns for 2011, 2012 and 2013 to claim child benefits for her kids. Along with her returns, she filed the T1135 form for each year.

CRA confirmed no tax was owing but assessed late-filing penalties of $2,500 for each late T1135, plus arrears interest, for a total of $5,541.

The taxpayer twice applied for relief, but was denied by the CRA and took the matter to Federal Court, where a judge concluded that the CRA’s decision not to grant full relief for the 2011 tax year was “unreasonable,” sending the matter back to the CRA for reconsideration by a different officer.

Unreported U.S. rental income 

Canadian resident taxpayers are required to report, and pay tax on, their worldwide income, which includes foreign rental income. Generally speaking, a foreign tax credit is available to ensure that such rental income, which may also be taxable in the other jurisdiction, is not taxed twice.

If you own a U.S. condo or vacation home and regularly rent it out, then you have an obligation to report that rental income on your Canadian tax return. Failure to do so means you could be reassessed, and subject to tax, penalties and interest levied by the CRA, even if you paid U.S. taxes on such income.

Unreported U.S. real estate sales

Finally, the CRA will likely be looking into sales of U.S. residential properties owned by Canadian taxpayers to ensure any capital gain is being reported on your Canadian return. Again, while a foreign tax credit is generally available for any U.S. capital gains tax paid, foreign exchange movements in recent years may mean some extra Canadian tax. For example, if you bought your Florida condo for US$100,000 in 2012 when the U.S. dollar was at par with the Canadian dollar, but you sold it in 2019 for the same amount when the foreign exchange rate was 1.33, you could have no gain for U.S. tax purposes, but a $33,000 gain to report in Canada, with no offsetting foreign tax credit.

Jamie.Golombek@cibc.com

Jamie Golombek, CPA, CA, CFP, CLU, TEP is the Managing Director, Tax & Estate Planning with CIBC Private Wealth Management in Toronto.

 

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