Milton Ontario Real Estate, Opinion, & News

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You Asked . . . A Series of Real Estate Questions

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I receive lots of questions about things to do with purchasing or selling a home, so I thought I’d start a new section on my blog, entitles ‘You Asked’.

Today’s question comes from Fred:

Hi,

What are the 2 taxes on house purchase in ontario?

I am trying to figure out what is important. I was hoping you might be able to give me some insight. Any help would be appreciated. Thanks.

Sincerely,

Fred

Well, Fred, if you are purchasing a resale home outside of the City of Toronto, and you are a Canadian resident, there is only one direct tax on your purchase, and that is the Land Transfer Tax – you can find calculation tables here. You will also be paying GST on the lawyer’s fees and on some of the costs you will pay via your lawyer.

If you are purchasing a resale home in the City of Toronto, you will be paying the City’s Land Transfer Tax; you can find more information on it, including rates, rebate information, etc. here

As to to the second part of your question, ‘ . . . . what is important?’, there are many other things to consider when buying a home, such as location, commuting time and distance, resale potential, how the home will fit your wants and needs, overall condition of the home, the neighbourhood, and lots more. If you’d like a no-obligation 30-minute consultation to discuss this, give me a call at 905-208-7002, or send me an email to chris@chrisnewell.com.

Thanks for the question Fred.

Province offers new home tax break HST-BST

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Ontario to provide 75 per cent tax rebate on first $400,000


QUEEN’S PARK BUREAU CHIEF
Premier Dalton McGuinty’s Liberals are sweetening the pot in a bid to make the controversial harmonized sales tax more palatable to Ontarians.

In a surprise move this morning, the government announced it was capitulating to homebuilders’ demands by effectively reducing taxes proposed on new homes.

Under the change, buyers of new homes in all price ranges would receive a 75 per cent rebate of the 8 per cent provincial portion of the HST on the first $400,000 of the cost.

In the March 26 budget, Finance Minister Dwight Duncan had said that while people purchasing new homes costing less than $400,000 would be eligible for the tax break, those buying more expensive homes would get little relief.

It would have been a recipe for disaster for consumers and developers because there would be a gradual increase in taxes on homes costing between $400,000 and $500,000 and a massive one on those priced above $500,000.

For residents of Greater Toronto, where homes are more expensive than in the rest of Ontario, it would have been especially onerous.

“During these challenging economic times, the McGuinty government’s enhanced housing rebate would improve affordability for more homebuyers – increasing the most generous housing rebate of its kind in Canada,” Duncan, who was not available for comment, said in a news release.

The Liberals also announced a new rebate to encourage builders to construct rental housing units.

The HST, which will blend the 8 per cent provincial sales tax and the 5 per cent federal GST, is to come into effect July 1, 2010.

Since it was announced early this spring, the government has weathered an avalanche of criticism because the business-friendly levy will increase taxes on gasoline, heating fuel, funerals, newspapers, fast-food value meals, legal services and a slew of other things.

A Toronto Star-Nanos Research poll last month found 67 per cent of people polled have a negative view of the melded tax compared to 23 per cent seeing it as positive and 10 per cent unsure.

HST – Buckle up, it’s going to be a bumpy ride

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Building slump, rise in underground economy expected with arrival of tax, seminar told

TRACY HANES

TORONTO STAR

The introduction of the Harmonized Sales Tax could bring a whole new breed of housing products to the market, such as “white box” homes finished only as a shell for which buyers will hire separate contractors to do landscaping, interior finishing and the like.

And new home builders should expect a four-year slump in new home sales and the underground renovation economy to flourish due to the HST.

Those were the hard realities presented last week at a panel discussion arranged by the Ontario Home Builders’ Association (OHBA) for its members.

“Your greatest challenge isn’t long term, it’s the next four years, if you are still alive,” Paul Pettipas, chief executive officer of the Nova Scotia Home Builders Association said. The HST has been in effect in Nova Scotia since 1997. “You have fertile ground for an underground economy. A lot of skilled people are going to be out of work (former auto workers) and there’s going to be a whole new breed of handy people.”

The tax, which will blend the goods and services tax (GST) and the provincial sales tax (PST), comes into effect July 1, 2010 and will be charged on new home and condo sales and on renovation work.

A new home priced under $400,000 will receive a rebate of 75 per cent of the provincial portion of the tax, meaning that consumers will effectively pay a 2 per cent tax, about they same they pay currently.

The rebate is scaled back on homes priced at more than $400,000, however; for a $500,000 new home, a consumer will be paying the full 8 per cent, or $32,000 more in tax than the buyer of a $400,000 home.

About half the single family and semi detached homes sold in Ontario are priced more than $400,000.

Panelist Harry Herskowitz, real estate lawyer and Tarion chairman, speculated that the transition rules, yet to be announced, will likely exempt any agreements of sales entered into prior to July 1, 2010.

He offered several ideas on how builders could minimize the tax bite and “there will be an incentive for builders to keep below the $400,000 threshold.”

Such measures may include reducing the overall size of new homes or condos; simplifying, downgrading or eliminating costly architectural or design features, such as exterior landscaping.

Herskowitz said builders might also lower the price point by reducing or eliminating green features which are more costly than Ontario Building Code standards, even though that thwarts the province’s Green Energy Act and “is a collective detriment to everybody.” Or they could eliminate all extras and possibly sell the home as a “shell” or “white box” with the finishing work to be done by a separate, third party contractor.

This “white box” approach raises several issues, said Herskowitz: the finishing work may not be covered by Tarion; and builders must be careful that the finishing work be done by separate contract with a different date than the closing, ideally by an arm’s length third party supplier, so it’s not seen as a builder’s tactic to avoid paying a higher HST rate.

Or he said, perhaps some developers/builders will sell lots separately and the home building will be done in a separate contract.

The government is treating houses like luxuries,” observed Herskowitz. “In the City of Toronto, there will be $80,000 in taxes (including land transfer tax, HST, etc.) on the typical half million dollar house, which most of the time is owned by people with a $150,000 household income. It’s not a luxury, it’s a necessity. More and more buyers will be opting for resale so they don’t have to pay HST.”

“This has the potential to change the way we do everything,” noted moderator Brian Johnston.

“And the huge issue is the impact on renovators and incentifying the black market economy.”

“I can tell you in no uncertain terms consumers are going to pay more,” said Pettipas. “The people that will hurt the most are the renovators as they will have to make the decision whether to join the cash economy and go underground. Consumers don’t consider cash deals as wrong.”

With the HST, the 8 per cent tax will be added to labour costs, pushing renovation costs higher. Pettipas says in his province, about one-third of the reno work is done under the table, with homeowners doing one-third themselves and professionals doing the rest.

He told builders to brace for a bumpy transition.

“Yours is the worst of the worst with the ($400,000) threshold and the government will try to make it seem palatable up front, but it won’t last,” said Pettipas.

“Batten down the hatches, have some money salted away for the next few years, you’re going to need it. You’ve got to get through the next four years. After that, it will be irrelevant.”

What’s frustrating, said Johnston, president of the Monarch Corp. is that no plan has been announced for how the tax will be phased in.

“We thought we’d have a solution by now, we thought we’d have an answer to the transition; we don’t,” said Frank Giannone, president of the OHBA.

Giannone said the OHBA has been lobbying the provincial government for two changes for implementation: one, that buildings under construction before the HST comes into effect be exempt; and secondly, that the 2 per cent rate applies to the first $400,000 of any new home sale, even if the price is higher, then the cost beyond that be taxed at 8 per cent.

Toronto Star

How To End a Tenancy

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How a Landlord Can End a Tenancy

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The Residential Tenancies Act (the Act) has rules for how a landlord can end a residential tenancy and evict a tenant.  This brochure provides some general information about these rules.

It is not a complete summary of the law and it is not intended to provide legal advice.  If you need more information about the law, please see For More Information at the end of this brochure.

There are special rules for ending a tenancy in a care home.  These rules are not explained in this brochure.  For information about the rules relating to cares homes, see the Board’s brochure on Care Homes.

Information in this brochure

  • Tenancy Agreements
  • Agreement to End a Tenancy
  • Notice to End a Tenancy
  • Application to the Board
  • Hearing
  • Board Order
  • For More Information
  • Reasons a Landlord Can Apply to Evict a Tenant

Tenancy agreements

Tenancy Agreements

When a landlord rents a unit to a person, they enter into a tenancy agreement – a contract in which the tenant agrees to pay rent for the right to live in the rental unit.  This agreement may be in writing or it may be an oral or implied agreement.   A written tenancy agreement is often called a lease.

Fixed term tenancy

If the landlord and tenant agree that the tenancy will last for a specific period of time, this is called a fixed term tenancy.  This is because both the start and end date are set out in the tenancy agreement.  Most leases are for a fixed term, usually for a year.

Renewing a lease

The end of a fixed term tenancy or lease does not mean that the tenant has to move out or sign a renewal or new lease in order to stay.

The lease is renewed automatically on a month-to-month basis (if the rent is paid monthly) or week-to-week basis (if rent is paid weekly).  This means the landlord and tenant do not have to sign a new fixed term lease when the term of the lease runs out.  All the rules of the former lease will still apply to the landlord and tenant.

The landlord and tenant can also agree to renew the tenancy agreement for another fixed term period, or enter into a new lease.  If the landlord and tenant agree to enter into a new lease, the terms of the lease can only be changed in accordance with the Act.

Security of tenancy

Tenants have security of tenancy.  This means that a tenant can continue to occupy the rental unit until:

  • the tenant decides to leave and gives the landlord proper notice that they intend to move out (see the Board’s brochure on How a Tenant Can End Their Tenancy for more information),
  • the landlord and tenant agree to end the tenancy, or
  • the landlord gives the tenant a notice to end the tenancy for a reason allowed by the Act, and
    • the tenant agrees to move, or
    • the tenant does not agree with the landlord’s notice, the landlord applies to the Board, and the Board issues an eviction order.

If the landlord gives a tenant notice to end the tenancy, the tenant does not have to move out.  The landlord must apply to the Landlord and Tenant Board (the Board) for an order allowing the eviction of the tenant.  The tenant has the right to go to a hearing and explain why they should not be evicted.

Landlord cannot lock tenant out of the rental unit

It is illegal for a landlord to change the locks to a rental unit or the building, without giving the tenant a key for the new locks.  The only exceptions are where:

  • the locks are changed because the tenant has been evicted by the Sheriff, or
  • the landlord is sure that the tenant has abandoned the unit.

It is an offence for a landlord to illegally lock a tenant out of their rental unit or the building.  If a landlord is convicted in Provincial Court under the Provincial Offences Act, they could be fined up to $25,000 if the landlord is an individual, or $100,000, if the landlord is a corporation.

If a tenant is illegally locked out and if the unit is still vacant, the tenant can apply to the Board for an order that requires the landlord to let the tenant back into the unit.

Agreement to End a Tenancy

Landlord and tenant can agree to end the tenancy

A landlord and tenant can agree to end the tenancy at any time, even during the term of a lease.  They can make an oral agreement to end the tenancy, but it is best to have a written agreement. This way, if there is any confusion about the agreement, both the landlord and tenant have a written copy to refer to.  Written agreements should be signed by all parties included in the agreement.

The Board has an Agreement to Terminate a Tenancy (Form N11) that landlords and tenants can use.

A landlord cannot require a tenant to agree to end a tenancy, or to sign, at the start of the tenancy, an agreement to end the tenancy at a later date.  (There are, however, certain exemptions for student housing and care homes.)

If tenant changes their mind

If a tenant agreed with the landlord to end the tenancy and later changes their mind, the tenant can ask the landlord if they will consent to a new agreement allowing the tenancy to continue.

The landlord can apply to the Board for an order to evict the tenant if the tenant refuses to leave as agreed to, unless the landlord and tenant make a new agreement.

Important: In this situation, the landlord can make an application to the Board for an eviction order without giving the tenant notice that they have done so.  The tenant will not be made aware of the application until they receive the eviction order from the Board.  The tenant can apply to the Board to stop the eviction if the tenant believes that the eviction order should not have been given.

Notice to End a Tenancy

Landlord must give proper notice

A landlord can end a tenancy only for the reasons allowed by the Act.

In most cases, the first step is for the landlord to give the tenant a notice in writing that they want the tenant to move out.

The proper forms a landlord must use for giving a notice to end the tenancy are available from the Board.  There are different notices for different reasons.

Landlords must use the correct notice form and fill it out completely and accurately to ensure that the tenant receives all the information that the Act requires.  If the landlord does not give the tenant all the information required by the Act, the notice may be void.  And, if the landlord files an application to evict the tenant based on an incomplete or incorrect notice, the application may be dismissed.

Reasons for ending a tenancy

The Act allows a landlord to give a tenant notice to end the tenancy early if the tenant, the tenant’s guest or someone else who lives in the rental unit does something they should not do, or does not do something they should.  This is sometimes called ending a tenancy “for cause”.

Some examples of “for cause” reasons for ending a tenancy are:

  • not paying the rent in full,
  • causing damage to the rental property,
  • disturbing other tenants or the landlord, and
  • illegal activity in the rental unit or residential complex.

There are also other reasons for ending a tenancy that are not related to what the tenant has done, or not done.  These are sometimes called “no fault” reasons for ending a tenancy.

Some examples of “no fault” reasons for ending a tenancy are:

  • the landlord plans to do major repairs or renovations that require a building permit and the work cannot be done unless the rental unit is empty,
  • the landlord requires the rental unit because the landlord, a member of the landlord’s immediate family or their caregiver wish to move into the unit, and
  • the landlord has agreed to sell the property and the purchaser requires all or part of the property because the purchaser, a member of the purchaser’s immediate family or their caregiver wish to move into the unit.  (This reason for eviction only applies in rental buildings with three or fewer units and in condominiums.)

A complete list of the Reasons a Landlord can Apply to Evict a Tenant is provided at the end of this brochure.

When the landlord must give notice

Where a notice to end a tenancy must be given, the landlord must give the notice to the tenant before the termination date (the day the tenancy will end).  The amount of advance notice depends on the reason for ending the tenancy.

The list of Reasons a Landlord can Apply to Evict a Tenant provided at the end of this brochure shows the amount of advance notice required for each reason.

Tenant’s remedy

For some of the for cause reasons for ending a tenancy, a tenant can prevent the tenancy from ending by stopping the behaviour referred to in the notice, or by doing what the notice requests. This is a called a tenant’s remedy.  The notice explains what this is, and gives a deadline for the tenant to comply.  If the tenant does what the notice asks them to do by the deadline, the notice to end the tenancy is then void.  The landlord cannot apply to the Board to evict a tenant based on a void notice.

For those reasons for ending a tenancy that do not have a remedy, the tenant cannot do anything to void the notice.  However, this does not mean the tenant has to move out.

If the tenant does not move out after receiving a notice to end the tenancy, the landlord can file an application to the Board to end the tenancy. The Board will decide if the tenancy should end after holding a hearing.  Both the landlord and the tenant can come to the hearing and explain their side of the story to a Member of the Board.  (For information about when a landlord can apply to the Board see the Application to the Board section).

Application to the Board

Applying for approval to end the tenancy

A landlord can apply to the Board for approval to end a tenancy if:

  • the landlord gave the tenant a notice to end the tenancy,
  • the landlord and tenant have an agreement to end the tenancy,
  • the landlord wants to evict an unauthorized occupant,
  • the tenant gave the landlord a notice to end the tenancy,
  • the tenant breached a condition of a Board order or mediated settlement and the order or settlement allowed the landlord to apply to end the tenancy,
  • the tenant abandoned the rental unit, or
  • the tenant was the superintendent and the superintendent’s employment has ended.

If there is a tenant remedy, the landlord cannot file an application to the Board unless the tenant fails to correct the behavior referred to in the notice, or fails to do what the notice requested, by the deadline set out in the notice.

Where the tenant does not have a remedy, the landlord can file their application as soon as they give the notice to the tenant.

Deadline to apply

In most cases, there is a deadline by which the landlord must file their application to the Board.

Most, but not all, landlord applications must be made within 30 days of the termination date set out in the notice.  However, there is no deadline for making an application to terminate a tenancy where the landlord has given the tenant a Notice to End a Tenancy Early for Non-Payment of Rent (Form N4).

The list of Reasons a Landlord can Apply to Evict a Tenant provided at the end of this brochure shows the deadline for filing each application.

Hearing

A hearing will be scheduled

In most cases, the Board will schedule a hearing to decide the landlord’s application.  However, the Board will not usually schedule a hearing if the application was made because the tenant:

  • gave the landlord a notice to end the tenancy, or
  • made an agreement with the landlord to end the tenancy, or
  • breached a condition of a Board order or mediated settlement and the order or settlement allowed the landlord to apply to end the tenancy without notice to the tenant.

If a hearing is going to be held, it may be one of three types:

  • an oral hearing, where the landlord and tenant appear in person before a Member (this is the most common type of hearing),
  • a video conference hearing, where the hearing takes place using a video camera link between the Member, the landlord and the tenant, or
  • a telephone hearing, where the hearing takes place using a telephone link between the Member, the landlord and the tenant.

The Board will decide which type of hearing you will have.

Landlord must inform tenant of the hearing

The Board will issue a Notice of Hearing and give it to the landlord.  The landlord must give a copy of the Notice of Hearing and a copy of their application to the tenant.  The deadline for giving the Notice of Hearing depends on the reason the landlord is ending the tenancy.

Information about the deadline for serving the Application and Notice of Hearing can be found in the Board’s brochure, Instructions for Landlords:  How to serve the Application and Notice of Hearing.

Tenant can dispute the application at the hearing

At the hearing, a landlord will have to prove that the tenant should be evicted.  The tenant can go to the hearing to explain why they should not be evicted, even if they have done something that is a reason for eviction.

Even though a landlord proves their case in an application to evict a tenant, the Board must consider all the circumstances of each case to decide whether or not the eviction should be refused or delayed.

Board Order

The decision

A Member of the Board will make a decision about the landlord’s application to end the tenancy and whether the tenant should be evicted or not.

The Member’s decision is always put in writing. This written decision is called an order.  The Board will mail a copy of the order to both the landlord and tenant, and their representatives, if any.

Only the Sheriff can evict a tenant

If a tenant doesn’t leave the rental unit by the termination date in the eviction order, a landlord cannot personally enforce the order (remove a tenant from a rental unit or change the locks).  See the section called Landlord cannot lock tenant out of the rental unit for more information.

An eviction order can only be enforced by the Court Enforcement Office (the “Sheriff’s Office”).  The Board does not enforce an order.

The landlord must file a copy of the Board order with the Sheriff’s Office to have the order enforced.  The Sheriff’s Office will charge the landlord a fee for the enforcement of the order.  Further information about enforcement can be obtained from the Sheriff’s Office.

For More Information

Other related publications

The Board also has brochures on these related topics:

Contact the Landlord and Tenant Board

This brochure provides general information only.  For more information, or to obtain copies of the Board’s forms and publications, you can:

  • call the Board at 416-645-8080 or toll-free at 1-888-332-3234, or
  • visit your local Landlord and Tenant Board office.  A list of Board office locations can be found on our website, or you may call us at the numbers listed above.

Some Comments from MREI

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We had a record turnout at the Millionaire Real Estate Investor seminar in Milton tonight!! Here are some comments from a couple of the attendees . . .

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