Real estate markets used to cool off in December, but oil and taxes have heated things up in two locations this year.
In Toronto, the real estate market has revved up to levels that create urban legends. Multiple offers are the norm as harassed buyers try to beat the taxation deadline set by the city's newest property tax.
Purchasers with an Agreement of Purchase and Sale signed on or before December 31, with a closing before the new land transfer tax takes effect on February 1, 2008, will escape the tax and save thousands. The tax increases with higher purchase prices, so beating the tax in this already inflated real market is worth the scramble.
Buyers with Agreements signed after December 31 and that close on or after February 1, will pay the full amount of tax. The exact breakdown of the escalating tax is:
- one-half of one percent of the value of the consideration on sales up to and including C$55,000
- one per cent of the value of the consideration on sales exceeding C$55,000 up to and including C$400,000
- two per cent of the value of the consideration of land containing one and/or two single family residences exceeding C$400,000
- one and a half per cent of the value of the consideration on commercial properties including multi-residential units exceeding C$400,000 up to C$40 million
- one per cent of the value of the consideration which exceeds C$40 million.
This means buying a C$650,000 home will cost an extra C$8,725.00 in land transfer tax.
As usual, first-time buyers have some advantages. A rebate of up to C$3,725 applies to first-time purchasers of new and existing homes. This will mean a full rebate for homes valued at $400,000 or less. Over this amount, purchasers will pay the net tax after the rebate.
Some lenders and developers are offering to absorb the new tax for buyers, but since these gestures often mean higher interest rates or costs, the savings may not be as implied.
A cool head, a calculator and solid professional insight are essential to buyers who want to do well in this time-sensitive market. Otherwise, the old saw "act in haste, repent in leisure" may be their motto for 2008.
In Alberta -- Canada's hottest economy -- real estate continues to be the scare commodity at the vortex of accelerating development. Rapid oil-driven industrialization is adding significant pressure to water supplies and the environment in general. Water may become the "golden" resource in Alberta if residents and communities do not intensify their insistence on preservation of water supplies in the face of unprecedented pipeline, mining and industrial activity in what was Canada's agricultural heartland.
The World Wildlife Fund of Canada (WWF-Canada) is among organizations congratulating and condemning governments for inconsistent long-range land-use planning in this province.
According to WWF-Canada: "The booming tarsands industry may actually profit from selling carbon credits while their global warming emissions dramatically increase. An analysis by the UK-based Tyndall Centre for Climate Research, commissioned by WWF, demonstrates this perverse outcome arises because the federal government's proposed greenhouse gas limit for large industrial facilities is set at a level below what is attainable, and in some cases, below what has already been voluntarily committed to by industry."
Under the government's proposed plan, the windfall profit for the sale of these carbon credits by tarsands companies could run between C$30 to C$700 million.
"This is a plan in which it pays to pollute," said Mike Russill, President & CEO of WWF-Canada and former oil industry executive. "Handing a cash bonus through carbon credits to the companies responsible for the fastest growing source of global warming pollution in Canada does not make sense for the health of the planet, or for Canada's credibility on the world stage."
On the other hand, the federal government recently announced that over 10 million ha (25 million acres), have been withdrawn, for an interim period of 4-5 years, from industrial development in the Mackenzie River Basin through Orders in Council approved by the federal government at the request of local First Nations and communities like Fort Good Hope. This withdrawal maintains "options for protection" around Great Slave Lake and along a northern stretch of the Mackenzie River in the Northwest Territories. One 1.5 million ha area called "The Ramparts" after sacred cliffs located along the river also includes world-class wetlands that should qualify the area as a National Wildlife Area.
"I think the real significance of today's announcement is that First Nations' wishes to sequence conservation first are finally being acted upon -- up front in the development process while conservation can still make a difference," said Rob Powell, Director of WWF's Mackenzie River Basin program. "WWF looks forward to working with the communities involved in today's announcements, as they determine exactly what kind of protection they want. And there are many other communities who have identified areas they want to protect throughout the Mackenzie Valley."
2007 will be remembered for the transition to "green" thinking in real estate, but there's still along way to go before communities and businesses can co-exist with the environment in tact.