Archive for the ‘Mortgages’ Category

10 ways to reduce your tax bill

January 31st, 2013 Comments off

10 ways to reduce your tax bill


The days are starting to get longer, and you can feel that spring is right around the corner. With spring, of course, comes tax-filing season, so as “filing taxes” joins “spring cleaning” on your to-do list, here are 10 ways to save you money—and even land you that refund you’ve been hoping for.

• Tax-free savings account: Using a TFSA is a smart way to save on tax. Generally, the interest, dividends, and capital gains earned on investments in a TFSA are not taxed—not when they are held in the account or when they are withdrawn.

• Registered retirement savings plan:
Pay less tax and save for your retirement at the same time. Any income that you earn in your RRSP is usually free from tax as long as the funds stay in the plan.

• Charitable donations:
Donations of cash, goods, land, or listed securities made to a registered charity or other qualified donee may be eligible for a tax credit.

• Parents:
All those mornings spent at the hockey rink and afternoons spent at the ballet studio can mean savings—with the children’s fitness and arts tax credits. Child care is also deductible, so gather up your receipts.

• Family caregivers
: If you have a dependant with a physical or mental impairment, you could be eligible for an additional $2,000 this year with the new family caregiver amount.

• Student:
Were you a student in 2012? You may be able to claim tuition, textbook, and education amounts, as well as moving expenses if applicable. And if you’ve recently graduated, you can claim the interest you paid on your student loan.

• Public transit amount:
If you are a public transit rider, you may be able to save by claiming the cost of your transit passes. You can get up to 15% of the amount claimed.

• Seniors:
If you receive income from a pension, you can split up to 50% of eligible pension income with your spouse or common-law partner to reduce the taxes that you pay. You may also be eligible to claim the age amount, medical expenses, and the disability amount.

• Home buyers:
You may be able to claim up to $5,000 if you bought your first home in 2012.

• Hiring an apprentice:
Did your business employ an apprentice? An employer who paid a salary to an employee registered in a prescribed trade in the first two years of his or her apprenticeship contract qualifies for a non-refundable tax credit.

Make filing your taxes this spring even easier by doing it online. It’s fast, secure and you may be able to use cost-free filing software. The Canada Revenue Agency offers step-by-step instructions at

Source: News Canada


The Bank of Canada has a WARNING for condo investors

February 6th, 2012 Comments off

Some lenders have increased the downpayment required for condo apartments, the usual downpayment is 5%, some lenders have increased this to 10%. The Bank of Canada has a warning for condo investors – the boom times may be over……..

In its December economic review, the central bank said that “certain areas” of the housing market could see prices fall as the economy weakens.

“Certain areas of the national housing market may be more vulnerable to price declines, particularly the multiple-unit segment of the market, which is showing signs of disequilibrium,” the bank warned. “The supply of  completed but unoccupied condominiums is elevated, which suggests a heightened  risk of a correction in this market.”

The Toronto  market has been of particular concern to market watchers, with prices  continuing to rise at the same time as a record number of new units are set to  flood the market.

It’s also unclear who is buying the units – those in the industry often cite foreign demand, saying that investors from afar are racing to snap up units  because the city is seen as a safe place to park money.

But there are no actual statistics. Canadadoesn’t track foreign  investment in its real estate market, leaving anyone with an anecdote licence  to talk up the market.

While there has been a flurry of construction in the GTA, where most of the  country’s condos are built, there are signs that the market is slowing. Data  released Thursday by Canada Mortgage and Housing showed the number of  multiple-unit housing starts dropped by a surprising 23 per cent in November.

Urbanation, which tracks Toronto  condo sales, said that 20,964 new condo units were sold in the first nine  months of the year, putting the city on track for a record year regardless of  any recent slowdown.

The average resale unit, meanwhile, sold for $365,161 in November,  according to the Toronto Real Estate Board, 8 per cent higher than they were  last year.

National Bank Financial analyst Stefane Marion said that he disagrees with  the idea of oversupply in the city. He said the amount of inventory currently  on hand would take 19.3 months to sell, below the historical average of 26  months and well below the four-year mark set in 1990, 2007 and 2010.

While it may be true that the residential market in Canada is vulnerable to  price declines in the advent of an economic slowdown, the source of the problem  is more likely to come from a credit-crunch induced global recession, not the
Toronto new condo market,” he said.

Those in the industry don’t expect to see things slow down much in the next year.

“As a result of delayed condo launches in 2011, and due to the number  of new sites rumoured and under development in the GTA, we are expecting a busy  2012 in terms of new condo launches,” said Matthew Slutsky, president of BuzzBuzzHome. “We are  expecting to see some epic and mind-blowing new condominium buildings and sites  coming to market in 2012, specifically centred aroundToronto’sYonge Street and the 905 region.”


Steve Ladurantaye

Globe and Mail Update
Posted on Thursday, December 8, 2011 2:54PM EST

Connect the Housing Bubble Dots: There could be Trouble on CMHC’s horizon

February 2nd, 2012 Comments off

Ted Rechtshaffen | Columnist profile | E-mail

Globe and Mail Update

Published Monday, Jan. 23, 2012 6:00AM EST

A few months ago I heard leading Canadian investor Eric Sprott speak, and he said a very basic thing that struck a chord. He said that you should not be afraid to connect the dots. The dots are usually in front of you, but people don’t often look beyond the single dot.

Today I am going to show six dots that we can all see. When we connect them, the conclusion is that the Canadian Mortgage and Housing Corp. (CMHC) has a realistic chance of putting the Canadian taxpayer at risk – unless meaningful changes are made.

The key piece of background is that right now, a young couple can put down $20,000 to buy a $400,000 house, or five per cent of the purchase price. Their mortgage will be insured by CMHC (the Canadian government, also known as you and I) in exchange for a fee paid by the young couple.

If that $400,000 house drops in value by 20 per cent, for example, which has happened before in Canada, it will be worth $320,000. But the couple will owe $380,000. Then the odds of them walking away from their house or defaulting on their mortgage become meaningful. Given that this young couple might be in the same position as 50,000 other young couples (about 3 per cent of the Canadian population) at roughly the same time, the odds of a surge in mortgage defaults is very real in Canada.

Here are the dots or facts that we can all see:

Dot #1: “The greatest risk to the domestic economy is household debt,” Bank of Canada Governor Mark Carney said in an interview with the CBC last week, again sounding the alarm bell on excess borrowing.

Dot #2: The ratio of credit market debt to personal disposable income rose to a record high of 150.8 per cent in the third quarter of 2011, Statistics Canada said last week, the third-straight quarter the figure has gone up.

Dot #3: Last week, Bank of Montreal offered a five-year mortgage rate of 2.99 per cent. The lowest rate offered in history. Yes, this rate is available to those interested in putting down 5 per cent.

Dot #4: Fannie Mae and Freddie Mac, two U.S. organizations started in 1968 as a government sponsored enterprise (although they became privately owned and operated by shareholders) – have a mandate to help Americans to become homeowners by increasing liquidity for housing lending, and where appropriate, taking on risk. These two organizations were bailed out by the U.S. government in 2008 after the housing market deflated and it is estimated that their bailout will eventually cost taxpayers as much as $124-billion (U.S.) through 2014. When the housing bubble burst in the U.S., the value of many houses fell by 50 per cent.

Dot #5: In November, the Economist magazine said that Canada is among nine countries in the world where house prices are overvalued by 25 per cent or more. It went on to say that Canada is one of only three countries where “housing looks more overvalued than it was in America at the peak of its bubble.”

Dot #6: CMHC is Canada’s national housing agency. Established as a government-owned corporation in 1946 to address Canada’s post-war housing shortage, the agency has grown into a major national institution. CMHC backed loans of $541-billion (Canadian) as of Sept. 30, 2011. At that time, the total equity of CMHC was $11.5-billion. This is 2.1 per cent in equity against its overall loan exposure. To put the $541-billion in perspective: If we go back to those imaginary 50,000 couples that bought a $400,000 house and put down $20,000, that represents $19-billion of mortgages.

Back in 2007, Fannie Mae backed up $2.7-trillion (U.S.) of mortgage-backed securities with $40-billion of capital, or 1.5-per-cent equity against its overall exposure. At that time Fannie Mae stock was trading at $50 a share. Today it is 19 cents.

Just because these dots or facts are out there doesn’t mean that housing prices in Canada will fall 25 per cent or that CMHC will face any major financial problems in the years ahead. However, by connecting the dots, we can see a very plausible scenario that already unfolded with Fannie Mae and Freddie Mac that cost U.S. taxpayers an estimated $124-billion. If we had a similar scenario – and CMHC is now roughly one-tenth the size of the combined Fannie Mae and Freddie Mac – it is plausible that in a major real estate downturn, Canadian taxpayers would be on the hook for several billion dollars.

The biggest risk is likely with mortgage holders who only put 5 per cent to 10 per cent of equity down when buying a property. The reason I say this is that if house prices drop by over 10 per cent, everyone in this group will have negative equity in their homes. According to CMHC, 9 per cent of their loan book (or $49-billion) is connected to mortgages with under 10-per-cent equity based on current home prices. Remember all of CMHCs equity value is $11.5-billion (Canadian). Another 18 per cent of their loans are connected to mortgages with between 10-per-cent and 20-per-cent equity based on current home prices. This is another $108-billion of loans.

What happens if Canadian houses hit their ‘proper’ value, according to the Economist magazine, and decline by 25 per cent of their value? Every one of the $157-billion of mortgages noted above will be guaranteed by the Canadian taxpayer, and every one of those mortgages will be on homes with negative equity value.

When we connect the dots and look at the real risk, the time has come for the federal government to do the prudent thing and raise the minimum equity payment from 5 per cent to 10 per cent, and at least minimize the hit from the riskiest segment of mortgages insured by CMHC.

We can’t say we didn’t know, when the dots were right in front of us.


Historically Low Interest Rates

February 2nd, 2012 No comments

Currently, mortgage rates are historically low, even though last week we saw the end of the competitive 2.99% for 5 years. After the Feds announcement in the U.S. to keep interest rates low until 2014, people are becoming hopeful that ours will also remain low until 2014. We are now getting used to the new norm. This is dangerous as interest rates will go up, but when, I would guess, nobody knows!

Over the weekend I watched an interesting CBC news report on the upcoming RRSP season. We are being told that we have to be more conservative when calculating our investment returns. Warren MacKenzie, of Weigh House Investor Services, said; “It would be unwise to assume an eight per cent average (return) over the next 15 to 20 years. I think we’re in for some tough times”. So where should our projections be at? According to PWL Capital’s Justin Bender: “Financial planners using more than a 4 per cent to 5 per cent rate of return for their projections (after fees) may be overstating the return that their clients can reasonable expect.”

I was taught to start saving for your retirement from your first pay cheque. I am hoping to hear how YOU are saving for your retirement. Let’s try and get some ideas flowing. I will share these ideas with everybody (names will be kept confidential). I guess you won’t be surprised to hear that I think purchasing a rental property is a good way to plan for my retirement income. I was thrown into this by accident. After renting an office in a plaza that held a major bank, the bank had my lease terminated as they believed I was effecting their mortgage sales. It’s a long story … I ended up purchasing a unit where I operate my office and also lease an apartment above. After the fact, I realized that the bank did me a huge favour!

I believe now is the time we all should be extremely aware of our own retirement planning particularly when we hear Prime Minister Harper say: “We’ve already taken steps to limit the growth of our health-care spending. … We must do the same for our retirement-income system.”

Let’s hear some thoughts


Speaking of Money… It’s Financial Planning Week

October 21st, 2011 No comments

Speaking of Money… It’s Financial Planning Week

October 17-23 is Canada’s third annual Financial Planning Week and as part of its campaign to get more Canadians engaged in their financial wellbeing, Financial Planning Standards Council (FPSC®) hit the streets to hear what Canadians are saying about money.

“Every day is financial planning day at Financial Planning Standards Council and for the 18,000+ Certified Financial Planner® professionals in Canada. But, while many Canadians may have great intentions, they fall into the procrastination trap,” says Tamara Smith, V.P. Marketing & Consumer Affairs, FPSC. “We are putting a call out to every Canadian: this Financial Planning Week, it’s time to take action — even if in small steps — to do more towards your financial wellbeing.”


Even small steps can build momentum and make a difference.


1. Reflect on your life goals (Own a home? Travel the world? Or simply get by?). Think in terms of shorter and longer-term goals. As well, consider your needs and wants. Financial planning supports your life and it involves much more than just planning for tomorrow. It’s about the continuum of your life, which includes today!


2. Talk to your life partner. Money often comes last on the list of relationship conversations but it should be a priority and is an essential part of family life planning. Plan now to prevent money from becoming a stressor on your relationship!

3. Talk to your kids. It’s never too early to teach your kids the value of money and the importance of good financial habits.

4. Talk to a financial planning professional who can help you make sense of it all. CFP® professionals are uniquely trained to help you translate your life goals into meaningful financial strategies and in seeing how all these strategies are connected. Before engaging anyone, learn what to look for and what to ask a prospective planner. See 10 Questions to Ask for starters.


5. Learn something new. You can start by going to a Financial Planning Week event.

6. Track your spending so you know where that darn money is going. You’d be surprised of how much you can squeeze out in savings when you are accountable for every dollar spent.

7. Create a monthly budget.

8. Pay yourself first and start a savings and/or investment program. Even small amounts add up if you save regularly.

9. Pay off debt — especially credit card debt that can result in high interest fees for late payments. Keep your credit rating healthy and don’t forget to pay those bills on time!

10. Get help creating a financial plan that looks at the whole picture. CFP professionals say it’s never too early to start, nor do you have to be wealthy to have a plan. Planning is for everyone!

11. BONUS TIP: Brainstorm a few of your own ideas of what you can do to celebrate Financial Planning Week and make them meaningful for you. Remember – it’s about your life.


•FPSC executives are available for media interviews; also, CFP professionals from various regions across Canada are available to discuss financial planning topics.
•Looking for statistics on Canadians’ emotional and financial wellbeing? Read the highlights on FPSC’s Value of Financial Planning Study.

About Financial Planning Week

Now in its third year, Financial Planning Standards Council (FPSC) and the Institut québécois de planification financière (IQPF) have jointly declared October 17-23, 2011 as Canada’s Financial Planning Week. During the Week, each organization will be spearheading industry events and public outreach activities in their respective markets. Financial Planning Week is part of an ongoing effort by both organizations to make financial planning more a part of Canadians’ lives. Stay up-to-date at / Twitter @FPWeek, and join us on the LinkedIn and Facebook page for Financial Planning Week.