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As the saying goes there’s two things in life that are certain death and taxes.

We’re going to talk about taxes and how they relate to your real estate transaction. So there’s generally three types of taxes that could impact your transaction. The first would be municipal property taxes the lawyers on your transaction will make sure that the property taxes are adjusted so that each party only pays their proportionate share of the taxes relating to their property. The next kind of tax that we’re going to talk about is land transfer tax this is a larger tax and it’s payable whenever a transfer is registered in the province of Toronto. The amount of tax that you’ll be required to pay is based on the purchase price so the higher the price the more tax you’re going to be required to pay. Depending on the nature of the transaction and the relationship with the parties sometimes the transaction could be exempt from land transfer tax. It’s really important that you discuss all of the facts related to your transaction with your FAMILY & CRIMINAL lawyer so that they can properly inform you as to the amount of tax that would be payable and any exemptions that you might qualify for. The other tax that could have an impact on your real estate transaction is HST, the HST does not apply to most sales of use residential property, however, the issue can become more complicated if you’re selling vacant land or property that has a commercial component. In any event, the HST needs to be an address at the outset of the transaction when the parties are negotiating the agreement of purchase and sale. If you’re unsure about whether HST is applicable to your transaction you should make sure that you consult your lawyer first.

In any event at end of the day, it’s really important that your real estate where is well-versed in the tax issues that can impact your real estate transaction.

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I was recently reminded of this issue when reviewing a client’s pre-construction purchase contract for a fee simple town home abutting a common element condominium plan for the roads and amenities in the neighbourhood. The 81 Stone purchase agreement was typical for a pre-construction project. There was a floor plan without measurements of any guaranteed size, with options for the builder to revise the plans, alter elevations or reverse the footprint. Furthermore there was an obligation to pay a number of
undisclosed but unlimited charges. As is usually the case, the contract was custom prepared by the
builder. Also included were the condominium organization documents. I have found these documents
are usually intimidating and incomprehensible to clients, and they do not bother to read them.

Buried in the purchase contract and in the condominium organization documents were a number of
additional costs to the buyer. These included Tarion Warranty registration fees; utility meters and
connection charges, Transfer preparation fees, just to name a few. Additionally there were ongoing
charges to be incurred in the future by the homeowners under the condominium documents.
The lessons: ask about undisclosed charges in the sales office before signing anything, and read
the organizational or disclosure statement for the condominium.

Finally, always have an experienced FAMILY & CRIMINAL lawyer review the purchase agreement and condominium documents within the prescribed cancellation or conditional period (usually 10 days).

Be careful out there!

By: David Smith, Partner

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One of these protections under s. 21(1) of the Toronto FAMILY & ELDER LAW Act, is that a spouse cannot “dispose of or encumber” an interest in the matrimonial home unless the other spouse consents, or if a separation agreement or court order allows it. This means that no spouse is able to sell or refinance the matrimonial home without the knowledge and consent of the other spouse, even if only one spouse holds the title to the property.

There are some good reasons for this protection, in that if one spouse were to sell/transfer or mortgage/refinance the matrimonial home without the other’s knowledge, this could significantly impact both spouses and their financial and and/or occupancy rights. Banks and other lenders are well aware of these spousal consent requirements. It is common practice for mortgage brokers and real estate agents to ask your marital status, however, it doesn’t hurt to present this information yourself to avoid a sticky situation. If one spouse is able to get a mortgage on the matrimonial home without the other spouse’s consent, the courts will likely set aside the mortgage based on the lender’s failure to obtain the consent of both spouses.

For married couples, spousal consent to dispose of or encumber a property is only required in regards to the matrimonial home; all other properties (i.e. second homes, investment properties, etc.) may be dealt with according to ownership. For unmarried couples, the matrimonial home protections do not exist. Cohabitating or common law couples are not given this protection under law. Common law spouses who are not on title to the couples’ home, in some cases, are able to advance claims for a share in the property but it is always best practice to be well aware of your rights and protections before problems arise. For those in common law relationships whose common law spouse owns the house they both live in, it may be wise to enter into a Cohabitation Agreement to secure your rights before any issue arises.

Circumstances can vary and it is always wise to speak with a lawyer with respect to individual ownership and equitable interests.

By: Lindsay Hayes and Joanne McPhail (Partner)

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The NRST took effect on April 21, and imposes an additional 15% tax upon the purchase or acquisition of a residential property by those who are neither citizens nor permanent residents of Canada, or by foreign corporations or taxable trustees.

This tax will apply to all residential property located within the Greater Golden Horseshoe (GGH) area, which essentially spans from the Niagara Region through Peterborough.  Those who qualify will be subject to NRST as well as Toronto’s general land transfer tax.

Premier Wynne has insisted that this tax is not intended to target immigrants; a rebate will be available for those who pay the NRST and subsequently obtain permanent resident status or citizenship.

Instead, she says this tax is meant to target those looking for quick profit/investment but not a place to raise a family.

This move follows a rise in GTA housing prices of 33.4% in the past year, to an average price of $1.21 million.

Wynne has future plans to expand rent control, which currently applies only to units built before November 1991, to include all private rental units under annual rent increase guidelines. She also plans for a 5-year, $125 million program to rebate a portion of development charges to encourage rental construction. Finally, she intends to review the rules governing real estate agents, looking in particular at those surrounding ‘double-ending’.

Through these measures, the Wynne government intends to make housing more affordable for the young, and more secure for those of advanced age.

Though many support the tax as a tool to cool a hot market, some criticize Wynne for opposing New York’s proposed buy-American provisions only to implement her own buy-Toronto policy, which they call “anti-NAFTA”. In fact, there is a proposed lawsuit against BC based on its foreign buyer tax, claiming that the tax is unconstitutional per Section 15 of the Charter of Rights and Freedoms, and that it perpetuates “prejudice and stereotyping”. Critics remind us of Canada’s signature on over 30 international treaties committing to treat foreign nationals as citizens.

Here in the Barrie and District Area, the average sale price of residential homes increased 36.9% between March 2016 and March 2017, to an average of $547,847. The number of transactions has also grown, with the area selling 705 units in March of this year, 27.5% higher than March of last year. These together have led to a whopping 82.9% increase in the total dollar value of all March 2017 home sales from the same month last year.

To find out more about the NRST and how it will affect yourself or your clients, visit: https://www.fin.gov.on.ca/en/bulletins/nrst/nrst.html

By: Jacklyn Tuckey, Student-at-Law

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