Wednesday, July 06, 2016

Competitive Pricing Still Key in 

Victoria's Hot Real Estate Market

A total of 1,174 properties sold in the Victoria Real Estate Board region this June, an increase of 29 per cent compared to the 910 properties sold in June last year.

"When we look at month over month numbers, sales are down almost 9 per cent in June compared to the record breaking sales we saw in May, which may be due to the very low inventory available," notes Mike Nugent, 2016 President of the Board. "It's likely that sales would be higher were there more on the market to buy, but with the current conditions people may be hesitant to give up the homes they have."

Inventory levels remain lower than the year previous, with 2,289 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of June 2016, 42.8 per cent fewer than the 4,003 active listings at the end of June 2015.

"June marks the halfway point for 2016. By this time last year 4,282 properties had sold," adds Nugent. "In the same six months this year, 6,181 properties have sold. If sales continue at a similar rate, we may meet the total sales from last year by the end of the summer. However, this may depend on available inventory, which continues to decrease."

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in June, 2015 was $594,700. The benchmark value for the same home in June 2016 has increased by 21.9 per cent to $724,900.

"Even in this market, price and strategy are important," says Nugent. "It's smart to engage a local REALTOR® to identify a price point and marketing strategy to sell your property. We have seen many multiple offer situations and record breaking numbers in the past few months, but there are properties that sit unsold. Sellers trying to test the upper price limits in their specific range will find that buyers are as discerning as ever. Even in this market there is no guarantee of sale." 

Thanks to Tony Spagnuolo, Barrister & Solicitor at www.bcrealestatelawyers.com for permission to use this article

Most individuals who sell real estate are aware that a sale of a principal residence does not attract income tax.

The Income Tax Act requires the individuals to file a prescribed form with their income tax return for the year in which the principal residence is sold. In practice, however, the vast majority of individuals who sell their principal residence will merely ignore the requirement to file the proper forms under the assumption that the sale is not taxable.
In order for a property to qualify as a principal residence during any particular year it must:
  1. be a housing unit, a leasehold interest therein, or a share of stock of the co-operative housing corporation. The Canada Revenue Agency (CRA) interprets the term housing unit as being a house, an apartment, condominium or cottage, a mobile home or houseboat; and
  2. be “ordinarily inhabited” during the year by the individual, the individual’s spouse or former spouse, or the individual’s dependant child. The CRA has adopted a very liberal approach as far as administering what is meant by the term “ordinarily inhabited”. For example, a summer cottage or winter home which is used (by the owner) for a portion of the year (ie a period of two weeks appears to qualify), could meet the definition of “ordinarily inhabited”. Furthermore, properties occupied for a portion of the year because they were purchased late or sold early in the year will also qualify.
The principal residence can include land upon which a housing unit is situated if the land contributes to the “use and enjoyment of the housing unit as a residence”. However if the land exceeds one and one quarter acres, in order for the excess to qualify, the onus is on the individual to prove that the excess was necessary for the “use and enjoyment as a principal residence”.
For the years subsequent to 1981, an individual may not designate more than one property as a principal residence with respect to that year.
Tax issues may arise when the use of a property is changed from a principal residence to income earning, or vice versa. These are described below.

Conversion of Principal Residence to Income Earning Use

Situations do arise whereby individuals will commence leasing their principal residence, for example where they have temporarily moved to another location.
In such cases the Income Tax Act provides that the individual is deemed to have sold their principal residence at a price equal to its current value and to have reacquired it at a cost equal to that same value. Assuming the principal residence has increased in value from the original purchase date, the above treatment will result in a gain. This gain, however, will generally be exempt from tax pursuant to the principal residence rules. Any subsequent gain though, has the potential to be taxable.
To alleviate the above, the Income Tax Act contains an elective provision under which the individual is considered not to have sold (for tax purposes) his or her principal residence and thereby not to have changed its use. Furthermore this particular section of the Income Tax Act provides that for a period of four years beyond the date of the deemed sale, the individual may continue to consider the property as a principal residence even though it was not ordinarily inhabited by the individual.
To utilize the above, the individual should enclose with the income tax return for the year in which he or she moved out, correspondence in the form of a letter indicating that they are electing pursuant to section 45(2) of the Income Tax Act with respect to the above noted property.

Conversion of Income-Earning Property to Principal Residence

There are also situations where individuals will move into a property that originally was being used to produce rental income. Under these circumstances, similar to the above, individuals will be faced with a deemed sale at the time the property is converted to a principal residence. However, provided the individual has not claimed what is known as capital cost allowance, he or she may elect that for tax purposes there is no disposition (sale) and avoid any potential taxable gain. Furthermore, the election also provides that the property can be treated as a principal residence for up four years prior to the year the individual commenced to occupy it as a principal residence.
Please remember the Income Tax Act may be changed at any time by the federal government. The information above is accurate as of the date of writing but please review the government website or discuss your situation with your accountant to ensure the proper amount of taxes are being paid. If you do not have an accountant, we would be happy to refer you to our partners, Newport Group of Chartered Accountants, contact us at 310-HOME (4663).

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Monday, July 04, 2016

Competitive Pricing Still Key in Victoria's Hot Real Estate Market

July 4 2016, Victoria, BC

A total of 1,174 properties sold in the Victoria Real Estate Board region this June, an increase of 29 per cent compared to the 910 properties sold in June last year.

"When we look at month over month numbers, sales are down almost 9 per cent in June compared to the record breaking sales we saw in May, which may be due to the very low inventory available," notes Mike Nugent, 2016 President of the Board. "It's likely that sales would be higher were there more on the market to buy, but with the current conditions people may be hesitant to give up the homes they have."

Inventory levels remain lower than the year previous, with 2,289 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of June 2016, 42.8 per cent fewer than the 4,003 active listings at the end of June 2015.

"June marks the halfway point for 2016. By this time last year 4,282 properties had sold," adds Nugent. "In the same six months this year, 6,181 properties have sold. If sales continue at a similar rate, we may meet the total sales from last year by the end of the summer. However, this may depend on available inventory, which continues to decrease."

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in June, 2015 was $594,700. The benchmark value for the same home in June 2016 has increased by 21.9 per cent to $724,900.

"Even in this market, price and strategy are important," says Nugent. "It's smart to engage a local REALTOR® to identify a price point and marketing strategy to sell your property. We have seen many multiple offer situations and record breaking numbers in the past few months, but there are properties that sit unsold. Sellers trying to test the upper price limits in their specific range will find that buyers are as discerning as ever. Even in this market there is no guarantee of sale." 

Friday, June 17, 2016

Vancouver Island Motorsport Circuit

Full throttle.

Right in the heart of idyllic Cowichan Valley on Vancouver Island is a world-class raceway, a Federation Internationale de l’Automobile-designed track with five combinations for different activities, of Formula One quality, but laying resplendent amidst waves of scenic greenery.
Peter Trzewik and Sylvester Chuang of Gain Vancouver Island had a dream of creating a place where their clients could drive their cars at high speeds and, after some thought, they hit upon a seminal notion: employ Hermann Tilke, founder of Tilke Engineers and Architects, arguably the world’s most renowned and respected Formula One track designer, responsible for, among others, the tracks at Bahrain International Circuit, Shanghai International Circuit, Istanbul Park, and Valencia Street Circuit. Trzewik, himself an accomplished driver with plenty of links to the German auto industry, connected with the Tilke team and convinced them to pay a visit to the proposed site. Though undoubtedly tired from a long trip that also took them to the States and Mexico, after spending 36 hours on the island, Trzewik says they couldn’t stop talking about how beautiful it was and that they wanted in. The exciting project opened in June.
The Circuit site is only a few kilometres off the Trans-Canada Highway, not far from Duncan, and not so far, either, from Nanaimo. This is a vital part of the overall plan, since potential members of the Motorsport Circuit will have access to the tracks, the clubhouse, and the newly (and splendidly) renovated and soon-to-be-reopened Villa Eyrie located between Victoria and Duncan. The options are not limited, but as Trzewik describes it, “You can arrive in Nanaimo, or in Victoria. We will get you to your accommodations and arrange transport to the track.” There are many options for accommodation, but Villa Eyrie is ideally located, and is owned by the resort. “You can golf in the morning, race in the afternoon, or vice versa,” says Trzewik. “You can have a wonderful evening at the resort, and be ready for the next day.” One of the Circuit’s big advantages is that it is the only one in Canada that is virtually a 365-day-a-year facility. Similar setups are seasonal; others are extreme distances away. Membership has plenty of advantages, including 25 years of driving club privileges, access to the clubhouse restaurant any day of the year, and, for an extra fee, an on-site vehicle storage facility.
Professional instructors, including celebrity guests, and a driving academy are available. State-of-the-art technology allows each lap’s performance specifications to be analyzed, showing drivers where they are doing well and where they can stand to improve. Multiple elevation changes, 19 corners, variants in corner banking degrees, seven different track configurations, all are part of this wonderland for drivers. There is even an off-road track with 10 elements, also designed by Tilke. Trzewik is now able to share his passion for beautiful cars and high-performance driving with members of the Circuit, who in turn can bring guests, and create bespoke driving experiences. Full throttle, Formula One-style fun.

Thursday, June 16, 2016

To unravel the politics of Metro Vancouver’s red-hot, real estate market, just follow the money. And the votes.

http://www.theprovince.com/business/Smyth+politics+Metro+Vancouver+real+estate+money+votes+rule/11988848/story.html

Premier Christy Clark has resisted aggressive intervention in a hyper-inflated market that’s soured the dream of home ownership for non-millionaires.
Why has Clark fiddled while the market burns? Maybe it’s the $12 million donated by real estate tycoons and property-development companies to Clark’s governing Liberal party over the last decade.
But here’s another reason Clark might not want to spoil the real estate profit-palooza: the vast sums of money flowing into government coffers from the property transfer tax.
When a B.C. home is sold, the government takes a percentage cut. The higher the price, the more the government collects.
With prices soaring, the government is making a transfer-tax killing: an astonishing $1.49 billion in the last fiscal year, a 40-per-cent increase in one year.
The transfer-tax take was $562 million more than the government budgeted at the start of the year, allowing the Liberals to balance the books and giving Clark a key re-election talking point.
How big is this pot of money? It’s more than the government got from lotteries and casinos. More than the carbon tax. More than tobacco. More than liquor. More than royalties from forestry, mining and natural gas combined.
As the government rakes in money from real estate sales, Clark says she’s worried about taking steps that would reduce home prices and erode existing homeowners’ equity.
Polls and demographic studies suggest those homeowners are more likely to vote and vote Liberal.
“Homeowners were much more likely to vote than renters — 71 per cent versus 54 per cent,” concluded a 2012 Statistics Canada study on voter turnout rates.
“Homeowners tend to have lived in the area longer, so they are more familiar with the candidates and where to vote,” explained pollster Greg Lyle of Innovative Research.
The same StatsCan study said older, wealthier voters (who tend to be homeowners) are also more likely to vote than younger, less-wealthy voters (who tend to be renters).
“Renters tend to be more likely to support parties on the left, while homeowners are more likely to vote for those on the right,” Lyle said.
In other words, homeowners show up on election day more than renters. And homeowners tend to vote Liberal to boot, while renters tend to vote NDP if they bother to vote at all.
Is it any wonder Clark doesn't wish to anger homeowners who now represent a crucial Liberal voting bloc across a Metro Vancouver packed with critical swing ridings in the election?
Watch for Clark to continue to protect the interests of existing homeowners, as the red-hot housing market increases their equity and pumps more millions into the coffers of the Liberal party and government.