Curtis Leibel 780-438-2500

Capital gains are taxes that you pay on the profit or increase in value of a property when you sell it.  That being said – capital gains means something different to everyone.  The best thing to do is talk to your accountant before you sell any second property to see how it applies to your specific portfolio.

I try and keep this blog as simple as possible and a lot of the topics I speak about, we just brush on the surface of the idea.  So the most important question is: how do you know if you are subject to paying  capital gains taxes and how much will it be?

1)   Basically any property that you do not call your principal residence is considered an investment and thus subject to the tax.  If you do not live in the residence (and you can only have one principal residence) and the value of the house upon sale is greater than the value you purchased it at + renovation or other expenses you incurred on the property, you will have to pay capital gains.  Yes, there may be some loopholes ie. passing property through family, forced sales or relocations for work, etc… but generally you can expect to pay tax if you made money on it.

2)  The amount of tax on capital gains varies throughout North America, but in Alberta you can expect to pay tax on 50% of your profit.  Ie. make 100,000 on the sale of a rental property – 50,000 of that is susceptable to a tax rate coinciding with your specific tax bracket.  (In alberta the lowest personal tax bracket would be 15.25+10% =25.25%)  So in this example you would pay a minimum of $12,625 on $100,000 profit if you were in the lowest bracket.  There are other routes one can take, involving running it through a business that may or may not be advantageous to you.  Again the best advice – ask your accountant before you sell to figure out what the best route for you to take is.

I have a new property that I just listed for sale at the popular Mulhurst Village at Pigeon lake.  One block off the lake, complete with 1.56 acres, this lake home is all you could ever want.  Here are the details:

1 block from Pigeon Lake and the golf course, quietly hidden amongst the trees
on 1.56 acres of land. This beautifully maintained 1941 sq ft 2 storey home has
loads of features. The house itself boasts a tiled kitchen, newer carpet in the
living room, 3+1 bedrooms and 3 bathrooms including an ensuite. It also features
a large double garage with a brand new door, RV parking, 2 driveway access,
large deck, master bedroom balcony, wet bar plus an enclosed hot tub. This is
the best of country living with the benefits of a municipality.

Give me a call if you have any more questions about this property, or would like to set up a viewing!

I recently listed 2 new homes in very desirable areas:

1) First one is beautiful home in Strathcona located on a beautiful lot steps from the river valley.  This home boasts completely upgraded upstairs with hardwood floor and newer kitchen cabinets, as well as a large double garage with loft in the backyard.  All this for $419,900 – the lot is worth at least this much!

2)  Next up is the desirable location of Terwillegar town.  This 3 bedroom, 3.5 bath 2 storey home also has a lot of upgrades, including hardwood floors throughout the main floor, carefully crafted archways and a completely finished basement.  There is little yard work to do as it has all been landscaped magnificantally with rocks, perennials and a vegetable garden.  Cant beat the price at $449,900!

Stay tuned, as coming up in a few weeks I will be listing a custom million+ home being built in the quickly rising Windermere neighbourhood.

Further to my recent post on RPR’s, title insurance is often offered in place of a current RPR.  Alot of new buyers are hesitant to accept insurance instead of RPR, but in reality in may be in their best interest, and Ill explain why.

Title Insurance is relatively new in Alberta (about 10 years old), but has been around for a century in the United States.   Alberta has created a government-guaranteed system called TORRENS – which goes far beyond Eastern Canada and US standards, so you can be sure that all information is accurate and INCLUSIVE ( American systems dont disclose everything, such as unregistered mortgages!)

So what is title insurance?  Basically its insurance that covers the buyer (or seller) from problems occured through the transfer of land.  The scope of coverage has recently been expanded to cover nearly everything.  Some examples:

Covers the gap between submission date and registration – often things can occur between the time of purchase and the time it takes to transfer title with the city (can take up to 5 weeks).  This insurance will cover this time period.

Covers deficiencys on RPR – this is very important – and in fact after doing more research on this, I am quite amazed by the amount of stuff this will cover ie. unregistered easements, hidden deficiencies, builder liens….

Covers Unknown special assessments in condos

Covers any issues that would have shown up on the RPR, thus avoiding the need for an RPR.  It covers non compliance issues such as lack of permits or failure to meet building codes

Even covers known defects (ex. deck over property lines, deck too big for area, etc…)

Coverage continues after closing date – this is important to cover things like fraud, impersonation, forgery etc…

All of this seems like a no brainer to choose title insurance over RPR.  However there is one downside to getting the RPR – if you accept it when you purchase a property, it does not automatically get passed on when you decide to sell it.  Therefore, if the coverage doesnt include making a modification to something not complying in the RPR, the new buyer will either have to decide to get title insurance as well, or some resolution will need to be made to fix the problem.  In this sense, you may just be delaying changes that will need to be made at your expense.

Still title insurance, is a great alternative if a complying RPR is not convenient to obtain.  It is much cheaper, at a cost of usually $200-$300.  The best idea is always to ask your lawyer or call First Canadain Title get some more information before making a decision on title insurance vs. RPR.

In the legal sense, A real property report (or RPR as it will be referred to from now on) is a legal document that illustrates the location of significant visible improvements relative to property boundaries.  In a simpler sense, a RPR defines the exact property lines and locations of any structures that have been built on the property.

RPR’s first came in to existance around 1989 in Alberta, although it wasnt widely accepted in the sale of house until 1994.  Now, the sale of a home in Alberta must be accompanied by a RPR (or title insurance instead- which will be the topic of an upcoming blog).    People often wonder how recent the RPR has to be – it depends on what the buyer asks for, but usually as long as there has been no new structures built on the property since the last RPR.

When the lawyer reviews the RPR, they will see it is either complying, or noncomplying.  Noncomplying means that some structure/s are not built within property lines or up to satisfaction, and at that point its up to the agreement of buyers/sellers to determine whether changes will or will not have to be made.

A RPR will range in cost, but for an average lot with a single family house you can expect the cost to be anywhere between $600-$800.  It can be completed by anyone that is approved by the Alberta Land Surveyors Association and takes about 2-3 weeks (unless a rush is put on at an extra cost….).  Hopes that answers any questions you may have had about RPR’s.

A lot of first time home buyers/sellers have very little knowledge on how the process of hiring a Realtor works or what it costs.  In most real estate transactions there are 2 realtors involved; buying realtor and selling realtor.

The buying Realtor represents the potential buyer.  It is important to note that as a buyer, if you use a Realtor, it costs you absolutely nothing for this service!  All commissions are paid by the seller.  Even if you look at 100 houses and in the end you decide not to buy anything, it costs you nothing as your Realtor will only get paid by the seller if you buy something.

The role that a buying Realtor will/can provide are endless, but in short form this is typically how it goes down:

I sit down with my potential home buyers and make a list of dreams, wants and desire.  I use this information to compile a search engine and search every house that is on the market finding potential matches.  We then arrange showings and look to find the perfect house.  Then we write a purchase contract negotiating things like price, possession date, conditions.  Once a contract is accepted we work to get conditions removed (ie.financing, home inspections).  If this is all completed we send all the information off to the lawyer, the homebuyer meets with the lawyer to sign it off, meets with the Realtor again on possession day and do a walk through to make sure everything is the same and then you enjoy your new home!!

If only it was that easy – there is always a lot more to it, and always a few bumps in the road, but this is it in its simplest form.

As a selling Realtor, the process looks more like this:

Meet with potential home buyers and discuss the wants and desires of the seller.  Compile this and write in a contract with commissions.  The seller will have to pay both buying and selling Realtor commissions, which is typically 7% on the first 100k and 3% on the remaining balance.  (ex. $300,000 house costs 7,000+6000+GST = $13650).  Once the contract is signed, house is made to look its best, pictures taken, keybox arranged, and house is put on the MLS system for everyone to see.  Showings arranged, property is advertised, someone makes an offer, contract is negotiated and signed and possession day is set.  Again – Both Realtors only get paid if the house is actually sold, so if your home doesnt sell, you dont pay anyone.

This is more the process of the role Realtors play.  In an upcoming blog I will explain more the advantages of having a Realtor vs doing it on your own.

If you have a little time and want to do some more research, I recommend the website http://www.howrealtorshelp.ca/ which should answer most of your questions.  If you still have any questions regarding this, give me a call or send me an email and I would love to clarify it for you.

When buying a new home, always be sure to calculate property taxes into  your monthly expenses.  Sometimes mortgage companies include this as part of the mortgage (they pay taxes on  your behalf) but be sure to clarify this before final signing your mortgage.

Quite often a MLS listing will state the tax amount of the previous year – however it is important to note that taxes usually increase every year with inflation, and at the end of May, all property owners are sent a statement saying what the taxes will be for the following year.  For the city purposes, the new property tax year ends June 30 (coincidentally the busiest day of the year for real estate transactions).

Property taxes in the city of Edmonton are composed of 3 parts:

Muncipal portion- based on the budget set each year by city council

Provincial Education portion- set by the Alberta government

Local improvement portion- this is often an assessment added on for improvements made in your specific area (ie. sidewalk replacement, light posts, etc..)  It can be added to a one year statement, or if the cost is more significant, it is often spread out over many years, as to not raise your taxes by more than a minimal amount.

Since the end of the property tax year is June 30, it is important to be aware of this when you are buying or selling a home.  Often the buyer or seller will need to reimbursed for paying taxes up until June.30.

Hi everyone,

I have a brand new listing in the quiet community of Spruce Avenue thats already garnering a lot of interest:  Details look like this:

Well maintained property on a great, quiet street. This 2+1 bedroom home has
been owner occupied by current owner for the past 27 years and has been well
looked after. This home features original hardwood floors, coved ceilings, huge
eat in kitchen with lots of natural light, capped windows, exterior roll
shutters, central air, central vac, alarm, weeping tile, upgraded insulation,
newer shingles and 125amp electrical service. The basement is equipped with a
second kitchen area, bathroom, and bedroom. The east facing yard is well
landscaped and offers a great garden area as well as apple and cherry trees and
grape vines.The garage is 20×28 and the property sits on a 50×150 foot lot. The
RF3 zoning makes it a great property for future development. The location is
great, close to downtown, NAIT, Royal Alex, Kingsway and future LRT.

Stay tuned for another new listing coming up in Strathcona next week!

I have recently just completed 3 new projects that have all gone on the market within the last 2 weeks.  Each one has something to offer to different types of buyers, so they will appeal to a wide spectrum of people:

1)  Completely renovated 2 bedroom townhome in Millwoods.  This one is perfect for first time homebuyers, as it comes in at a great price point of $195,000 and doesnt need any work.  Has a nice cozy easy to maintain front yard, all new bamboo hardwood flooring, new kitchen, new bath, and completely finished basement.  Move in ready!

2) Completely renovated 1 bedroom condo at 9730, 156st.  Investors delight – listed at $99,000 and everything has been upgraded, including all new kitchen, bath, floor, appliances and paint and floor.  It rents for $850 month.  With 25% down (so a 75,000 mortgage) costs are about $300 month mortgage, $220 month condo fees, and $80 month property taxes, you could be looking at about $250/month profit.  Thats a Debt Service Ratio of 1.4!!

3) Completely upgraded huge 1 + den condo in beautiful high rise downtown (almost 1200 sq feet!).  For the working professional, this is the ideal home.  Listed at $257,900 it will be tough to find another condo like this.  Beautiful sliding doors give the option for a second bathroom.  Everything has been updated and it shows great!

For more info on these properties, or any others you have in mind, do not hesitate to send me an email!

Principal residence- 5%, Investment/recreation property – 20%-35%

Starting with principal residences, if you are buying a home and planning on living in it, you can expect to have to put 5% down.  A couple things to keep in mind for this- first. anything less than 20% down requires CMHC insurance (which is a few extra thousand dollars that will be added to your mortgage).   The other thing to remember is that when you purchase home, you most likely included an initial deposit with your offer; these funds will be subtracting from the 5% down. (ie.  Buy house for $100,000 with $2500 deposit…only need to pay $2500 later to equal the $5000 down payment)

There a few lenders out there right now that are still offering 0% down, but they can be hard to get and you will end up paying more for them.  Usually they add that extra 5% right into the mortgage.  On top of this the lenders will be very particular about the house they are lending on, so could deny lending based on the condition/appraisal of property.

When looking at investment or second properties, the gold standard used to be 20% down.  Nowadays however this is becoming more and more rare, as lenders now are more often expecting 30-35% down.  Again there are many stipulations.  Although you wont need CMHC insurance on this type of product, you will most likely still need appraisals (at your own cost) to be completed.  Additionally, most lenders have restrictions on the type and amount of properties you can own.  It is best to talk with a mortgage broker about a potential purchase so you can know what to expect ahead of time.