2014 EDITION FREE
THE GUIDE TO BUYING AND MANAGING YOUR FIRST HOME Saving up for your down payment How to maximize your saving power with TFSAs and RRSPs P.44
Built with you in mind How to buy a home before it’s built—is buying pre-sale right for you? P.42
The power of drawer pulls Cheap ﬁxes to bring that dated domicile into this century P.27
OTHER PEOPLE’S NO-FUN HOME-BUYING HICCUPS
NEIGHBOURHOODS TO CHECK OUT NOW
THE BANK OF MOM AND DAD
YAY! THEY’RE WILLING TO HELP YOU BUY. NOW WHAT? 1
FIRSTHOME FI FIR F IR RS ST THO HO OM ME 2014 2 14 20 4
“ BUILT BY JIM BOSA’S
APPIA DEVELOPMENT MEANS LASTING QUALITY & EXCELLENT VALUE.
Jim Bosa, Appia Development
KNOW YOUR BUILDER What’s in a name? Everything. Jim Bosa is proudly building on the Nat BOSA legacy. We attract the very best team and trades. We build for the long run and put our name on it. We create homes for your family and ours. We’re passionate about the Appia way of doing business – and our customers appreciate the difference.
NOW SELLING • LOUGHEED & WILLINGDON HOMES STARTING FROM THE LOW $300,000’S
SOLODISTRICT.COM 604.298.8800 This is not an offering for sale. Any such offering can only be made by way of disclosure statement. E.&.O.E.
Letter from the Publisher
Buying My First Home — Real-life Experiences from First-time Home Buyers A series of unfortun na te events you can learn from. nate
Hidd Hidden H dden Costs osts of B Buying a Home D Do on n’tt g get sideswipe sid d swipe by these sneaky fees. Don’t sideswiped
Hot Neighbourhoods for First-time Buyers Who’s buying what where, and why.
The Bank of Mom and Dad A lawyer’s advice on getting a ﬁnancial leg-up from your parents.
Leaseholds: A Cheaper Way to (Sort Of) Get on the Property Ladder Advantages and disadvantages of buying the home but not the land it’s on.
Moving Checklist Tick all these boxes and you won’t forget a thing.
Cheap DIYs for Dated Places Quick and snazzy updates that bring an older unit back to life.
Mortgage Cheat Sheet Mortgage features: when you want them and when you don’t.
Why Work with a Realtor Here’s what a real estate professional can do for
Property Transfer Tax and the First-Time Buyer Exemption Do you qualify to save up to $7,500?
When Only New Will Do! Check out these new-home projects built with ﬁrsttime buyers in mind.
How to Buy a Home Before It’s Built A quick guide to buying pre-sale.
2 14 44 46
RRSP versus TFSA How to use both saving vehicles to get you to a down payment faster. Services Directory
The guide to buying and managing your ﬁrst home PUBLISHER
P R O D U C T I O N C O O R D I N AT O R
Carol Rui Arslan Sultan
SALES, NEW HOME DEVELOPERS
Tracey Aussem Connie Chan Ann Grifﬁths
Ross Hansen Jane Lin Bernard Yao
A D V E R T I S I N G C O O R D I N AT O R
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Published by REW.ca, a division of Glacier Media, 3355 Grandview Highway, Vancouver BC V5M 1Z5, 604 435-7977. REW.ca comprises of www.REW.ca, the real estate search portal for the Lower Mainland and Victoria, and Real Estate Weekly, with eleven local editions delivering current property listings to over 450,000 homes in the region.
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Buying your First Home
WELCOME TO OUR INAUGURAL ISSUE OF FIRST HOME, REAL ESTATE WEEKLY’S ANNUAL GUIDE DESIGNED TO HELP YOU NAVIGATE THROUGH THE COMPLICATED PROCESS OF BECOMING A NEW HOME OWNER. Purchasing a home is complex transaction, and the number of decisions to be made can be overwhelming. It can be challenging to decide where to live, what you can afford and what the best type of home is for you. In our ﬁrst issue we talk to new home owners who have recently gone through the home-buying process and asked them to share their stories and newfound knowledge. We show you how to put your team of professionals together—Realtor, lawyer and mortgage broker lender—to ensure you have the best team working to make your transaction simple and stress free. Working within a budget while making renovation updates offers unique challenges. We will show you some low-cost renovation ideas that offer big results for tight budgets. And our checklists and infographics will help guide you step-by-step through the home purchase process. With any big decision it’s important to do your homework, and a ﬁrst home purchase will be one of your biggest milestones. Your new home will be your haven, so it’s important to ﬁnd one that suits your lifestyle, but still leaves you enough cash to actually have a life. First Home Guide is here to help you ﬁnd that delicate balance. And we link you to even more good advice online through the free Layar App (get.layar.com). Wherever you see this logo, scan the page for videos, interactive charts and more. Happy house hunting and good luck with your purchase. Let us know what you think of this issue. We’d love to hear from you.
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Don’t let these ﬁrst-time home buyer horror stories happen to you.
Horror! MICHELLE HOPKINS
It goes without saying that if you’ve never bought a home before, you don’t know exactly what to watch out for. Read this and avoid these common nightmares.
We were pre-a p p rove d a n d n o w we ’re n o t ! A few years ago, RE/MAX Westcoast Realtor Fred Brome had an accepted offer on one of his condominiums from a couple of ﬁrst-time home buyers who were pre-qualiﬁed for their mortgage. Then the bank did some more checking into their ﬁnancial history and found out that the young man hadn’t paid a Visa bill back while he was in university.
“You have to be really honest about your ﬁnancial past, because even if the bank had pre-approved you based on your incomes and down payment, and they later ﬁnd out you had a bad credit rating, the deal is off,” explains Brome.
The seller never told us about T H IS! In a tough real estate market, it’s tempting for sellers to stretch the truth or cover up minor problems or potential issues in order to close the deal. That makes it even more important for ﬁrst-time buyers to do their due diligence, says Brome. This is where a comprehensive Property Disclosure Statement can be helpful. It’s a statement of what the owner knows about the property. Sellers aren’t bound by law to ﬁll one out, but the BC Real Estate Association requires that one be ﬁlled out for every property sale listing. A Realtor will ask the sellers to answer—to the best of their knowledge—a list of questions covering such potential issues as: • • • • •
archaeological sites easements, encroachments or highway entitlements former grow ops and illegal drug labs hazardous materials (e.g., asbestos, lead paint) heritage designations
• renovations done without permits • stigmatized property (e.g., someone died there) • streamside issues (e.g., ﬁsh-bearing creeks on the property) • underground fuel storage tanks
For strata properties the Property Disclosure Statement will cover: • • • •
building envelope problems parking and storage restrictions on age, pets, rentals etc. special assessments
“In court, if a buyer can prove that the seller ought to have known or knew about a problem, they will have recourse,” he says. If you’re buying in a strata, you also have the right to see all the minutes of the strata council. These will give you big insights into potential issues, general maintenance level and even personality conﬂicts in the strata community.
The inspe c t io n came back and there’s som ething wrong! So long as the contract is subject to an inspection, and the inspection shows something signiﬁcant, the buyer can walk away. The issue must be signiﬁcant to a reasonable purchaser. The buyer cannot demand that it be ﬁxed; their choice is to walk or remove subjects.
“Of course they can try to negotiate and the vendor may agree, but they do not have the right to demand a repair,” says Tony Spagnuolo, real estate barrister and solicitor, Spagnuolo & Company Lawyers.
That’s not what we signed off on! In a recent Ontario case, the sellers thought they’d sold at $420,000 and the buyers thought they’d bought at $410,000 after contract negotiations went back and forth by email… without the signature page. The deal died and the buyers got their deposit back after a judge ruled that there was no contract in the ﬁrst place.
Whether you’re dealing with email, fax or paper, never assume. Open all attachments, count and read all pages, make sure everything that needs to be signed or initialed is. Check that names are spelled right and terms don’t change from one version to another without being initialed. This is one of the most important contracts you’ll ever sign. Don’t take anything for granted.
No b o d y wa r n e d u s t h is c o u ld h a p p en ! Lots of things can go wrong in a real estate deal, so your team should be experienced enough to deal with or, better yet, prevent any issues that arise. Your team will include many members: your Realtor, lender or mortgage broker, inspector and a real estate lawyer. Hire the best people you can. “The importance of selecting the right people cannot be overemphasized,” says Spagnuolo.
The same applies for the lawyer or notary that you choose to close the transaction for you. Make sure they have the experience and expertise to handle your ﬁle. Phone around and ask for detailed quotes, but also ask about their experience and expertise, then make your decision.
Interview a few, and make sure you are comfortable with the ones you choose. Don’t pick a Realtor just because your kids play on the same soccer team, or you went to high school together. You can certainly interview that Realtor, but choose
“Having the right team in place will ensure you are best prepared for any issues that arise. The people on your team will likely have dealt with the same problems in the past, and will have found creative solutions to the problems.” he adds.
The y le ft a mes s and took the lig h t f ix t u re s! Clients of Fred Brome purchased a home and on moving day they discovered that the seller had left garbage strewn around and an old patio set left outside, while minor repairs that were supposed to be done, weren’t.
Also describe everything you expect to remain after closing day. It’s understood that anything permanently attached to the wall stays, but some sellers will even take what’s nailed down if there’s nothing that says they can’t.
“I couldn’t get hold of the seller … he left town and I have no way of reaching him,” he says. “The only recourse the buyers have is to sue him in Small Claims Court … if they can ﬁnd him.”
Say what you want gone and what you expect to stay when you prepare your agreement in the ﬁrst place.
If you don’t want this kind of nasty surprise, include a contract clause that says your seller will leave the home in a broom-swept condition and all their possessions and garbage must be removed.
One of the ways to avoid getting burned is to hold back funds until the buyers move in. “However, not all sellers are going to agree to that,” Brome says. “Bottom line is it will always be buyer beware.”
Scan with Layar for the top 10 buying & selling pitfalls
one who has done deals in your area, and has some experience. The more experience, the more likely they have seen the problem in the past.
Donâ&#x20AC;&#x2122;t get sideswiped by these sneaky fees. MICHELLE HOPKINS
Where property virgins are looking, and why. JILL BOWEN.
BOURHOODS VANCOUVER • West is moving east and today’s ﬁrst-time buyers are open to this. • First-time buyers who are looking in Vancouver tend to be committed urbanites without children or are not planning children for a while. They are singles or couples with a 3 to 5 year plan. • Most are looking for condos and
the hot neighbourhoods are Mount Pleasant (the Main Street renaissance); Fraser Street (the next
Main Street); and Chinatown (close to Olympic Village and the seawall are seen as big pluses). • Condo prices in these neighbourhoods are in the $350K range – that buys you a small one-bedroom in a newer building. • For those ﬁrst-time home buyers who can afford a single family home in Vancouver, the hot neighbourhood is Hastings Sunrise. It offers affordability, location (easy access to downtown), and amenities. Many of the homes have potential suites to work as mortgage helpers. It’s a neighbourhood in ﬂux with lots of upcoming development. A home here will set you back a little under a million dollars.
NORTH VANCOUVER • Most North Shore ﬁrst-time home buyers are choosing condos. Those who want new product are looking at developments along Marine Drive and those willing to move into something a little older are picking up resale units in Lower Lonsdale. • The majority of buyers are single or newly married. • Marine Drive is an up-and-coming area; its new condo buildings tend to have retail below, offering residents easy access to commercial venues. • Buildings here tend to be wood-frame (cheaper than concrete) and developers are offering incentives and decorating bonuses. • A one-bedroom, 600-700-square-foot unit here will start around $400K. • Purchasing an older resale unit in Lower Lonsdale usually means a slightly larger apartment starting in the $350K range. • Both areas are popular because of their proximity to shopping and access to transportation. • The average ﬁrst-time buyer stays in their North Shore home for ﬁve years. • Do your homework now so you’ll be prepared for resale. If you choose new: research the developer’s background and the new home warranty. If you want something older: check the strata’s history.
Hot BURNABY • Move over Metrotown… Brentwood is the up and coming desirable neighbourhood for ﬁrst-time buyers looking for a home in Burnaby. The area offers a good lifestyle and is slightly more affordable than the more established Metrotown area. • Appia’s SOLO District is bringing a lot of attention to this community and will have Whole Foods as its anchor tenant. • The Brentwood Town Centre is about to undergo a major revitalization which will also bring more amenities to the neighbourhood, including a proposed entertainment plaza large enough to host events such as Christmas celebrations with a big tree, Canucks playoff games on a big-screen TV and street buskers on weekends. • The area has great accessibility to downtown and highways (including a SkyTrain station at the corner of Lougheed and Willingdon). • First-time buyers here are purchasing condos primarily, and the location is a good alternative to downtown as prices are generally under the $475,000 threshold to avoid the Provincial Transfer Tax. • There’s a wide price range of stock. A onebedroom with shared laundry facilities in a 30-year-old building runs around $200K to $210K. These homes can be a great
investment for ﬁrst-time buyers as there are often no rental restrictions, leaving the option open to rent the apartment after you move on. • A 1-bed in newer wood-frame low-rise buildings (~8 years old) is in the $310320K range; 2-beds are $380K and up. A two-bedroom in a concrete building will run around $400-420K. • Who’s buying here? These ﬁrsttime buyers cover a wide range of demographics but tend to be young professionals in their late 20s. People have adjusted to condo living and, with so many parks and amenities in the area, it’s not unusual to see couples with a young child or one on the way moving in.
NEW WESTMINSTER • Gimme now and gimme new… that’s the credo for ﬁrst-home buyers purchasing in the Royal City. • The hot areas in New Westminster are new condo developments in the Fraserview and downtown neighbourhoods, where you can purchase a home for less than the new Provincial Transfer Tax threshold of $475K. • These homes are great for buyers who are willing to settle for less space but aren’t willing to compromise on the security of a new building that comes with a warranty.
• Coached by parents who are assisting with the down payments, these buyers are looking for rooms with a view... and these two areas deliver.
TRI-CITIES • Saving for the down-payment on your ﬁrst home can be difﬁcult; but once you’re in the market, it’s easier to move up. • In late February, 220 one-bedroom condos were on the market in the Tri-Cities with prices starting at $128K for 650 square feet. The average price for a one-bedroom and den? $200K. Factor in mortgage payments, strata fees and taxes and you need around $1,000 a month – which is likely what many renters are paying for a similar-sized apartment. • Central Coquitlam and downtown Port Coquitlam are both being revitalized, making them the Tri-Cities’ places to be for ﬁrst-time home buyers, • Central Coquitlam particularly will see huge changes with the Evergreen Line opening in 2016. The area already enjoys great shopping and Douglas College’s David Lam Campus is close by. • Not everyone wants to live downtown and many of today’s ﬁrst-time home buyers want easy access to the great outdoors. The Tri-Cities has lots to offer for people who love to hike, bike and generally be active.
Scan with Layar for the latest real estate stats and search properties in these areas
PITT MEADOWS AND MAPLE RIDGE • Go east young couples! There’s an abundance of townhouses available throughout these two municipalities, with neither community proving hotter than the other. • With so many townhouses to choose from, prices are pretty much comparable to what they were ﬁve years ago: $250K to $320K. • Many ﬁrst-time buyers have been living with Mom and Dad and ﬁnding now’s the right time to strike out on their own or with their partner. Many come from the TriCities and ﬁnd that just by crossing the Pitt River Bridge they’re getting prices that are considerably lower. • Most are in their 30s and are in relationships where children are being contemplated. • These family-oriented communities offer lots of parks and recreation and really know how to celebrate community with Christmas parades, Blueberry Days, and Halloween tricks and treats.
• The cheapest home is not always your best option for long-term investment. Firsttime home buyers in Surrey with an eye to the future are choosing the Panorama Village/Sullivan neighbourhood. • This trendy, upscale community offers lots of variety (condos, townhouses and single detached homes) in the right price range for ﬁrst-timers, with most opting for townhouses. • Here you can ﬁnd a two-bedroom townhouse for $275K, and it’s a neighbourhood that banks like to ﬁnance. • The 10-12-year-old community has tree-lined and a lower density than newer neighbourhoods. • There’s also a YMCA with a pool, rec centre and day program along with shopping and restaurants. • Buyers choosing here tend to be couples and young families with two incomes.
LANGLEY • First-time buyers in Langley are focusing their attention on the community of Willoughby, where there are a lot of new single detached homes on smaller lots that come with a legal suite. • The area is attracting singles, couples and young families—anyone who wants to get into the market and see their money going towards an investment rather than rent. • There is a currently a lot of growth happening in Willoughby which is close to schools, parks, shopping and freeways. • A starter home in this community (three bedrooms on the main ﬂoor and a oneor two-bedroom suite) will cost in the neighbourhood of $515K.
• Langley lookers wanting a bit more for their money are checking out the more established areas of Brookswood and Walnut Grove. • Here an older single detached home with an income suite on a larger lot starts around $500K.
ABBOTSFORD • The changing face of a neighbourhood: East Abbotsford is appealing to many young families who have been renting in the area. • Young people are moving in and renovating their homes, which is making the community more desirable. • Homes tend to be 20-30 years old and on larger lots; once renovated, the homes look newer yet still have the advantages of being in an established neighbourhood including mature landscaping. • Given that you can purchase a single family home with a suite in the $400-450K range, ﬁrst-time buyers can own a house and still take advantage of the increased threshold of the Provincial Transfer Tax to save themselves $7,500.
CHILLIWACK • Looking to get more bang for your buck? For young families who are ready to become ﬁrst-time home buyers in an established neighbourhood, Chilliwack is a great location with the most affordable homes to be found in the city’s communities north of the highway. • Here you can ﬁnd a four-bedroom, 2000-square-foot fully ﬁnished home on an 8,000-square-foot lot for $250,000 to $350,000. • This part of Chilliwack is rich in amenities including Townsend Park with its multiple sports ﬁelds, Prospera Centre arena, the new Chilliwack Cultural Centre, and the Landing Leisure Centre which features a wave pool and workout facilities. • There are also plenty of schools and shopping is close by.
PAR PARK P PA A ARK RK RK
68 8A AV AVE VE
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The Bank of Mom and Dad
It’s a loving gesture when Mom and Dad help you ﬁnance your ﬁrst home, but it can be a legal quagmire. A lawyer looks at the options. RICHARD BELL, Bell Alliance For many young people, buying a home is out of reach. So increasingly, to the rescue come the Bank of Mom and Dad. There are a number of different options for parents to help. 1. Guarantee the loan A child may have enough of a down payment, but not satisfy the Gross Debt Service (“GDS”) ratio or Total Debt Service (“TDS”) ratio the lenders require. These are calculations of the borrower’s income against total housing costs or total monthly expenses. In this situation the parents may simply guarantee the loan. However, most lenders will require the parents go on title to the property as owners. They will then calculate the GDS and TDS including the parents’ ﬁnancial information. Where the lender requires the parents to be on title, a legal advisor will likely recommend the parents hold a 1% interest in the property. This way, a child entitled to claim the ﬁrst-time buyer exemption would then get the beneﬁt of 99% of the exemption. And to deal with the parents’ potential exposure to capital gains, the legal advisor will likely recommend that the
parents sign a trust declaration stating that they hold the 1% interest “in trust” for their child. 2. Give money for the down payment Parents may provide some or all of the down payment by way of a gift. The lenders will recognize the down payment as belonging to the child if the parents execute a gift letter stating that the funds are an outright gift to their child and there is no obligation on the child to repay the amount. 3. Give some money and lend the rest Parents may provide a gift to satisfy the requirement that the down payment must come from the assets of the child, as well as additional funds. Under the Family Law Act, the child’s spouse could claim a 50% interest in these additional funds. To protect these additional funds from a claim, parents can register a second mortgage against the property, but must obtain the consent of the lender. If the lender does not consent, the parents could have the child and child’s spouse execute a promissory note which is not registered against the property. Normally the mortgage
or promissory note is payable on demand and is interest free. If interest is included in the loan, then the parents must account for tax on interest income regardless of whether or not they receive the interest. 4. Pay for the home Parents may be in a ﬁnancial position to truly be the Bank of Mom and Dad and provide all funds necessary to buy the property. In this situation they may want to register a mortgage to protect against a future claim under the Family Law Act. Again, the mortgage may simply be payable on demand with or without interest and principal payments. A caution for parents is to consider the impact of a loan to a child on their estate plan. If the parents have other children or other beneﬁciaries in their Wills the outstanding demand loan needs to be considered. Best Advice: As with all things complicated you should always talk to your professional advisor. Scan with Layar for more articles on ﬁnancing your home purchase
This content is for information purposes only and does not constitute legal advice.
Leaseholds: A Cheaper Way to (Sort Of) Get on the Property Ladder You buy the home but rent the land. Is that a good deal? THERESA BORSMAN
What i f you could shave a hundred thousand or more off t he t ypi cal asking price? W hat if you could do this in a central nei ghbourhood, in a more spacious unit? It’s possible. The only cat ch? You won’t own the land under your home. Leasehold unit s are usually attractively priced, more spacious, and in bet t er nei ghbourhoods than their freehold counterparts.
Look at the difference between these two one-bedroom condos in the West End of Vancouver.
What is leasehold property? There are pockets of land throughout the Lower Mainland—many in prime locations— that have been rented out to developers for a set amount of time, usually between 50 and 99 years. They’re owned by the city, federal government, First Nations bands, universities, and even private individuals. The developers use the land for condos, townhouses, detached houses and duplexes—even mobile home parks or ﬂoat home marinas, then sell or rent out units. Unlike traditional freehold, you own your share of the structure and any common property, but only rent the land beneath it. What exactly are you buying? Basically you are buying a “right of exclusive possession” until the end of the lease period (or until you sell). You’re often buying into a better lifestyle (at the cost of a better investment). And in some areas, you are buying the right to live somewhere you otherwise couldn’t, such as UBC. What you won’t get is a share of the rising land value. What are the drawbacks? If your lease payments have not been prepaid by the developer, you’ll have to fork over rent for the land, on top of strata fees, taxes and mortgage payments. Your lease payments will probably also rise to reﬂect current land value—sometimes dramatically.
If the lease is coming to an end, you can’t be sure it will be renewed, and if so, at what cost once rising land values have been factored in. Some leasehold properties don’t increase in value as quickly as a freehold. They generally take longer to sell. And as the lease counts down to expiry, the property value can actually drop. Banks don’t like the uncertainty surrounding certain leaseholds. Most lenders will ask for a hefty 25%-30% down payment. And, if your lease expires in 20 years, your amortization period will be ﬁve years less than that. Do the advantages outweigh the risks? That depends. If lifestyle factors like being close to work or living in a beautiful area are most important, it could be the right choice for you, depending on the unit. Look for long leases—25 years or longer— and preferably for a length of time that far exceeds how long you plan to live there. That way you’ll be able to sell the unit and at least get back what you paid for it—better than renting for all that time. Prepaid 99-year leases are the most secure, but they also cost almost as much as freehold. If you’re thinking of investigating further, talk it over with your Realtor and mortgage broker. Scan with Layar to see more leasehold properties at REW.ca
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Moving Checklist This handy guide will help you remember everything you have to take care of… so maybe you can take care of yourself better during the whole ordeal.
O l d Loca tion
❏ Arrange for a professional moving company ❏ Show movers any obstacles they’ll have to deal with ❏ Arrange packing materials ❏ Arrange dumpster for both ends of move ❏ Declutter ❏ Inventory household goods and print list ❏ Photograph items of value ❏ Arrange insurance coverage for the move, new location ❏ Have draperies and rugs cleaned in time for packing day
❏ Empty and defrost freezers ❏ Arrange cleaning service for ﬁnal cleanup Send cha nge- of -addre ss noti fi c ati ons ( o nline or via p ost offi c e )
❏ Post Ofﬁce ❏ Governments: local, provincial/federal ❏ Credit cards/accounts ❏ Loan companies ❏ Insurance companies ❏ Financial services ❏ Subscriptions ❏ Friends, relatives
Have services shut off/changed to new address
❏ Cable TV/Internet/Phone ❏ Utilities ❏ Newspaper delivery ❏ Dairy/grocery delivery
Ta k e ca re o f h o u seh o l d a n d p erso n a l b u s i n e s s
❏ Pick up items from cleaners ❏ Empty safe-deposit box ❏ Arrange for banking in new location ❏ Arrange for local school to transfer children’s records ❏ Find new dentist, doctor, veterinarian — have records ❏ ❏ ❏
forwarded Have appliances serviced for moving Transfer social, civic organization memberships Record multiple ways to check progress of shipment: Tracking code Mover’s toll-free phone number Driver’s mobile number Tracking URL
M ake tr a vel a r range me nts
❏ Plan route or book ﬂight, rental car and hotel ❏ Arrange for transportation of pets ❏ Alter phone plan to avoid excessive roaming charges ❏ Designate a point person in case you’re unreachable during the move
Sa y goodbye to your ol d home
❏ Pack household goods into boxes labeled by room ❏ Pack treasured items and take them with you ❏ Scan important papers and take the originals with you ❏ Take supplies you’ll need on the day of the move ❏ Check every inch of the house to make sure it’s empty ❏ Supervise cleaners and movers ❏ Leave current home in clean condition B e f or e a r r iving at ne w l oc ati on Contact condo property manager and book parking and elevator for moving day Get recommendations for repair services: ❏ Plumber ❏ Electrician ❏ Handyman
N ew Loca tion
❏ Supervise unloading and unpacking ❏ Set up and make beds ﬁrst (you’ll need them!) ❏ Put up shelving units before you unpack other items ❏ Meet your neighbours and write down their names ❏ Get recommendations for babysitters, nanny agencies, etc. ❏ Put valuables into safe-deposit box in new bank ❏ Ensure that new school has received records ❏ Ensure that new dentists and doctors have received records ❏ Have pets licensed ❏ Arrange for new registration and insurance of cars ❏ Apply for new driver’s licence if necessary ❏ Contact Welcome Wagon or other local merchantsponsored organizations
Welcom e to you r ne w home !
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for dated places
Susan M Boyce
2: Pretty up your pulls
You saw past the pink bathtub and 80s kitchen. It’s an older place, but it’s got potential. Here’s how to bring it into this millennium on a first-time home owner’s budget. Congratulations, you’ve just become a home owner. Sure your new home has a bit of age — a.k.a. “character” — but it was actually within your budget. And you have a bit of wiggle room to ﬁx it up. Now, how to stretch those renovation dollars for maximum wow factor? Try these insider tips and tricks.
Scan with Layar to watch celebrity designers share the latest trends
1: Paint is your new best friend
Nothing personalizes a home like fresh paint. It’s cheap, readily available and inﬁnite in its variety of colours. And with a little effort, you can transform an entire two-bedroom condo in about three days (including primer coats). Best of all, if you change your mind in six months, it’s no big deal to design a whole new look. Bonus tip: Try using paint on your kitchen and bathroom backsplashes. It’s a fraction of the cost of tile or stone, and a lot easier to match to your ﬂooring and cabinetry.
The ﬁrst thing most people look at—and touch—in a kitchen is the cabinet hardware. (Go on, admit it, you opened every drawer and cupboard when you were checking the place out.) So get rid of those faux-antique, curlicue knobs and screw in something sleek, angular, and contemporary. Not only are new pulls usually easier to open, they say: This is a 21st Century space.
3: Open-and-shut style
Like your cabinet hardware, doorknobs and hinges are a quick update that you can easily swap out in a day or less.
6: Hot stuff
Bonus tip: Lever-style handles are trendy and ergonomically savvy. 4: Lighten up
Ditch the ceiling fan/light combo and Great Aunt Martha-style wall sconces. Today’s lighting is sleek, shiny, and energy efﬁcient. Sparkles are more likely to come from petite Swarovskis than glass baubles — even a few of these go a long way. It might mean you need to hire an electrician (never mess with volts and current unless you’re qualiﬁed), but changing up your lighting can pack a whole lot of drama and functionality into your new space. Add some dimmer switches and programmable panels, and voilà, instant ambiance. Bonus tip: New switchplate covers typically cost less than $5 a pop and are available in dozens of styles from elegant to fun’n’funky.
Big bonus tip: Check out the ReStore 28
5: Get soaked
Okay, so you’re a fan of That ’70s Show, but it has not made you love the salmon pink bathtub you’re about to move in with. Nor has the stained grout around the tiles. Eewww. Instead of ripping everything out, consider having the whole thing refurbished. Tub reﬁnishers usually charge between $600 and $800 per bath and are done in two days. You end up with a solid-surface ﬁnish, no grout to keep clean, and a pristine contemporary colour. Add some new faucets and a rainforest showerhead and you’ve got instant elegance. Bonus tip: For a feeling of sheer indulgence every time you step out of your new tub, add a heated towel bar.
Replace those ugly, boxy baseboard heaters. Contemporary baseboard heaters will work wonders toward putting your electricity bill on a diet. And because today’s units are typically 25 to 40 percent more efﬁcient, they take up less space. Translation: less visual intrusion and more room for furniture. 7: It’s easy bein’ green
Not technically a renovation, but plants are a super easy, instant gratiﬁcation way to add warmth and charm to your new home. Plus they’re a natural air freshener too. Any garden centre can give you more suggestions than you’ll ever need for plants that will suit your lighting and lifestyle. Bonus tip: Garage sales are a great place to ﬁnd intriguing pots for a fraction of the retail cost.
For incredible savings (and a warm feeling inside) stalk your nearest ReStore. Builders, renovators and retailers contribute unused and unsold building materials, and the proceeds go to Habitat for Humanity. There are awesome ﬁnds to be found, and often they’ll be the same elegant ﬁxtures that are in the brand-new condo down the street. Plus, they have everything, so it’s a fantastic place to get ideas.
TOP1% OF ALL VANCOUVER-AREA REALTORS® BASED ON SALES S
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Gene Watt Dean Hassan John Mazzei
Buying your first home is one of the largest life decisions you will make. You can rely on our market knowledge, property & location information, current buy/sell strategies, and proven negotiation expertise & experience to make your first home purchase easy. If you are looking in Vancouver Westside or Richmond, we're the right realtor team to look after your interests -
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Mortgage Cheat Sheet
The best mortgage is more than just the best rate. There are dozens of mortgage variations that might or might not be right for you. We always recommend talking to an independent mortgage broker, but it doesn’t hurt to know a bit beforehand. M AT T H E W C H A N , CA M B A A M P
Variable-Rate Mortgage What It Is... Your mortgage rate goes up or down with the current prime interest rate. Because you take on some risk, variable-rate mortgages offer the lowest rates at any given time, and you could end up paying a lower average rate than a ﬁxed-rate mortgage offers. • Payments can change with the prime rate, or stay the same but cover more or less of your interest • If interest rates are climbing you can switch to a ﬁxed rate • You must be able to handle a higher “qualifying” rate to get a variable mortgage. You Want It If…
• Interest rates are low or trending down • You’re willing to pay attention to prime rate ﬂuctuations You Don’t If…
• Interest rates are going up You like security and predictability
Prepayment Privileges What It Is... Your mortgage includes the right to make extra payments up to a certain percentage of the whole without penalty: • in one or more lump sums per year • in double-ups, or extra amounts whenever you want to make them • in increased payments arranged annually
You Don’t If…
• You want to pay out the mortgage or reﬁnance it before the term is up (over 70% of borrowers do) • You can make lump-sum payments occasionally • You want to increase your payment each year
You Want It If…
• You want to pay your mortgage down faster • You expect to have extra money in your budget • You’re expecting bonuses or other lump sums you can apply to your mortgage You Don’t If…
• You don’t foresee any extra money in your budget No-Frills Mortgage What It Is... A basic, ﬁxed-rate mortgage with: • very limited prepayment privileges • penalties (often very high) for reﬁnancing or paying out the mortgage • in some cases, no ability to reﬁnance unless your home is sold • limited ability to take your mortgage with you if you move You Want It If…
• Interest rates are low • You see no need to change the mortgage term and payments • You don’t expect to be able to make extra lump-sum payments • You want your payments to stay the same through the life of the mortgage
Collateral Mortgage What It Is... This mortgage can be split into multiple components, e.g., part ﬁxed rate, part variable rate, part secured line of credit. It’s easy to borrow against it, but it essentially ties you to the lender, which is why lenders love these. You Want It If…
• You want to separate different portions of your mortgage for tax purposes • You want to diversify the mortgage so you have some on both variable and ﬁxed rate • You plan to use some of the equity in your home later, e.g., for investment or renovations You Don’t If…
• You don’t want to be tied to one bank because you have different loans with different renewal dates • You don’t want to incur legal fees if you switch to a different lender • You want to have leverage to negotiate or switch lenders • You might default on some other debt you have with the lender, e.g., car loan
Find a mortgage professional through the Mortgage Brokers Association of BC: www.mbabc.ca.
Buying a home? Renovating? Renewing your mortgage? Check out our low mortgage rates at prospera.ca. Call or come see us at any of our 16 branches.
Why Work with a Realtor Go ahead. Be a smartypants if you want. But why pass up a trained professional who’ll work for you for free? ELIZABETH WILSON Buying a home is a huge undertaking with dozens of different steps. It involves large sums of money, stringent legal requirements and the potential for costly mistakes. You could go it alone. These days you can ﬁnd suitable listings as they come on the market, and ﬁnd out when the open houses will be held and collect a great deal of information about homes you’re interested in. But mere information can’t cover it all. WITH A REALTOR YOU GET WISDOM. A Realtor is a local real estate expert with the training, experience, and proprietary market information to guide you through the process—not just the business and legal sides of it, the emotional side, too. Realtors… • Know what to do next—they’ve been through the whole process many times • Open up possibilities you might not think of—different neighbourhoods, different types of housing, alternatives that suit your needs and budget • Ease the stress of buying a home by offering perspective and expertise
• Steer you away from costly mistakes by identifying risks • Educate you about the current values and conditions of the local market—right down to block level • Get you the best deal possible by negotiating from experience, not emotion And all this knowledge and support costs you nothing when you’re a buyer! The buyer’s agent is paid from the listing agent’s fee. Increasingly, Realtors will want you to sign a Buyer Agency Agreement if you want them to help you ﬁnd and purchase a home. This agreement ensures the amount of compensation they will receive and conﬁrms that they owe you the duties of utmost care, integrity, conﬁdentiality and loyalty. Before you settle on one Realtor as your buyer’s agent, it’s a good idea to interview several and ﬁnd someone you’re comfortable with and who has an excellent grasp of your needs and tastes. You can set out your criteria and budget and ask them to send you listings that they think will work for you. You can ﬁnd a Realtor by asking for recommendations from friends and relatives, meeting and talking to agents at open houses, going into a brokerage, or checking
Real Estate Weekly and REW.ca for agents who specialize in the neighbourhoods or housing types you’re interested in. Many buyers think they’ll save money by going directly to the listing agent and getting that person to represent them. It’s possible, and it’s allowable, but it’s not recommended. That Realtor is then restricted in what information can be disclosed to you. It’s also common for buyers looking at new developments to buy directly. Again, you’re better off having your own agent who can provide expert advice. Your Realtor is, in law, your agent and must disclose to you, in writing, who exactly they represent in any real estate deal. As your agent, this trained professional will work to get the best deal for you. To learn more, visit the British Columbia Real Estate Association’s website at www. bcrea.ca and go to the “Working with a REALTOR®” section.
Scan with layar to get the steps on how to make an offer they can’t refuse
604-336-3539 Main Street
Expectations If you are a ďŹ rst time buyer, your Dexter Realtor ÂŽ (backed by the entire Dexter Team)has the knowledge and the experience to support and guide you through the entire process, from looking to buying to moving into
your new home.
Wherever you are, we can help. Contact us with confidence. Enjoy the security and confidence which comes from dealing with professionals who care. Call or visit us at www.dexterrealty.com FIRSTHOME 2014 1
Property Transfer Tax & the First-Time Buyer Exemption Do you qualify to save up to $7,500? Well, it’s complicated... RICHARD BELL, Bell Alliance
Property Transfer Tax (PTT) is a provincial tax payable on the purchase of property in BC. It’s calculated at 1 per cent on the ﬁrst $200,000 and 2 per cent on the balance of the purchase price. So, for a $400,000 property, PTT would be $6,000. That’s a lot of tax! Recognizing that the tax would be an obstacle to home ownership, the provincial government provided an exemption for “ﬁrst-time” buyers. But not everyone who has never owned a home is a ﬁrst-time buyer under the Act. You have to satisfy all of these requirements to qualify for the exemption. 1. You must never have owned a principal residence anywhere in the world The key words here are “principal residence,” which is a place of residence where an individual normally resides. If you have been or are currently a registered owner of an investment property, or on title to your parents’ home, but in neither situation did you occupy it as your principal residence, you still qualify under this requirement. 2. You must have lived in BC for at least the 12 consecutive months immediately before the date of registration of transfer of the property If you are relatively new to BC and at 10 months decide to buy a property, you want to make sure you delay closing for 2 months. If you have not lived in BC for at least 12 consecutive months before the transfer, you could still qualify if you have ﬁled income tax returns as a BC resident for at least 2 of the preceding 6 years.
This content is for information purposes only and does not constitute legal advice.
3. You must be a Canadian citizen or permanent resident If you are not a Canadian citizen or permanent resident at the time of the purchase but become one within 12 months of the transfer of ownership in the property, you can retroactively apply for the exemption. 4. The fair market value of the property must be less than $475,000 This can be a tough one in Vancouver. The price threshold is $475,000 to receive the full exemption. There is a partial exemption for properties valued between $475,000 and $500,000. There is no exemption for properties beyond $500,000. 5. You must actually live in it At the end of the ﬁrst year after your purchase you’ll receive a letter from the
government asking you to conﬁrm that you moved in within 92 days of transfer of title and that you occupied the property as your principal residence for the remainder of the ﬁrst year. If you did not move in within 92 days, you will be charged the tax. If you moved out within the ﬁrst year you will be charged for a prorated portion of the tax. If you pass away or the property is transferred pursuant to a separation agreement or court order, you still keep the exemption. A word of warning: the government audits exemption claims and if they determine that you ﬁled a false claim you are charged a penalty equal to twice the amount of tax you should have paid. If you’re not sure if you qualify, ask your legal advisor.
PURCHASING YOUR FIRST HOME? WE CAN HELP!
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BELL A LLIANCE LAWYERS & NOTARIES PUBLIC *Immigration Consulting services are provided by Bell Alliance Immigration Inc.
201 – 1367 West Broadway Vancouver, B.C. V6H 4A7 604.873.8723 | bellalliance.ca firstname.lastname@example.org
Check out these new-home projects built with ﬁrst-time buyers in mind. JILL BOWEN
When only new will do!
nothing like a brand-new home to move into: no one else’s bad decor to live with and it comes with the security of a new home warranty. Choosing a home is often as much about choosing a lifestyle, and new condo developers offer a countless array of options. There are also plenty of choices in new product that ﬁt below the $475,000 threshold for the Property Transfer Tax for ﬁrst-time buyers (See page 32).
“It’s a great time for ﬁrst timers to buy,” says Bob de Wit, CEO at the Greater Vancouver Home Builders’ Association. “We’re seeing lots
of activity with interest rates still low. We’re projecting those rates will be going up and we also expect the market to shift soon to be more in the sellers’ favour with prices also expected to rise.” “Today’s first-time buyers are looking for homes that are either downtown or with easy access to transit,” adds the Urban Development Institute’s president and CEO, Anne McMullin. “The challenge to developers has been to get prices down while still providing a place people want to live in. Many are doing that by the efﬁcient and innovative use of space.”
Scan these pages with Layar to see more details on these new developments
URBAN DWELLERS A number of Vancouver developments are designed to appeal to first-time buyers.
The Cordovan 557 East Cordova Street (preconstruction). Homes here start in the mid-$200,000s, which works out to about $420 per square foot—the lowest price point for new construction in Vancouver. www.boffoproperties.com/cordovan
Canvas Prince Edward Street and East 1st Avenue (preconstruction). Across from the future home of Emily Carr University, the area is gaining a reputation as the city’s artist district. Billed as southeast False Creek’s most affordable homes, with prices from $249,000. www.onni.com/canvas
Wall Centre 900 Hastings at Campbell Ave.(preconstruction). Three towers to choose from and prices starting at $249,000. This Strathcona development’s amenity spaces will include a ﬁtness centre, meeting rooms and plots for gardening. 900hastings.com
T R A N S I T- O R I E N T E D C O N D O S Buyers opting to move away from the core but stay within easy walking distance of transit—particularly SkyTrain stations—have multiple alternatives. If you have ever also longed to literally live at the mall, several shopping centres along SkyTrain lines are about to undergo major redevelopment (Oakridge; Brentwood; Lougheed) with condo towers as part of the plans.
SOLO District 2131 Willingdon Avenue, Burnaby (under construction). The four towers on this site are being built in phases. Residents will be have over 100,000 square feet of retail at their doorstep, including Whole Foods, the world’s largest retailer of natural and organic foods. www.solodistrict.com
Uptown 580 Clarke Road, Coquitlam (preconstruction). The ﬁrst of two towers on the site, which will also include a new Safeway and Starbucks. Homes, starting at $258,900, will be just steps away from the new Evergreen Line. bosaproperties.com/uptown
Park Avenue 13718 -100th Avenue, Surrey (preconstruction). Located across from King George Skytrain, Park Avenue offers incredible resort-style amenities including a sky garden, private tennis court and outdoor lap pool. Easy access to transit and walking distance to any amenities. Over 250 homes under $250,000. www.parkavenueliving.ca
I N N O VAT I V E I D E A S The word affordability is thrown around often in conversations about housing in the Lower Mainland. Developers are coming up with ingenious ways to keep prices as low as possible.
A l u m n i To w e r
162 Street at 23 Avenue, South Surrey (complete/ nearing completion). Designed in stunning West Coast Modern architecture, Breeze is rooted in a philosophy that celebrates natural materials. Because it’s built to high standards of sustainability, you beneﬁt from lower maintenance costs, lower monthly energy bills and a smaller ecological footprint. Starting from $339,900.
13409 104 Avenue, Surrey (preconstruction). This residential tower is debuting BosaSPACE™, a system of transformable built-in furniture components designed to maximize space by altering room conﬁgurations and furniture sizes. Prices start at $217,900.
AT T E N T I O N G R A B B E R S Making a condo development stand out in a crowded marketplace has led to some hey-look-at-me marketing campaigns that appeal particularly to first-time buyers.
150 East Cordova (preconstruction). This development made a splash with its #carforcondo campaign whereby buyers trade in cars for down payments. Prices start at $269,900.
2565 Campbell Avenue, Abbotsford (under construction). Quantum Properties made the headlines by becoming the ﬁrst developer in the Lower Mainland to accept Bitcoin for deposits. Abacus is its most appealing project for ﬁrsttimers with prices from $129,900 including GST.
SUBURBAN VALUE Heading south of the Fraser can mean more space and fantastic finishings at lower prices, stretching your budget even further.
The Grove at Clayton
194A Street at 68 Avenue, Surrey (complete/nearing completion). Downtown amenities at suburban pricing: 2, 3 and 4 bedroom parkhomes nestled in lush landscaping start at $275,900. Stainless steel appliances, quartz and hand-laid tile ďŹ nishings plus an
6123 138th Street, Surrey (complete/preconstruction) Spacious. 3 Bedroom. Townhome. In Vancouver, these three words could set you back almost $1,000,000. With ďŹ&#x201A;oor plans starting from 1380 square feet, Panorama Woods in Surrey offers value and luxury with
over 9,000-square-foot clubhouse.
affordable options starting at $313,900.
Yo r k 7298 199A Street, Langley (preconstruction) Conveniently located close to Willowbrook Shopping Centre, great recreational facilities and easy access to Hwy 1, makes this townhome community a winner. Plus you can own
Elevate at the Hamptons
a 3 BR townhome from $964/mo.
16458 23 Avenue, South Surrey White Rock (preconstruction). Duplex-style row homes built in traditional craftsman style give the feel of a single-family home, without the price tag. As part of The Hamptons, a master-planned community, Elevate offers full-amenity living in South Surrey.
Riverwalk 5469 Chinook Street, Chilliwack (Complete) Move in right away! 2 Storey + Basement townhomes in the heart of Chilliwack. Don’t let the suburban location fool you. The location offers a great outdoor lifestyle, while the homes offer over 2000 sqft of urban luxury.
2 HOMES AVAILABLE
for Immediate Possession
A Place to Call Home
Bringing West Coast style to the heart of Chilliwack, River Walk is a unique collection of 49 luxury townhomes located minutes away from the city’s restaurants, boutique shops, Vedder River trail, and the Canadian Education Park.
• 3 Bedroom Townhomes - some with master bedrooms on the main level • All homes have basements • Full Driveways and fenced yards • Executive ﬁnishings
2 storey plus in ground basement from $299,900
Wayne Temple 604-703-9292
Bill Driesen 604-991-1777
5469 Chinook Street Chilliwack OPEN HOUSE Mon-Sat 1-3PM (Entrance off Lindy’s Drive)
How to buy a home before it’s built You’re already picturing yourself drinking in the sunset from the roof deck but before you buy pre-sale, get to know what’s involved. THERESA BORSMAN Lay t h e g ro u n d wo r k
Thinking of buying a pre-sale home? Pre-sale means you’re entering into a contract for the right to receive-and an obligation to pay for-a finished home at a set point in the future. You can pay a small deposit now, save money while it’s being built, then pay the balance of your deposit when you move in. Or pay your deposit in bite-sized increments during the building process. You can customize design elements, ﬁnishes, and even layout. Because you’re buying a brand-new home, you won’t have to worry about costly repairs for at least another decade. And your home will be covered under the BC Government’s 2-5-10 Year Home Warranty Insurance program. There are deﬁnitely advantages to buying pre-sale. But there are also risks and unique obligations. You need to know your rights and responsibilities under the Real Estate Development Marketing Act (REDMA). Here are some tips to mitigate some of the risks.
Be fin a n c ia lly p re p a re d First, unless the developer violates the terms of your agreement, you are legally obligated to complete the sale—or forfeit your deposit. If you buy in a softening market, by the time you move in, your unit might be worth less than you agreed to pay for it. Mortgage lenders may only cover the market value of the property at the time of completion, leaving you scrambling to raise more cash for the difference. So what happens if you can’t raise the cash you need to complete the sale, or your unit is worth less than what you owe when it’s time to pay up? Can you deal with that situation? Besides market changes, there are other unknowns: from unexpected construction delays to condos that don’t get built at all.
Find out everything you can about the builder of each development you’re considering. Do they have a reputation of building on time? Talk to your Realtor and to homeowners who’ve purchased from them in the past. And if you’re a ﬁrst-time buyer with a small down payment, consider sticking with pre-sale units that are already close to completion to eliminate some of the unknowns.
C h e c k t h e sma ll p r i n t b ef o re yo u sig n Before you sign a purchase contract, you have the right to review a Disclosure Statement prepared by the developer. The disclosure statement lays out everything you will be buying—including proposed and ﬁled bylaws, common property and storage allocations, and descriptions of appliances, furnishing, and ﬁnishes. Under REDMA, the Disclosure Statement also has to include an estimated construction start and end date, as well as any “material facts” that could “reasonably be expected to affect, the value, price, or use of the development unit or development property.” Take time to review the statement carefully and make sure you understand all the terms set out in it. Also go through the pre-sale contract with a ﬁne toothcomb. REDMA legislation leaves room for interpretation and is being shaped by a number of ongoing court cases. So it’s a wise move to enlist an experienced Realtor and a lawyer to safely guide you through the process - and into your swanky custom home. Scan with Layar for more details on purchasing a pre-sale
arranging mortgages for over 20 years
ﬁrst-time home buyers get pre-approved At Dreyer Group Mortgage Brokers, we have access to many First-Time homebuyer products and rates your bank does not. • Access to First-Time Hombuyer Programs • Access to the lowest mortgage rates • No Fee* for our service • We shop your mortgage to over 50 Banks, Trust Companies and Credit Unions • Lock in rate your lowest mortgage rate for up to 120 days • Continue to shop your mortgage up to 10 days prior to funding • Pre-qualify upfront so you can shop with conﬁdence • Provide professional and unbiased ﬁnancing advice
QUICK FACT: 45% of Vancouver FirstTime Homebuyers use a mortgage broker to shop their best mortgage.
now is the opportune time for ﬁrst-time homebuyers to take advantage of the historical low mortgage rates and negotiate better prices on housing, especially in the condo/townhome market. 5% down Payment programs are still available, plus you can use your RRSP’s. Find out how much you qualify for. We’re here to help!
Top 10 Mortgage Broker Team in Canda When we shop the banks, you save
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What’s the BETTER WAY to save for your ﬁrst home?
Like thousands of young couples starting out, E.J. Bugayong and his wife Jessica dreamed of owning their own home. Lucky for them, many relatives and friends gave them money as a wedding gift. Two years ago, the newlyweds purchased their ﬁrst home using the $14,000 they had accumulated in their RRSPs. “Right after our wedding, we took the money we received in gifts and put it into an RRSP,” says the 29-year-old teacher. “When we deposited into our RRSPs, we received a substantial amount back from our taxes and used that money as well, which allowed us to put a good down payment on our condo.” (The higher your tax bracket, the bigger the refund you can add to a down payment.) But now they’ll have to pay that money back to their RRSPs in 15 years, while they’re paying their mortgage. Wouldn’t a Tax Free Savings Account (TSFA) have been a better choice? There is no right or wrong answer, according to Diane McCurdy, a well-respected Vancouver ﬁnancial planner and author of How Much is Enough? (Wiley, 2013)
TFSA o r RRS P ? Under the federal government’s Home Buyers’ Plan (HBP), ﬁrst-time home buyers are allowed to withdraw up to $25,000 from their RRSP plan to help with a down payment. That’s $50,000 per couple. “In the past, I didn’t advocate that people use their RRSP to buy a home. However, because homes are so expensive in B.C. it’s more difﬁcult to avoid using your RRSP,” she says.
There a re so m e r u le s t o remem b e r. First, contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP. Once you do, you must replace them. “Young couples must be really mindful of the fact that they must pay back the full amount to their RRSP within 15 years or pay a hefty penalty,” she says. On the upside, you can use your tax refund from your RRSP contribution toward your down payment as well, as Bugayong did. McCurdy says if you can, take the tax refund
and contribute to your Tax-free Savings Account (TFSA). One step better is to top up your TFSA to the maximum since it allows money to grow into a bigger down payment, with no payback penalty. Introduced in January 2009, TFSAs soon became very popular with Canadians because growth in the plan is 100 per cent tax free. “RRSPs have a contribution end date at age 71, while TFSAs have no end date or age in which you must stop contributing. If you withdraw, you must wait until the next calendar date to re-contribute into the plan, but you may still make the following year’s contribution. It is a wonderful saving tool designed to help you save money for emergencies and large-ticket items,” says McCurdy. However, she cautions that you must track your contributions and be careful because any over-contributions will be hit with a one per cent penalty per month. There is currently no method to track your eligible TFSA room. You ﬁnd out how much RRSP room you have every year on your Notice of
MICHELLE HOPKINS Assessment from CRA (Canada Revenue Agency). Turns out, they’re also keeping track of your TFSA room; they’re just not telling you about it. So if you contribute too much, you’ll pay the price.
I t all c ome s do wn to good pl a nning If you’re in a higher tax bracket when you put the money in than when you take it out, then it’s better to use an RRSP. When you contribute to your RRSP you receive a tax rebate now, and Revenue Canada takes less tax on withdrawal. However, if you take the money out when you’re in a higher tax bracket than you’re in now, it’s better to go with a TFSA. “If your tax rates are the same when the money goes in and out, then your options are the same,” adds McCurdy. “Navigating through the differences and complexities of TFSAs and RRSPs can be difﬁcult for those who don’t understand, so it’s important for ﬁrst-time buyers to educate themselves on what is the best savings plan for them,” adds McCurdy.
Ke y d if f e re n c e s b e t we e n T F S As a n d RRS P s T F S As Annual contribution limit: $5,500 regardless of earned income Maturity limit: None Tax-deductible contributions: No Tax on withdrawals: Investment income and returns remain tax free; amount withdrawn is not added to your taxable income Contribution room restored after withdrawals: Yes Ability to carry forward unused contribution room: Yes Penalty for exceeding contribution limit: 1 per cent per month
RRS P s Annual contribution limit : 18% of earned income, less pension adjustment, with a maximum for 2014 of $24,270 Maturity limit: Must mature by the last day of the year which you turn 71 Tax-deductible contributions: Yes, reduces your taxable income Tax on withdrawals: Amount withdrawn is added to your taxable income; applicable marginal tax rate applies Contribution room restored after withdrawals: No Ability to carry forward unused contribution room: Yes Penalty for exceeding contribution limit: 1 per cent per month after $2,000 lifetime overcontribution allowance.
Check out this cool RRSP calculator by Vancity with Layar
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