In its 2012 Budget announced yesterday, the Provincial Government announced a temporary one-time refundable personal income tax credit worth up to $10,000 if you are a First-Time New Home Buyer.

THE B.C. FIRST-TIME NEW HOME BUYERS’ BONUS

Subject to approval by the legislature, the B.C. government intends to implement a temporary BC First-Time New Home Buyers’ Bonus. Effective February 21, 2012, to March 31, 2013, the bonus is a one-time refundable personal income tax credit worth up to $10,000.

Requirements to Qualify for the Bonus:

ELIGIBLE FIRST-TIME NEW HOME BUYER

You will qualify as a first-time new home buyer if:

1. You purchase or build an eligible new home located in B.C.;
2. You, or for couples, you and your spouse or common law partner, have never previously owned a primary residence;
3. You file a 2011 B.C. resident personal income tax return, or if you move to B.C. after December 31, 2011, you file a 2012 B.C. resident personal income tax return (you will not be eligible for the bonus if you move to B.C. after December 31, 2012);
4. You are eligible for the B.C. HST New Housing Rebate; and
5. You intend to live in the home as your primary residence.

ELIGIBLE NEW HOME

An eligible new home includes new homes (i.e. newly constructed and substantially renovated homes) that are purchased from a builder and that are owner-built. The bonus will be available in respect of new homes purchased from a builder where:

1. A written agreement of purchase and sale is entered into on or after February 21, 2012;
2. HST is payable on the home (e.g., HST will generally be payable if ownership or possession of the home transfers before April 1, 2013 - see further details below); and
3. No one else has claimed a bonus in respect of the home.

The bonus will be available in respect of owner-built homes where:

1. A written agreement of purchase and sale in respect of the land and building is entered into on or after February 21, 2012;
2. Construction of the home is complete, or the home is occupied, before April 1, 2013; and
3. No one else has claimed a bonus in respect of the home.

A substantially renovated home is one where all or substantially all of the interior of a building has been removed or replaced. Generally, 90% or more of the interior of the house must be renovated to qualify as a substantially renovated home (90% test).

MAXIMUM AMOUNT

The bonus is equal to 5% of the purchase price of the home (or in the case of owner-built homes, 5% of the land and construction costs subject to HST) to a maximum of $10,000.

PHASE-OUT FOR HIGHER INCOME EARNERS

The bonus will be reduced based on an individual’s/couple’s net income (line 236 of your income tax return) using the following formula:

1. For single individuals, the bonus is reduced by 20 cents for every dollar in net income over $150,000 (bonus is reduced to zero at $200,000 net income).
2. For couples, the bonus is reduced by 10 cents for every dollar in family net income over $150,000 (bonus is reduced to zero at $250,000 family net income).

THE B.C. FIRST-TIME NEW HOME BUYERS’ BONUS - APPLICATION PROCESS

Individuals must apply for the bonus through the B.C. government. Individuals can apply once application forms have been posted on the B.C. Ministry of Finance website later this year. Applicants will be required to submit documentation demonstrating eligibility for the bonus.

ELIGIBLE NEW HOME

The bonus is available in respect of new homes (i.e., newly constructed and substantially renovated homes) where HST is payable. HST will generally be payable on homes purchased from a builder where ownership or possession transfer before April 1, 2013. Potential buyers should consult with the builder to determine if the home will be subject to the HST.

For owner-built homes, the bonus will be based on land and construction costs subject to the HST. Eligible new homes will include:

Detached Houses, semi-detached houses, duplexes and townhouses,

Residential condominium units,

Mobile homes and floating homes, and

Residential units in a cooperative housing corporation.

• For Completion Dates between NOW and April 1, 2012, the current

tax (HST) still applies with the same rebate programs.

TRANSITIONAL RULES

• For Completion Dates between April 1, 2012 and April 1, 2013,

transitional rules will apply. GST and PST will be charged. A PST

new housing rebate will be available of 71.43% of the PST portion to

a maximum of $42,500.

• Or, in other words, if you buy a home of $850,000 or less, you will

pay the usual GST, plus PST of 2% after the rebate is taken into

account.

• For homes constructed partly before April 1, 2013 and partly after

April 1, 2013, there will be a mechanism for calculating which taxes

and which rebates will apply.

• The transitional rules will apply to new rental housing and to new

second and recreational homes outside of the Capital and Greater

Vancouver Regional Districts.

NO PST AFTER APRIL 1, 2013

• For homes constructed entirely after April 1, 2013, PST will not be

charged. (Note: builders will not be able to claim input tax credits for

PST paid on building materials, so home prices may be adversely

affected). GST will still be payable and the existing federal GST

rebates programs remain in place.

The BC government announced, on Friday, that effective April 1, 2013, HST will be scrapped.

THIS STILL MEANS PURCHASERS CAN PAY UP TO 12% TAX ON NEW HOMES!

The government did NOT announce that new homebuyers will go back to paying only GST on new homes, but will now be paying both GST AND PST.

The only change in the effective tax payable by new home buyers is that the threshold for the maximum PST rebate has increased from homes worth up to $525,000  (max. rebate $26,250) to homes worth up to $850,000 (max. rebate $42,500).

Follow the link below for the CBC News webpage.

http://www.cbc.ca/news/canada/british-columbia/story/2012/02/17/bc-new-home-hst.html

I thought I would share this article that was published in the financial press on September 12, 2011.  Read on…

Greece’s wrestling match with its sovereign debt is raising fears of default and financial market contagion around the world and threatening to tear a gaping hole in the euro.

Though the question of whether the country will be able to pay its creditors has been playing out for more than a year, fresh worries about the health of its economy were back in the spotlight Monday.

“Ultimately we believe that we’re going to see a default out of Greece,” said Beata Caranci, deputy chief economist at TD Economics.

The timing, however, is difficult to predict, she added. “There’s only one road out of this, and we’re taking the scenic route.”

Economists are warning of worse times still to come.

Greece’s debt problems won’t be solved quickly. Experts anticipate months of political wrangling over bailout and austerity measures which then drag down demand across the Euro zone and possibly North America and eat away at investor confidence globally.

In the U.S., the National Association for Business Economics, a panel of 52 economists, cut its growth forecast for this year in half to a measly 1.5 per cent from 3.1 per cent in the previous outlook.

In Canada, RBC Economics has slashed its GDP forecast to 2.4 per cent for 2011, down from 3.2 per cent initially estimated.

Markets throughout the world dipped sharply on Monday as investors priced in the growing likelihood of default. Only the Dow bucked the negative trend with a late-afternoon rally, taking it up 0.63 per cent at close.

If it feels like we’ve been here before, it’s because we have. Like the Greek myth in which Sisyphus was condemned to roll a boulder uphill for an eternity, only to have it roll back down each time, the country has embarked on another round of austerity measures, including government spending cuts and tax increases, meant to balance its books.

Among them, and sure to be wildly unpopular, is a two-year property tax that would range from 50 cents to 10 euros a square metre. The levy would be added to electricity bills to ensure collection and thwart tax evasion, apparently a national pastime in Greece.

But part of the problem is that these belt-tightening measures also slow the economy.

Greece’s finance minister warned Sunday that the country’s economy will contract by as much as 5.3 per cent, far more than the 3.8 per cent that was initially forecast.

“Greece has put through significant fiscal austerity measures but it’s not enough. The fact that its economy continues to contract at a faster pace than anticipated means they need more measures and that makes growth slow down further,” said Benjamin Reitzes, senior economist at BMO Capital Markets. “On top of that, protests have been continuing non-stop. It doesn’t help when the population isn’t willing to accept the measures needed to keep the economy stable.”

The euro fell to its lowest level since 2001 against the yen Monday, as speculation that German Chancellor Angela Merkel is preparing for a Greek default curbed demand for the 17-nation currency.

A growing chorus of economists believes that Greece may ultimately exit the euro. “The euro will survive. Whether Greece is in the euro is in another matter,” Caranci said.

The European Commission warned Monday that that Europe’s recovery is “fragile” and sovereign-debt levels will keep rising through 2012.

The lack of confidence and gloomy outlook are raising worries of contagion, financial troubles spreading like wildfire from one country to another.

In particular, investors zeroed in on three French banks, which are also among the largest in Europe. BNP Paribas, Société Générale, and Crédit Agricole, hold billions of euros worth of Greek bonds, and have been singled out by Moody’s Investor Services as candidates for a credit rating downgrade because they hold billions of euros’ worth of Greek bonds.

Greece has already received two bailout packages worth more than 200 billion euros, and there are signs that its well-to-do neighbours are growing weary.

Last week, Germany’s Juergen Stark resigned from the executive board of the European Central Bank said, suggesting policy makers are divided over how to fight the debt crisis.

Investors are now casting worried looks at other euro zone countries, notably Portugal, which is also likely to have a deeper-than-expected recession, Ireland, Spain and Italy, with its massive 1.8 trillion euro debt.

Canada has trade ties to Europe, but “the bigger impact would come through financial markets, not necessarily direct exposure to European banks, but our exposure to U.S. banks that are exposed to Europe,” Reitzes said.

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent.

The global economic expansion is proceeding broadly as projected in the Bank’s April Monetary Policy Report(MPR), with modest growth in major advanced economies and robust expansions in emerging economies. The US economy has grown slower than expected, China’s economic growth remains strong, Japan’s economy has begun to show signs of recovering from the natural disasters that struck in March and Europe’s core economy is in a growth phase with some Euro-zone countries still under austerity measures that will hamper growth.  The European sovereign debt crisis still remains and there are still very real risks as to the ultimate outcome.

Commodity prices are expected to remain at elevated levels and this, together with persistent excess demand in major emerging-market economies, is contributing to global inflationary pressures. Total CPI inflation in Canada is expected to remain above 3% in the near term and is expected to return to the targeted rate of 2% by the middle of 2012.

The next schedule interest rate announcement will be made on September 7, 2011.

It is interesting to note that Citigroup Capital Markets, today, published a report predicting that the Bank of Canada’s overnight rate will double to 2% by mid 2012.  A lot would have to happen for this to materialize: the European debt-crisis needs to be something of the past and the US economy needs to be re-bounding otherwise we run the risk of being dumped back into a recession and will have a soaring Loonie.

I thought you would find the following Financial Post article of interest.  There has been much talk of a double-dip in the US property market and the fear that should the Bank of Canada increase rates too quickly then Canada runs the risk of getting dumped back into a recession.  So, the comments of Jim Flaherty are quite interesting.  Read on….

MONTREAL – The risk that the economic slowdown in the United States will turn into another North American recession is not high, Canada’s finance minister said Tuesday as he cautioned that too many people nevertheless remain jobless in this country.

“I do not think the risk is great,” Jim Flaherty said in response to a reporter’s question at the International Economic Forum of the Americas taking place in Montreal. “There are risk indicators with respect to which we are concerned which we reviewed in the budget [Monday] and which I reviewed with the private sector economists with whom I met last week. The nature of the risks have not changed. We are concerned about debts and deficit in the United States and the need for a convincing longer term plan in the United States” to deal with those problems.

Ottawa is also concerned about some evidence of continuing slowness in the U.S. real estate market which puts a damper on consumer confidence in that country, Mr. Flaherty said. As well, it is worried about the sovereign debt situation among some eurozone countries, including Greece.
“These are all risk factors but they are known risk factors,” Mr. Flaherty said, adding that to address the risk in the latest budget, federal finance officials discounted private sector growth assumptions by $10-billion in nominal GDP each year, equalling a revenue markdown of $1.5-billion annually.

The U.S. economy grew at a 1.8% annual rate in the first quarter but job growth remains anemic, prompting U.S. Federal Reserve Chairman Ben Bernanke to say Tuesday that the central bank should maintain monetary stimulus to boost a “frustratingly slow” recovery. U.S. employers hired 54,000 more people in April, well below the 165,000 expected by economists.

“Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” Mr. Bernanke said in a speech in Altanta. The U.S. economy is growing above “stall speed,” Deutsche Bank AG foreign exchange analyst Alan Ruskin told Bloomberg in an interview Tuesday.

“A lot of people say that if the U.S. economy slows below 2% in year-over-year gross domestic product historically, we’ve slipped in to recession. The key is that we stay above that line, otherwise that is perceived as stall speed and other issues kick in.” The pace of economic recovery in the United States is crucial for Canada because America is Canada’s largest trading partner, buying 75% of all Canadian exports like oil, wood and cars. Any major slowdown would hurt Canadian businesses and force layoffs here.

Mr. Flaherty maintained that unemployment in Canada also remains too high, even as his government initiates targeted hiring investments. The country’s unemployment rate stood at 7.6% in April as the economy added 58,000 mostly part-time jobs. Employment has grown by 1.7% in the last year.

Asked if the Canadian government has picked a preferred candidate to lead the International Monetary Fund, Mr. Flaherty said not yet. Former IMF chief Dominique Strauss-Kahn resigned last month amid allegations he sexually assaulted a New York City hotel worker. Agustín Carstens, the head of the Mexican central bank, and Christine Lagarde, France’s finance minister, are vying for the job.

In a speech to conference delegates, Mr. Flaherty stressed the importance of sound fiscal management for an elected government, noting no one truly foresaw the credit crisis in the fall of 2008 and subsequent recession. He said “it’s unpredictable” when the next shock might come.

The finance minister on Monday delivered a budget that included a pledge to bring the federal government back into surplus position by 2014-2015. He said he will do that through a combination of $4-billion in annual spending cuts and closing tax loopholes to generate another $4.1-billion.

The cuts mark the most intense attempt to rein in public sector spending in more than a decade. The government is conducting an operational review of the federal service and some departments have begun laying off staff.

Opposition against the cuts is expected to grow in the months ahead.

Canadian Auto Workers union president Ken Lewenza said Monday the government’s  spending will wipe out thousands of jobs and hurt service delivery. “With the economic rebound being so uncertain and anemic private sector investment growth, these billion-dollar cuts are the last thing Canada needs,” Mr. Lewenza said.

But compared to what a private company would do to trim spending, the government’s $4-billion plan is not very ambitious, Mr. Flaherty argued.

Mr. Flaherty’s savings target represents 5% of Ottawa’s $80-billion in annual discretionary spending. The government won’t book the savings until it achieves them and has not provided any details of which programs and departments will be affected.

It has been generally expected that the Bank of Canada would look at raising rates in July but a report in the Financial Post on May 24 by the RBC Economics team predict that the Bank of Canada will hold-off on raising rates till September.

You can read more on this article at http://business.financialpost.com/2011/05/24/boc-rate-hike-on-hold-until-september-rbc/

Greater Vancouver saw a typical, solid month of residential home sales on the Multiple Listing Service® (MLS®) in April, in contrast to the near record pace witnessed in the two preceding months.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales of detached, attached and apartment properties in Greater Vancouver reached 3,225 in April 2011, an 8.2 per cent decrease compared to the 3,512 sales in April 2010 and a 21 per cent decline compared to the 4,080 sales in March 2011.

Looking back further, last month’s residential sales represent an 8.8 per cent increase over the 2,963 residential sales in April 2009, relatively unchanged compared to April 2008, and a 4.8 per cent decline compared to the 3,387 sales in April 2007.

“While it continues to be a seller’s market in Greater Vancouver, last month’s activity brought greater balance between supply and demand in the overall marketplace,” Rosario Setticasi, REBGV president said. “The year-over-year decline in April sales can be attributed to a less active condominium market on our MLS®, as there were more detached and townhome sales this April compared to last year.”

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,847 in April 2011. This represents a 23.5 per cent decline compared to April 2010 when 7,648 properties were listed for sale on the MLS®, which was an all-time record for April. Compared to March 2011, last month’s new listings total registered a 14 per cent decline.

At 14,187, the total number of residential property listings on the MLS® increased 8.2 per cent in April compared to last month and declined 10 per cent from this time last year.

“There’s considerable variation in activity within the communities in our region. This is causing home price trends to differ depending on the area,” Setticasi said. “Your local REALTOR® is a valuable resource for obtaining the most accurate, up-to-date market evaluation.”

The MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver over the last 12 months has increased 5 per cent to $622,991 in April 2011 from $593,419 in April 2010.

Sales of detached properties on the MLS® in April 2011 reached 1,402, an increase of 2.3 per cent from the 1,370 detached sales recorded in April 2010, and a 17.8 per cent increase from the 1,190 units sold in April 2009. The benchmark price for detached properties increased 7.4 per cent from April 2010 to $879,039.

Sales of apartment properties reached 1,201 in April 2011, a 21.3 per cent decrease compared to the 1,526 sales in April 2010, and an increase of 1.9 per cent compared to the 1,179 sales in April 2009. The benchmark price of an apartment property increased 2.9 per cent from April 2010 to $409,242.

Attached property sales in April 2011 totalled 622, a 1 per cent increase compared to the 616 sales in April 2010, and a 4.7 per cent increase from the 594 attached properties sold in April 2009. The benchmark price of an attached unit increased 2.4 per cent between April 2010 and 2011 to $514,670.

Download the complete April stats package here

As was widely expected, the Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The global economy continues to show signs of recovery with growth evident in the USA and Europe (even with the presence of some challenging banking issues in some Eurpoean countries and some challenging sovereign debts issues). There is the emergence of broader global inflationary pressures arising from the robust demand from emerging-market economies for commodities.
The Bank of Canada projects that the Canadian economy will grow by 2.90% in 2011 and 2.60% in 2012. The BOC sees total CPI increasing to 3% in the 2nd quarter of 2011 but then retracing back to the 2% target by mid-2012. The persistent strength of the Canadian Dollar could lead to a larger decline in imports and thus lower inflation even further.
The next scheduled date for announcing the overnight rate target is May 31, 2011.

Activity in the Greater Vancouver housing market continued to strengthen in March with both the number of homes sold and added to the region’s Multiple Listing Service® (MLS®) reaching near record levels.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales of detached, attached and apartment properties in Greater Vancouver reached 4,080 in March 2011. This represents a 31.7 per cent increase compared to the 3,097 sales recorded in February 2011, an increase of 30.1 per cent compared to the 3,137 sales in March 2010 and an 80.1 per cent increase from the 2,265 home sales in March 2009. The all-time sales record for March occurred in 2004 when 4,371 transactions were recorded.

“Our market has had a very strong start to the spring season,” Rosario Setticasi, REBGV president said. “With home sales above 4,000 and nearly 7,000 home listings added to the MLS® in March, it’s clear that home buyers and sellers view this as a good time to be active in their local housing market.”

New listings for detached, attached and apartment properties in Greater Vancouver totalled 6,797 in March 2011. This represents a 3 per cent decline compared to March 2010 when 7,004 properties were listed for sale on the MLS®, an all-time record for March. Compared to February 2011, last month’s new listings total registered a 19.4 per cent increase.

At, 13,110, the total number of residential property listings on the MLS® increased 9.9 per cent in March compared to last month and declined 3 per cent from this time last year.

“Conditions favour sellers at the moment, but we’re seeing differences in home-price trends and overall activity depending on the region and property type,” Setticasi said.

The MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver over the last 12 months has increased 5.4 per cent to $615,810 in March 2011 from $584,435 in March 2010.

Sales of detached properties on the MLS® in March 2011 reached 1,795, an increase of 34.4 per cent from the 1,336 detached sales recorded in March 2010, and a 100.1 per cent increase from the 897 units sold in March 2009. The benchmark price for detached properties increased 8.3 per cent from March 2010 to $866,806.

Sales of apartment properties reached 1,622 in March 2011, a 29.6 per cent increase compared to the 1,252 sales in March 2010, and an increase of 66.2 per cent compared to the 976 sales in March 2009. The benchmark price of an apartment property increased 2.1 per cent from March 2010 to $403,885.

Attached property sales in March 2011 totalled 663, a 20.8 per cent increase compared to the 549 sales in March 2010, and a 69.1 per cent increase from the 392 attached properties sold in March 2009. The benchmark price of an attached unit increased 3.6 per cent between March 2010 and 2011 to $511,039.

Download the complete Stats package here:

March 2011 Real Estate Stats