Tuesday, April 19, 2011
Property Purchase Tax
If you are a first time home buyer purchasing a home under $425,000 and have never owned real estate anywhere in the world, you are exempt from having to pay the Property Transfer Tax. The Property Transfer Tax, also known as the Property Purchase Tax, is a provincial tax charged on real estate at 1% of the first $100,000 of the home value, and 2% of the remaining value. For a $450,000 home purchase, the buyer will pay $7000 in tax. As soon as any person who has owned real estate before appears on the title, this tax is applicable. There are several lobbying parties looking to have the PTT reduced, because when the tax was originally was created in 1987 average home values were under $200,000 in Vancouver. They now average $760,000. Unfortunately, the tax which was meant to affect only 2% of the population now affects 88% of British Columbians, and is a major expense especially for move-up buyers.
Monday, April 11, 2011
Landlordship
While there are many roads to a comfortable retirement, there are many that say that their true fortunes have been built in real estate. I don’t mean the likes of Donald Trump style real estate but rather the more moderate, more conservative path of investing in rental properties. The beautiful thing about acquiring a property as a rental is that the tenants pay the mortgage off for you. Imagine holding a condo for 15 or 20 years, having the tenant pay off the mortgage and then discovering you have a clear title property that is generating money for you each month. Have a few such properties and this could mean thousands of dollars in revenue each month.
But the realms of landlordship are not always all fun and games, especially if you get lousy tenants. Here are a few tips from someone who knows about how to make the best of having a rental property.
1. Do proper checks on potential tenants
By enlisting the services of a rental management company, they can assist with showing the property, assessing tenant applications, running back checks and signing all leases and collecting post dated rent cheques. You may not need month to month management, however, for as little as half a month’s rent a management company can eliminate the stress of finding suitable tenants.
The other option is to have an open house to show your property and meet potential tenants. Ask those interested to complete a Tenancy Application which will offer you their contact information, employment information, a previous landlord reference name and number and permission to look at their credit bureau.
By having this information you can get an excellent snapshot of who you have as potential tenants. Do the reference and credit check! This will dramatically increase your chance of choosing a tenant who can and will pay their rent in full and on time each month.
2. Have the tenants sign a lease.
Although you may be willing to rent the property to your tenant on a month by month basis, a lease allows you to outline the rules of that arrangement. For example, can the tenants have pets or smoke in the property, how much notice must they give if they want to move out, how much is the damage deposit, what utilities are covered in the rent, how much is the rent and what storage lockers or parking stalls come with the property if applicable.
3. Know the Residential Tenancy Act of BC
You can find all the rules of having a rental property at http://www.rto.gov.bc.ca. Study this site, read the forms that are available to you and never ever do anything without conferring with the Act. Your tenants have rights, in fact, it can be argued they are more protected than the landlord but if you ever have a problem with a tenant you are better to play by the rules. Having your tenant sign a lease means you have their word they are also going to play by the rules you set out and protects you in writing if they do not.
But the realms of landlordship are not always all fun and games, especially if you get lousy tenants. Here are a few tips from someone who knows about how to make the best of having a rental property.
1. Do proper checks on potential tenants
By enlisting the services of a rental management company, they can assist with showing the property, assessing tenant applications, running back checks and signing all leases and collecting post dated rent cheques. You may not need month to month management, however, for as little as half a month’s rent a management company can eliminate the stress of finding suitable tenants.
The other option is to have an open house to show your property and meet potential tenants. Ask those interested to complete a Tenancy Application which will offer you their contact information, employment information, a previous landlord reference name and number and permission to look at their credit bureau.
By having this information you can get an excellent snapshot of who you have as potential tenants. Do the reference and credit check! This will dramatically increase your chance of choosing a tenant who can and will pay their rent in full and on time each month.
2. Have the tenants sign a lease.
Although you may be willing to rent the property to your tenant on a month by month basis, a lease allows you to outline the rules of that arrangement. For example, can the tenants have pets or smoke in the property, how much notice must they give if they want to move out, how much is the damage deposit, what utilities are covered in the rent, how much is the rent and what storage lockers or parking stalls come with the property if applicable.
3. Know the Residential Tenancy Act of BC
You can find all the rules of having a rental property at http://www.rto.gov.bc.ca. Study this site, read the forms that are available to you and never ever do anything without conferring with the Act. Your tenants have rights, in fact, it can be argued they are more protected than the landlord but if you ever have a problem with a tenant you are better to play by the rules. Having your tenant sign a lease means you have their word they are also going to play by the rules you set out and protects you in writing if they do not.
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