Thursday, March 22, 2007

Does the GST Rebate Affect You?
- by Stan Galbraith

There is a GST rebate on new home construction or on homes that have been substantially renovated. A substantial renovation means a house has been gutted down to the floors and walls, or better yet, down to the foundations.
To qualify for the rebate, the Purchaser or a close relative must be the first individual to occupy the home after a substantial completion of the construction or renovation. In other words, when someone purchases a new home for rental or investment purposes, they are not eligible to receive the GST new housing rebate.

With so much volatility in the market, I have seen several instances where someone purchases a property fully intending to live in their new home. Then, before the closing date, there is a change of plans. In one case, the purchaser's employer transferred them to a new city while their new home was under construction. The purchaser was forced to close on their purchase so they would not lose their deposit. They then immediately resold the property without ever living there.

On first appearance this would seem to disqualify their ability to obtain GST new housing rebate at a cost of several thousand dollars.

However, there is an exception in the GST legislation. Under this exception, the purchaser can still make an exempt sale before the property is occupied by anyone. An exempt sale means the purchaser can resell the property without charging any GST on the basis the sale is used residential housing. The exception also allows the purchaser who has an unexpected change of plans to still qualify for the rebate.

So long as the original intention was to occupy the home, the purchaser can still obtain a rebate. Anyone in this situation is well advised to retain some documentation to prove they had an intention to occupy the property and to prove the change of plans that prevented their occupancy.

Remember, the GST rebate reaches a maximum when the total home price is $350,000 and is gradually phased out. It disappears completely for any home where the total price is $450,000 or greater.

Losing the GST rebate on new housing can cost thousands of dollars. At least there is a means for many people to preserve the rebate when they do not actually occupy the house.

About Stan Galbraith
Stan is a very experienced Real Estate lawyer. Consistently our clients have expressed appreciation for the competent, “hands on” manner in which he and his staff have dealt with their real estate transaction in this complex market. Stan can be reached at Galbraith Law Office, 217, 14925-111 Avenue, Edmonton AB T5M 2P6. Phone 483-6111.

If you’re thinking of buying or selling, please contact us at:
1-877-438-3336 toll free
780-438-3336 direct line
**this newsletter is not intended to solicit any properties currently for sale with another real estate brokerage.**

Saturday, February 24, 2007

Housing Market Booms – Up 4.3%

Much to many people’s surprise, the Edmonton Real Estate Market increased dollar-wise by 4.3% by February 1 of this year. Yet inventory is half of what is was this time last year. In January 2006 there were approximately four-thousand listings available, this year there are about two-thousand. This is partly due to the speed of information transfer and the fact that properties are not on the market very long. To date we are not having problems meeting the needs of our buyers.

The average price of a single family dwelling in the Edmonton area this January was up 48.66% from last year and the average price was $357,325. Condos went for an average price of $233,175, and the average price of a duplex/row house was $294,148.

Across Alberta most averages were up, although there are a few spots that didn’t increase as dramatically as expected. For instance, Fort McMurray was only up 16.45%, with the average house priced at $487,000. And Lloydminster actually decreased by 12.11%, with homes coming down to $198,200 from $203,300. However, Red Deer increased a whopping 48.77% with the average single family home priced at $242,200, and Calgary was up 32.12% with the average house selling for $361,600.

Trends to Watch

Many trends are being driven by the huge buying power of the “grey crowd”. The most specific of these are:

1. The growing market for upscale condos as they seek an end to exterior maintenance.
2. The popularity of smaller, more elaborate bungalows. This is resulting from empty nesters no longer needing the large family home. It is the real estate equivalent of trading the mini-van in on a convertible.
3. The taking of equity from existing Edmonton properties to purchase retirement or recreation properties. So much money is flowing from Alberta into British Columbia that it’s become very obvious we’re the marketing targets of new B.C. projects.

Did You Know…
- 90% of the business that we do is repeat business or referrals – we’d like to take this opportunity to thank you.

If you’re thinking of buying or selling, please contact us at:
1-877-438-3336 toll free
780-438-3336 direct line

**this newsletter is not intended to solicit any properties currently for sale with another real estate brokerage.**