A Bare Trust is a situation where one person holds title to an asset for the benefit of someone else, who gives instructions to the trustee. This differs from a typical trust, where the trustee controls the assets.
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Did you know there are detached houses in Toronto listed for less than a million dollars right now?
Something that’s been rare over the last few years. Although interest rates are still high.
What does that mean exactly? Real estate prices are lower than they have been in the past few years so a house currently price at $900,000, could have sold for over a $1 million over a year ago.
A buyer could buy a house for approximately $900K and save themselves $100K, that’s what I mean by marrying the house.
Then, on the rate side, interest rates are temporarily high but that will change as rates will most likely come down next year.
Any rate you have right now can be temporary, kind of like you are dating.
So… Date the Rate & Marry The House.
I explained this concept on BNN Bloomberg this week. Check out the segment on The Close.
In an effort to generate more revenue for the City of Toronto, Toronto’s Council has approved a new Mansion Tax for homes over $3 million.
If you buy and close on a property prior to Dec. 31st, 2023 you can avoid this additional tax.
The new graduated land transfer tax (LTT) increases would apply as follows:
| Value of Property | New Tax | Old Tax |
|---|---|---|
| $4 mill to $5 mill | 4.5% Toronto + 2.5% Province | 2.5% Toronto + 2.5% Province |
| $5 mill to $10 mill | 5.5% Toronto + 2.5% Province | 2.5% Toronto + 2.5% Province |
| $10 mill to $20 mill | 6.5% Toronto + 2.5% Province | 2.5% Toronto + 2.5% Province |
| $20 mill and more | 7.5% Toronto + 2.5% Province | 2.5% Toronto + 2.5% Province |
If you have a home valued at over $3 million and want to upsize, you might want to consider selling your home this fall and ensure you close before Christmas so that you can avoid this additional tax which will most likely kick in January 2024.
This also means that those who live in houses over $3 million will most likely stay put after Jan. 2024 further restricting our housing inventory.
Here is an example to show you how much you will pay with this additional tax:
| Property value | LTT until Dec. 31, 2023 | LTT after Jan. 1st, 2024 | Increase Tax Owed |
|---|---|---|---|
| $3,500,000 | $147,950 | $152,950 | $5,000 |
| $4,500,000 | $197,950 | $217,950 | $20,000 |
| $5,500,000 | $247,950 | $292,950 | $45,000 |
Contact us: 416.509.3286 or Davelle@BosleyRealEstate.com
