Weekly Market Commentary

Commodities surge lifts TSX, global credit concerns resurface

Canada’s S&P/TSX composite index posted its sharpest two-day advance in almost five months this week as a wave of surging commodity prices drove the resource-heavy benchmark 3.6 per cent higher over the final two days of the week ended August 21, 2008.

The week-ending surge, the steepest since March 25, propelled the benchmark 1.4 per cent higher on the week.

The nation’s energy producers led the advance, climbing 6.2 per cent on the week, as crude oil rebounded from a three-month low to close above the US$121 a barrel mark. News of billionaire investor Warren Buffett’s trip this week to Alberta’s oil sands also buoyed the sector... Learn More

This article of intrest was presented By Jocko Toic at the Investors Group. If you would like more one on one information, please feel free to contact him at:

Jocko Toic - Consultant
Investors Group Financial Services
2-2429 Dobbin Rd. Westbank, BC V4T 2L4
Ph. (250) 768-4546 Cell (250) 869-9636
Fax (250) 768-9005 Toll Free (866) 768-4546
Email jocko.toic@investorsgroup.com
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Did You Know?

Did you know that you can refer your friends and family to your mortgage Broker Steven Faux for Residential and Commercial Mortgages in Alberta and BC?

GST Tax on Home Purchases

The goods and Services Tax replaced Federal Sales Tax in 1991. Although the tax is collected at a rate of 5% on the sale price of goods and services, it doesn't apply to every type of home or every form of real estate service. New home purchases are subject to GST but may qualify for a GST rebate. Resale homes are sold exempt from GST.

GST and New Homes

When you buy a newly constructed home, condominium or townhouse, the entire purchase price including land is taxable. If the property is to be rented to tenants, the full 5% GST is charged on the purchase price. However, if the home is going to be your primary place of residence, it may qualify for a partial GST rebate, depending upon the sale price.

For primary residences costing $350,000 or less, you will receive a rebate of 36% of the GST paid, to a maximum of $8,750. That means you pay approximately 4.5% GST (not 7%) on the purchase price.

Example #1

You buy a new home for $200,000. The 5% GST is $10,000, less a 36% rebate of $3,600. So, you pay $6,400 in GST
The maximum rebate is $8,750. The rebate for new homes costing between $350,000 and $450,000 declines to zero on a proportional basis. Here is how it works
For each $1,000 of purchase price above $350,000 the maximum rebate of $8,750 is reduced by 1%
Therefore if your purchase price is $370,000 you are $20,000 over and must reduce the maximum rebate by 20%. As such the maximum rebate of $8,750 reduced by 20% equals $7,000.
For a home priced at $370,000 the GST payable, at 5%, is $18,500
The adjusted maximum rebate is $7,000 so the GST payable is $11,500.
Adjusting the maximum rebate continues until the rebate is reduced by 100%, there is no rebate, which occurs at homes priced at or above $450,000. New homes selling for $450,000 or more do not qualify for a GST rebate.

GST and the Resale Home

You don't have to pay GST on the purchase price of a used residential home. In other words, the purchase is "exempt" from GST.

Revenue Canada defines "used residential property" to include an owner-occupied house, condominium, apartment, summer cottage, vacation property or non-commercial hobby farm. They refer to "used" as residential property that has been occupied as a residence before you bought it.

Used property can also mean a recently built house that is substantially complete and has been sold at least once before you buy it. For example, if a new house is purchased and resold before being occupied, the home's resale price will normally be exempt from GST.

GST and the Real Estate Transaction

GST applies to most of the services provided in completing the real estate transaction. For example 5% GST is applied to the commission a Realtor charges for facilitating a sale. The tax is paid by the person responsible for paying the commission- usually the seller.

Realtor commissions are taxable even if the total GST owed is reduced by a rebate, or the sale of the property is exempt from GST. For example, if you sell a used home, the sale price is exempt from GST but the Realtor's commission is still taxable.

GST applies to many other services involved in the real estate transaction. These include legal fees, appraisals, surveys and legal assistance. Again, GST is charged on these fees regardless of whether the house you purchase is exempt from the tax.

GST and Rent

No GST is payable on residential rents. However, if you employ a Realtor or another professional to find and arrange a tenant for your rental property, GST applies to the fees and commissions they charge for providing this service. GST also applies to the fees charged to the landlord for property management, as well as repair and maintenance services. Monthly fees charged by condominium associations are not subject to GST.

Land Transfer Taxes

Along with the GST there are also other taxes that a purchaser must pay. Included is the Ontario Land Transfer Tax and the BC Property Transfer Tax. These are Provincial taxes levied on the purchase of property.

BC Property Transfer Tax

Property Transfer Tax is a provincial tax that is payable upon the purchase of real estate in British Columbia. The tax is equal to one percent on the first $200,000 in value and two percent on the balance. There currently is an exemption for first time buyers but there are a number of requirements to qualify, including:

(a) Must be the purchase of a principal residence;
(b) The purchaser must be a Canadian citizen or permanent resident of Canada;
(c) The purchaser must have resided in the province of British Columbia for at least one year immediately prior to the application to register the purchase of the principal residence;
(d) The purchaser must not have previously owned an interest in a principal residence anywhere in the world;
(e) The fair market value of the land and improvements must not exceed $275,000 within the Capital Regional District, Greater Vancouver, Central Fraser Valley, Dewdney-Allouette and Fraser Cheam and $225,000 if the property is located elsewhere in the province;
(f) The amount borrowed to finance the purchase, and registered against title, must be 70% or greater of the fair market value; and
(g) The amount borrowed must have a term of at least one year.

These are major requirements which should be reviewed with your realtor, lender or lawyer to ensure that you qualify.

Don't Bring Camels in the Classroom

by Ken Nesbitt

Don’t bring camels in the classroom.
Don’t bring scorpions to school.
Don’t bring rhinos, rats, or reindeer.
Don’t bring mice or moose or mule.

Pull your penguin off the playground.
Put your python in a tree.
Place your platypus wherever
you think platypi should be.

Lose your leopard and your lemur.
Leave your llama and your leech.
Take your tiger, toad, and toucan
anywhere but where they teach.

Send your wombat and your weasel
with your wasp and wolverine.
Hide your hedgehog and hyena
where you’re sure they won’t be seen.

Please get rid of your gorilla.
Please kick out your kangaroo.
No, the teacher didn’t mean it
when she called the class a "zoo."

Steve's Rates

YourMortgages.ca Premium Rates
Mortgage Term	Our Rates	Standard Rates
Variable Rate	4.00%	4.75%
6 Month Closed	5.25%	6.60%
1 Year Closed	4.90%	6.65%
2 Year Closed	5.55%	6.65%
3 Year Closed	5.25%	6.65%
4 Year Closed	5.50%	6.99%
5 Year Closed	5.19%	5.93%
7 Year Closed	5.65%	6.09%
10 Year Closed	6.00%	7.45%
15 Year Closed	6.45%	0.00%
18 Year Closed	6.45%	0.00%
25 Year Closed	6.55%	8.65%

Rates are subject to constant change, for the best rates call 1-866-993-8787.

Resources

Business Supporting Business — Thank You:

Investments
www.thenewwestside.ca

John Ferrier Head Teaching Professional
CPGA Class A
#320 - 1405 Stevens Road, Kelowna, BC.
Tel: 250-769-0339
Email: kelowna@urbanlinks.net

Twice the Fun Games - Al Samson
1783 Ross Road on the Westside
Tel: (250) 769-4346
Fax: (250) 769-4347
www.TwiceTheFunGames.com

Rockworld - Natural and Manufactured Stone , Fireplaces & Stoves, Sales & Installations
Brent Copeland
PH: 250-769-7250

Private Home Sellers
www.privatehomesellers.ca

Friends Supporting Friends — Thank You:

Krystal Beisick
www.krystalbeisick.com

For Investments check out — www.renascencedevelopments.com
Ask for Lisa Thomas lisa@renascencedevelopments.com

A Quote to Note:

“Like the principle of Karma, or the Golden Rule, we create positive business karma, and our clients reward us with their loyalty, their trust, and their business”
Michael Vickers

Contact

At Prolink Mortgage Inc., I have over 30 lending financial mortgage institutions in Canada with Steve Faux sourcing the best rates and the best products to suit your needs!

Direct Line — 250.768.0535

Direct Fax — 250.768.0510

Email — steve@yourmortgages.ca

www.yourmortgages.ca

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