Toronto Real Estate Frequently Asked Questions

How do I know how safe are the different areas of Toronto?

To look at the safety of your neighborhood you can take a look at this webiste http://www.torontopolice.on.ca/statistics/

What do I need to know about building permits?

The toronto.ca homeowner's guide to building permits is a good place to start.

Q:There is knob and tube wiring in the home that we are thinking of buying—what should we do?

A. One option is rewiring, in that case you can get a quote from an electrician ahead of time and know what your cost will be ahead of time, you can do that at the time of the home inspection. Most insurance companies will give you some time after you close to have the home rewired. Another option is to keep the existing Knob and Tube and find an insurance company that will cover you. This may be a little more of a challenge, but as it appears, not to be completely out of the question. The Electrical safety Authority says that knob and tube is permitted to stay if it meets some criteria, please look at the Electrical Safety authority information bulletin 02-03 FL. With the inspection of the Electrical Safety Authority, and their approval on the safety of the wiring, the Insurance Bureau of Canada 416-445-5912 says that there is no reason why you should have problems getting insurance.

Q. What is "knob and tube" wiring?

A. This type of wiring was installed in houses up until about 1950. This system consists of two wires to create a circuit. These two wires are held in place with ceramic knobs and tubes. In modern household wiring, these two wires are bundled together with a ground wire in a single plastic sheathing cable that runs through holes in the structural members and is held in place with clamps. While knob and tube wiring is not inherently dangerous, it is old and its insulation may no longer be intact. Much of this wiring is concealed behind walls, ceilings an insulation where its condition cannot be completely evaluated. for more info see August Beaches HomeWatch.

Q. Can I be denied insurance because of knob and tube wiring?

A. Serious Insurance Coverage issues are affecting older homes! Over the last few months there has been an increased awareness of the hazards of knob and tube wiring in homes. In addition to safety concerns, there are also issues for purchasers of older homes, regarding the obtaining or renewing of home insurance.

The Insurance Bureau of Canada (IBC) advises that, to their knowledge, very few insurance companies in Ontario provide coverage for knob and tube wiring.

Insurance Brokers Association of Ontario (IBAO) indicates that their members are having somewhat increased difficulty finding insurance coverage for these issues, however coverage is still available from more than one "specialty" insurance company.

Carson Dunlop, (a home inspection company - see resource page), has an exclusive relationship with Liberty Mutual to provide insurance coverage for knob and tube wiring, if Carson Dunlop inspects the home. See also the IBAO web site.

For more in-depth info see the August issue of Beaches HomeWatch

Q. Is there cause for concern over galvanized plumbing?

A. Once again, the IBAO indicates that this is an area of concern for many home owners and purchasers and that member brokers are having difficulty finding insurance coverage for these issues. There are specialty insurance companies, however, that will assist under certain conditions. One of these, Genmark, will provide coverage for homes with galvanized plumbing provided there have been no previous plumbing claims, the piping has been inspected and, if necessary, pieces of corroded piping has been replaced. See http://www.amerispec.ca/english/brochures/plumbing.htm

Q. How much are closing costs?

A. Costs to Expect:

Land Transfer Tax Provincial : All buyers of property pay this once and new homes are exempt from this. Budget between 1.5 to 2.0 % of the purchase price.

Land Transfer Tax City of Toronto : Toronto City Council approved a municipal land transfer tax that will be levied on top of the provincial land transfer tax as of February 2008, this is in addition to the Provincial Land Transfer Tax, budget another 1.5 to 2.0 % of the purchase price.

Legal Fees: Your lawyer will charge you on the closing date for registering the mortgage and for acting on the purchase. The fees can often be misunderstood so it's important to ask for the total costs including the disbursements. Budget approx. $1000 - $1500

Home Inspection and Appraisal: These are fees to make sure the house is in fine mechanical and physical condition. The appraisal is to assure you and the bank that the price you have decided to pay for the home is in line with neighbourhood market values. Budget approx. $500

HST on CMHC Mortgages Only (less than 25% down payment): Now that Ontarians are paying tax on insurance's this is applicable on CMHC insurance. 8% of the insurance premium.

Interest, property tax and other adjustments: Based on closing dates and the time of year there are various adjustments made and must be paid by you. Say the current owner has paid up 2 months of property taxes therefore you will have to reimburse them on the closing dates. Budget approx. $500

Is there HST on a Real Estate Purchase ?

The good news it that there is no HST payable on the purchase of a resale home or condo. HST is payable on new construction only.

The taxes that you will have to pay on the actual purchase are the land transfer taxes, but do remember that there is HST on services provided. This means that you will pay HST on the lawyer fees, the moving expenses, the real estate commissions and other services like staging, home inspections, etc.

Q. Who does the Real Estate agent represent, and why is this important?

A. An agent can represent either the buyer or the seller. For a full explanation see my article on agency.

Q. What is title insurance?

A. Most closings proceed smoothly. But every once in a while, an owner encounters a problem and has to make a claim.

Title insurance protects the insured against loss or damage due to title and survey defects. It can eliminate the need for costly searches and satisfies lender requirements.

To learn more, see http://www.titleplus.ca

Q. When is front parking pad permitted?

A. In the City of Toronto, front yard parking may be permitted when the property complies with the permit parking restrictions. For information on those restrictions look at: www.city.toronto.on.ca/transportation/offstreet/index.htm

Q. How do I find the school for the house I am looking at?

A. The easiest way to find out is go to www.tdsb.on.ca/schools/street.asp and then just type the address of the house in questions and you will get the name of the school that your kids will go to if you buy the home.

Q. What is HBP and how does it work?

A. The home buyer's plan (HBP) is a program under which you can generally withdraw up to $20,000 tax free from your retirement savings plan (RRSPs) to buy a qualifying home. Before you can withdraw the funds, you must have entered into a written agreement to buy or build a qualifying home that will be used as a primary residence. To qualify you must be a first time buyer and if you buy a qualifying home with your spouse or other individuals you can withdraw up to $20,000 each as long as the funds are repaid into an RRSP in the future.

For more details give me a call, Cristina (416) 606-HOME (4663), or take a look at the official government site, including printable forms: click http://www.cra-arc.gc.ca/hbp/

Q. How does the Ontario Home Ownership Saving Plan work?

A. By participating in this government program,you will receive interest on the money you deposit into your OHOSP plan and may receive the OHOSP tax credit.

If you earn less than $40,000 (or if you and your spouse have a combined income of less than $80,000), you can benefit from the Ontario Home Ownership Savings Plan. Other eligibility requirements include:

You must be 18 years of age or older; You must be an Ontario resident; You must have a social insurance number; Neither yourself nor your spouse have ever owned an eligible home anywhere, whether or not it was owner-occupied; and You never previously held an OHOSP.

There is no limit to the amount of funds you may deposit in your OHOSP. However, you will only receive OHOSP tax credits on annual contributions of not more than $2,000 individually (or $4,000 per couple). Depending on your annual income and the amount you invest in your OHOSP, you can earn up to $500 individually or $1,000 per couple in OHOSP tax credits. You are eligible for tax credits for five consecutive years. You must close the plan and use the funds to purchase a home by the end of the seventh year.

Otherwise, you must repay your OHOSP tax credits with interest.

Keep in mind that to qualify for a tax credit for the current taxation year, you must open a plan by December 31. A plan can be opened at any participating financial institution across the province. The funds you deposit into your OHOSP will earn interest at competitive rates.

You can only open one OHOSP, but your plan can be transferred from one financial institution to another. Joint OHOSPs are not available, so each spouse must open separate OHOSP accounts.

Eligible Homes Qualifying homes include:

• a detached or semi-detached house
• a townhouse
• a mobile home with a permanent foundation
• a condominium unit
• shares in a co-operative corporation housing unit
• a duplex, triplex or fourplex

Your home must be located in Ontario and be suitable for year-round residential occupancy. In addition, you must live in the home for at least 30 consecutive days within two years of the date of purchase.

Buying a Home

After you sign an Agreement of Purchase and Sale, but approximately four weeks before closing, complete an "OHOSP Home Purchase Declaration" form. This form is provided by the financial institution where you have your OHOSP. Your OHOSP funds will be released to your solicitor who will apply them to your home purchase. If you are not using a solicitor, contact the Ministry of Finance regarding the release of your funds.

Closing an OHOSP Without Buying a Home

If you close your plan without purchasing a home, you are not eligible for an OHOSP tax credit for that year. You will receive 75% of the funds in your plan from your financial institution. The balance of 25% is forwarded to the Ministry of Finance for a tax recovery credit. Any balance owing (with interest) will be returned to you.

OHOSP Tax Credits

OHOSP tax credits are based on your annual net income (line 236 of your income tax form) and your contributions to your plan each year. For couples, only one spouse can claim the OHOSP tax credit. Land Transfer Tax Refund

The Land Transfer Tax (LTT) refund which was a component of the original plan has not been continued. As a result, LTT refunds will only be issued to those who opened a plan before January 1, 1994.

Q. What is UFFI and how does it affect me?

A. UFFI is a retrofit insulation that was used in numerous homes in Canada between 1977-1980, primarily under the incentive of the Canadian Home Insulation Program (CHIP) and was banned due to public perceptions about health risks.

It appears the only problem with UFFI is the lingering public perception and h0w that may depress a property's value. After eight years of litigation, which went all the way to the the Quebec Supreme Court, the judgment rendered by the court, not only did not find in favour of the plaintiffs, but in fact obliged plaintiffs to pay the defendants legal costs.

UFFI is actually a very good insulation! It fell victim to public hysteria fueled by baseless media stories. The only time UFFI was considered to be an irritant was in the days immediately following a poorly done insulation. The concern was formaldehyde gas which could be emitted in above average concentrations an irate those people who had respiratory sensitivities. Today, you can find higher formaldehyde gas readings in a house with newly installed carpet than you would have found in a house with UFFI two weeks after the UFFI was installed.

Suffice it to say, my opinion on UFFI is that there is no concern about it. I would personally have no reservations about living in a home with UFFI and I would strongly suggest that the Real Estate Boards and mortgage lenders drop UFFI clauses or penalties from their paperwork. END OF STORY! Courtesy of: - Tim Purtill http://www.headsuphome.ca

Q. Is aluminum wiring dangerous?

A. Aluminum wiring was installed in homes primarily between 1969 - 1975. its use was discontinued because it is considered to be a higher maintenance electrical system than copper. Since aluminum has a higher expansion coefficient than copper, under peak loads it can "mushroom" under its contact screw. The idea was that after the first year the devices (i.e. plugs, switches) would be removed and the screws would be tightened again to ensure good contact. If this was not done, a homeowner may have noticed that some plugs or lights would flicker or cease to operate. This would be the result of a poor contact causing a "hot spot" which would heat the aluminum wire and cause it to become brittle. Eventually, the wire would break, usually right at the device.

In a house today with aluminum wiring with 25-30 years history behind it, it is safe to say the system has experienced full peak loads. If an inspection uncovers no electrical irregularities, the only advice I would offer is that aluminum wiring may attract slightly higher insurance premiums. Shop around, it is not a universal policy in the insurance industry. If there are electrical irregularities found, the advice would be to consider having an electrician in to do an "electrical tune-up" (+/- $250.00). Courtesy of: - Tim Purtill

Q. How can we find out what the approximate costs of any upgrades we may need to do in our home?

A. The easiest and fastest may be to go to this link to a document prepared by Carson and Dunlop Home Inspection Company which gives a quick reference to 2005 construction costs. You may find it helpfull http://www.carsondunlop.com/

Do I need to notify OHIP when I move?

A. Yes, you need to let them know you are moving. Go to http://www.health.gov.on.ca/ to print the necessary forms or call 416-447-4911