Find out more about the federal income tax credit for weekly or longer duration public transit passes and electronic payment cards, and how the Government of Canada is encouraging the use of public transit to reduce air pollution and greenhouse gas emissions. http://www.transitpass.ca/about_e.asp

What is the tax credit for public transit?
On July 1, 2006, the Government of Canada launched its program to offer individual Canadians a non-refundable tax credit to help cover the cost of public transit. Because it is a non-refundable tax credit, anyone who applies does not receive the money in the form of a refund. Instead, the amount claimed is multiplied by the lowest personal income tax rate for the year (15% for 2007, 2008) and then is deducted from the amount of tax owed for that year. Visit the Canada Revenue Agency Web site for additional information about how to qualify and claim the public transit amount.
What does the tax credit for public transit mean for me?
If your monthly transit pass costs $100, the amount you can claim in 2008 would be $1,200, resulting in a tax credit of $180.00 (twelve months multiplied by 15%).
You will be eligible to claim amounts you have paid for travel that occurs during the 2008 calendar year, but you must have proof of purchase. At a minimum you need to keep your expired public transit passes and receipts for electronic payment cards to support your claim. Visit the Canada Revenue Agency Web site for additional information about how to qualify and claim the tax credit for public transit.
Who’s managing this tax credit for public transit?
The tax credit for public transit is being administered by the Canada Revenue Agency. If you would like more information on how to claim your tax credit, visit the Canada Revenue Agency Web site.
Why is the government giving a tax credit for public transit?
Canadians are concerned about traffic congestion and the harmful greenhouse gas emissions that come with it. Increasing the use of public transit, including buses, subways, commuter trains and ferries, will help ease traffic congestion in our urban areas and reduce air pollution that dirties our air and affects our health. The tax credit for public transit makes public transit more affordable for Canadians and provides clean air in our communities.
Encouraging greater use of public transit is one element of the Government of Canada’s environmental agenda to reduce greenhouse gas emissions and promote clean air.

The federal government will make it tougher for many homebuyers to get mortgages this year as it grapples with an overheated property market, according to analysts in a Reuters poll, who also ruled out the prospect that prices could suddenly crash.
Ten of 14 economists and strategists surveyed last week in Reuters’ first poll on the Canadian housing sector answered “yes” when asked if they thought Ottawa would tighten mortgage rules within the next 12 months.
They expect home prices to climb just 0.1 per cent in the year to December 2012, and the same in 2013. That is down from a 0.9-per-cent year-on-year increase in December 2011.
If Finance Minister Jim Flaherty tightens requirements for government-backed insured mortgages it would be his fourth intervention in the real estate market since 2008.
Flaherty could raise the minimum down-payment to buy a home from the current 5 per cent or reduce the maximum amortization period from 30 years.
Any move would likely come before the prime spring real estate season, analysts said. “Sometime between now and the next budget,” said Benoit Durocher, senior economist at Desjardins in Montreal, on the timing of such a move.
The federal budget is expected in late March.
The poll respondents see the housing market as moderately overvalued, particularly in Toronto and Vancouver.
“There is some genuine concern that the housing market and households have been overstretched,” said Mazen Issa, economist at TD Securities.
“But in the absence of several triggers for a housing market decline, which are not likely to be forthcoming until at least the middle of next year, the underlying theme is of gradual moderation,” he said.
Possible triggers would be a rise in mortgage rates or a sharp rise in unemployment.
Canada’s robust housing market helped pull the economy out of the 2008 recession. Prices dipped briefly during the downturn, but quickly resumed the climb that characterized the previous decade.
But that effervescence is now a headache for policy-makers, as historically low interest rates tempt more and more people to take out mortgages for increasingly unaffordable homes.
Household debt levels are approaching those in the United States before the 2008-09 housing meltdown there. Canada’s debt-to-income ratio hit a record 153 per cent last year and is expected to rise.
The Bank of Canada, which has fanned the flames by holding its benchmark lending rate at 1 per cent for an unprecedented 17 months, has made it clear that rates are likely to stay unchanged for at least this year.
Of the nine forecasters who answered a question on how far prices would fall before stabilizing, the median decline was 5 per cent, with four predicting price stabilizing beyond 2013.
The economists see a moderation in housing starts to 190,000 units in the first quarter of 2012 compared with a seasonally-adjusted annualized rate of 197,900 units in January. Housing starts should ease to 181,000 by the second quarter.
Analysts said housing prices have strayed from fundamentals but not in an extreme way, placing them as a “seven” on a scale of one to 10, with five being fairly valued and 10 being extremely overvalued.
But the national average is skewed by extremes in Toronto and Vancouver, where foreign investment has helped push up prices. Excluding these centres, Durocher rated prices as a “five” on the scale.
Doug Porter, deputy chief economist at BMO Capital Markets, agreed. “I would say aside from those two cities, there’s really little evidence whatsoever that the market has got ahead of itself,” Porter said.
“Whatever strength we’ve seen in most cities has simply been the flip side of the decline in borrowing costs. Provided we don’t get hit with an interest rate shock, then I think the market can adjust to a moderate backup in rates over time.”
© Copyright (c) The Vancouver Sun

Read more: http://www.vancouversun.com/business/will+tougher+mortgage+future+survey+economists+predicts/6189269/story.html#ixzz1nbWpsB5S

Analysis suggests Canadians becoming hesitant to take on debt

The latest report of non-mortgage debt in Canada by TransUnion credit shows average credit up 1.4% in th quarter to $25,960.

In the most recently reported data from Statistics Canada, households now carry about 153 per cent more in debt than their annual disposable income, with about 70 per cent of that being mortgage debt.

TransUnion also reports in the past year

– Auto loans up 9.7%

– credit card debt increase in 4th quarter down 1.5%

– Lines of credit up 1.1%

– delinquency levels remain low

Thanks to our friends at Spagnuolo and Company for this important information

THE B.C. FIRST-TIME NEW HOME BUYERS’ BONUS
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THE B.C. FIRST-TIME NEW HOME BUYERS’ BONUS
Subject to approval by the legislature, the B.C. government intends to implement a temporary BC First-Time New Home Buyers’ Bonus. Effective February 21, 2012, to March 31, 2013, the bonus is a one-time refundable personal income tax credit worth up to $10,000.
Requirements to Qualify for the Bonus
ELIGIBLE FIRST-TIME NEW HOME BUYER
You will qualify as a first-time new home buyer if:
You purchase or build an eligible new home located in B.C.;
You, or for couples, you and your spouse or common law partner, have never previously owned a primary residence;
You file a 2011 B.C. resident personal income tax return, or if you move to B.C. after December 31, 2011, you file a 2012 B.C. resident personal income tax return (you will not be eligible for the bonus if you move to B.C. after December 31, 2012);
You are eligible for the B.C. HST New Housing Rebate; and
You intend to live in the home as your primary residence.

ELIGIBLE NEW HOME
An eligible new home includes new homes (i.e., newly constructed and substantially renovated homes) that are purchased from a builder and that are owner-built. The bonus will be available in respect of new homes purchased from a builder where:
A written agreement of purchase and sale is entered into on or after February 21, 2012;
HST is payable on the home (e.g., HST will generally be payable if ownership or possession of the home transfers before April 1, 2013 – see further details below); and
No one else has claimed a bonus in respect of the home.

The bonus will be available in respect of owner-built homes where:
A written agreement of purchase and sale in respect of the land and building is entered into on or after February 21, 2012;
Construction of the home is complete, or the home is occupied, before April 1, 2013; and
No one else has claimed a bonus in respect of the home.

A substantially renovated home is one where all or substantially all of the interior of a building has been removed or replaced. Generally, 90% or more of the interior of the house must be renovated to qualify as a substantially renovated home (90% test).
Amount of the Bonus
MAXIMUM AMOUNT
The bonus is equal to 5% of the purchase price of the home (or in the case of owner-built homes, 5% of the land and construction costs subject to HST) to a maximum of $10,000.
PHASE-OUT FOR HIGHER INCOME EARNERS
The bonus will be reduced based on an individual’s/couple’s net income (line 236 of your income tax return) using the following formula:
For single individuals, the bonus is reduced by 20 cents for every dollar in net income over $150,000 (bonus is reduced to zero at $200,000 net income).
For couples, the bonus is reduced by 10 cents for every dollar in family net income over $150,000 (bonus is reduced to zero at $250,000 family net income).

THE B.C. FIRST-TIME NEW HOME BUYERS’ BONUS
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Additional Information
APPLICATION PROCESS
Individuals must apply for the bonus through the B.C. government. Individuals can apply once application forms have been posted on the B.C. Ministry of Finance website later this year. Applicants will be required to submit documentation demonstrating eligibility for the bonus.
ELIGIBLE NEW HOME
The bonus is available in respect of new homes (i.e., newly constructed and substantially renovated homes) where HST is payable. HST will generally be payable on homes purchased from a builder where ownership or possession transfer before April 1, 2013. Potential buyers should consult with the builder to determine if the home will be subject to the HST.
For owner-built homes, the bonus will be based on land and construction costs subject to the HST. Eligible new homes will include:
Detached Houses, semi-detached houses, duplexes and townhouses,
Residential condominium units,
Mobile homes and floating homes, and
Residential units in a cooperative housing corporation.

For More Information
INCOME TAXATION BRANCH
Ministry of Finance
Province of British Columbia
Telephone: (250) 387-3332 or 1 (877) 387-3332
Email: ITBTaxQuestions@gov.bc.ca

To help support workers and communities in B.C. that depend on residential recreational development, purchasers of new secondary vacation or recreational homes outside the Greater Vancouver and Capital regional districts priced up to $850,000 will now be eligible to claim a provincial grant of up to $42,500 effective April 1, 2012.

B.C.’s portion of the HST will no longer apply to newly built homes where construction begins on or after April 1, 2013. Builders will once again pay seven per cent PST on their building materials. On average, about two per cent of the home’s final price will again be embedded PST.
The temporary housing transition measures will be in place for two years, until March 31, 2015. The tax only applies to homes where construction begins before the transition date and ownership and possession occur after.
The temporary housing transition tax and the temporary housing transition rebates will be administered by the Canada Revenue Agency on behalf of B.C. The Province is administering the grant for new secondary vacation and recreational homes.

Canada’s mortgage party has come to an abrupt halt. (MAJOR BANKS CUT BACK WHILE LOWER RATES BY OTHER LENDERS STILL AVAILABLE)
The bonanza of dirt-cheap mortgages offered by some of the country’s biggest lenders in recent weeks has been shut down sooner than expected, as banks pull their offers in the face of higher funding costs and concerns over dwindling profit margins.
On Wednesday, Toronto-Dominion Bank (TD-T79.090.260.33%) pulled discount mortgage rates that were supposed to be available until the end of the month. Royal Bank of Canada (RY-T53.930.350.65%) did the same on Tuesday.
RBC and TD were both offering four-year fixed-rate mortgages with a 30-year-amortization at 2.99 per cent, and had announced plans to keep those rates in place until the end of the month.
The offers were in response to Bank of Montreal (BMO-T58.600.480.83%) offering five-year fixed-rate mortgages over 25 years at 2.99 per cent, which observers said is the lowest in recent memory. Though BMO’s move was a two-week offer that was eventually halted, it led RBC and TD to match the rival bank with extended offers to avoid losing market share.
Hints that an economic recovery is taking hold in the United States are putting upward pressure on rates. A slight increase in bond yields this month has forced RBC and TD to pull their mortgage offers weeks ahead of schedule, an indication of just how slim lending margins are for banks in the current environment. Benchmark five-year Government of Canada bond yields have gone up 17 basis points since the start of February.
“The rates coming down were in response to a very aggressive move by a competitor and a need for us to defend our client base, and to defend our business. We didn’t lead it there, but we felt compelled to follow,” David McKay, group head of Canadian banking at RBC, said in an interview Wednesday.
“When that market attacker corrected and raised their rates, it enabled us to say funding costs are going up, we’re not making enough spread at this rate … and we need to raise pricing because the cost of funds is going up.”
In an improving economy, expectations of inflation taking hold gradually push up bond yields and lending rates. Government of Canada five-year bond yields reached a two-month high of 1.416 per cent on Wednesday.
“Rates can go up and down, depending on conditions. The new rates reflect rising bond yields and the subsequent increase in the cost of funds,” TD spokesman Mohammed Nakhooda said.
In response, TD and RBC both increased their four-year, fixed-rate mortgages to 3.39 per cent, an increase of 40 basis points. BMO has also raised its rates to similar levels.
“We have seen some modest backup in Canadian bond yields in recent weeks, amid growing optimism on the global economic outlook – and in particular an improving U.S. outlook,” said Doug Porter, deputy chief economist at BMO. “In turn, this has put some upward pressure on borrowing costs.”
The banks, which will begin reporting quarterly earnings at the end of the month, aren’t saying whether the deep discounts on mortgages led to a boom in new business. However, anecdotal evidence gathered from inside the mortgage community Wednesday suggested a flurry of activity has taken place since mid-January.
The lower rates came at a time when Ottawa is trying to warn consumers against taking on too much debt, worried that household debt levels across the country are rising too quickly. Sources indicated last week that officials in Ottawa were not happy with the price war the banks were waging on mortgages, since it potentially encouraged people to borrow more.
Frank Techar, head of personal and commercial banking in Canada for BMO. said BMO began offering the 2.99-per-cent rate as a way to promote its 25-year mortgages, rather than 30-year amortizations. “We went to 2.99 per cent to draw attention to the benefits of having a mortgage with a maximum amortization of 25 years,” he said.

http://www.theglobeandmail.com/globe-investor/canadian-banks-call-truce-in-easy-money-mortgage-battle/article2331673/

Government tightens stated income mortgage lending

The Department of Finance tightened lending rules in two sets of changes 2010 and 2011. In a continuing effort to control lending practices, the Office of the Superintendent of Financial Institutions (OFSFI) is increasingly worried about business for self underwriting practices at the country’s big banks. These practices include products targeted at business owners and new immigrants who both may have difficulty showing accurate proof of income. The increased attention and audits by OFSFI has resulted in some banks scaling back or (for the time being) eliminate their current programs.

In the case where a self employed person claims lower net income for tax purposes or where a new immigrant has not established income in Canada – some of the major banks and other lenders would “waive” the income requirement or allow “stated” income with the condition the borrower has good credit and a minimum down payment of 25%-35%. This guideline allowed those with the limited ability to show income to qualify for a mortgage the opportunity to access financing where they might otherwise not qualify based on income.

Earlier this week one major lender stopped access for this program. However, lenders such as TD Bank, Scotia and First National are still offering the program. CIBC also offers this program through the Mortgage Centre brokers only (which is good for me There are also other B side lenders with reasonable rates for these kinds of applications.

So – what will happen moving forward. I think we will continue to see rules tightening. For those people who have a unique situation or need a little special care for financing – talk to your independent mortgage professional to review your specific needs and to understand your options.

Depreciation Report Summary – excerpted from article prepared by Mike Mangan B.A., LL.B.

On December 13, 2011, the provincial government changed several important strata requirements.

The changes mainly concern depreciation reports and contributions to a strata corporation’s contingency reserve fund (CRF). Some changes are immediate, while others come into effect at different times over the next two years. This is a summary of the changes.

Depreciation Reports
A strata corporation’s depreciation report estimates the life expectancy of major items and the ultimate cost of their repair or replacement. Effective December 13, 2011, every strata corporation must periodically obtain a depreciation report, unless otherwise exempted. A strata corporation whose strata plan contains less than five strata lots is excused from this requirement. So too, where a strata corporation by 3/4 vote waives the requirement for a depreciation report, the corporation may defer compliance with this requirement for up to 18 months.

With some exceptions, a strata corporation has two years (in most cases, until December 13, 2013) to obtain the mandatory depreciation report. After that, a strata corporation must update its depreciation report every three years, unless exempted. Only a qualified person may prepare the report, which must involve an onsite inspection. The report must project the anticipated costs of maintenance, repair and replacement of major building components over the next 30 years. The depreciation report must also contain certain information, including a financial forecast that offers at least three cash-flow funding models for the CRF.

Strata Records
Effective December 13, 2011, a strata corporation must keep among its records any depreciation report obtained by the strata corporation. The strata corporation must also keep any reports respecting the repair or maintenance of major items in the strata corporation, including engineers’ reports, risk management reports, sanitation reports and reports respecting any items for which information is mandatory in a depreciation report.

Effective March 1, 2012, whenever a strata corporation issues an Information Certificate (Form B), the corporation must attach to it, among other things, the corporation’s most recent depreciation report.

Funding the CRF
In the past, the Strata Property Act imposed a CRF ceiling. In simple terms, once a strata corporation’s CRF exceeded the amount of the previous year’s operating budget, the law prohibited further CRF contributions, unless the eligible voters by 3/4 vote decided otherwise. Effective December 13, 2011, the CRF cap disappeared. Now, so long as the strata corporation has the statutory minimum amount in its CRF, the corporation may approve further contributions as part of the ordinary budget approval process after considering the depreciation report, if any.

“Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information.