Jan 30
Is this the year you stop paying rent and start paying yourself? If you’re considering buying your first home in 2012, you should make sure that you join me on February 15th (Langford) or February 16th (Sooke) for a free and informative interactive seminar – Buying Your First Home. Read more
Snow in the Otter Point area of Sooke
All this snowy weather got me to thinking – just because we live in one of the mildest climates in Canada, doesn’t make us immune from freezing temperatures every now and again. Where I live in the Otter Point area of Sooke, we have a well. We’re also several hundred metres above sea level and the temperature tends to be a few degrees cooler than in the village of Sooke. When I bought the house, the former owner told me that the well head had frozen and that she had installed a very simple system to prevent it in the future. Read more
It’s the end of the first week of January, and by now you should have received your 2012 BC Assessment notice in the mail, or checked online to see what the provincial assessment authority values your property at. Most people simply open it, read it, and file it away with their other house documents. It makes great water-cooler banter, as colleagues ask “what was yours assessed at?” and “did yours go up or down?” But what if you disagree with your assessment? Read more
First, the easy part: your 2011 property taxes are due July 4, 2011. If your property is in the District of Sooke, you can pay in myriad different ways. There is a drop box for your cheque at municipal hall, or you can visit and pay in person. You can pay in person or online with most banks, or you can mail a cheque. If your property is in the Juan de Fuca Electoral Area (Otter Point, Shirley, Jordan River, Port Renfrew, or parts of East Sooke), your taxes are payable to the provincial Minister of Finance and can be paid in person at a Service BC office, dropped off at the Surveyor of Taxes in Victoria, or online or in person at most financial institutions.
Many home owners will have their taxes paid automatically by their mortgage lender. Lenders will estimate your taxes owing and you’ll pay, along with your mortgage payment, into a side account from which the taxes are paid every year. Lenders do this because they want to be sure the taxes are paid – property tax debt takes priority before mortgages should the borrower default!
However, even if your lender pays the taxes, you’ll want to apply for the Home Owner Grant. The Home Owner Grant is a yearly grant from the provincial government to help offset your property taxes. If you qualify, that’s $570 off your property taxes! You’re eligible for the grant if :
Most property owners in Sooke will qualify as long as it is their principal residence. The grant is less for properties over $1.15M in assessed value. There is also an additional grant for seniors and other groups.
The thing that confuses people the most is the timing of your taxes. Even though you pay your taxes on or about July 2 of every year, you’re paying for that whole calendar year (ie, January 1, 2011 to December 31, 2011, not July 2, 2011 to July 2, 2012). Where this can come up is when you sell your house. People sometimes assume that if they sell their home in the spring, they’ve already paid their property taxes. Not true, because they haven’t been levied yet. When you sell your home, no matter what time of year, your lawyer or notary will have to adjust for the taxes on the statement of adjustments at closing.
For example, If you sold your home and it closed on March 31, 2011, the adjustment would be negative (a debit) to compensate the buyer for the time you occupied the house in 2011 (90 days) – since they will be responsible for paying the property taxes in July. If you sold your home and it closed on August 1, 2011, you would have already paid the taxes, so the adjustment would be positive (a credit) with the buyer compensating you for the time the buyer enjoys the house in 2011 (152 days).
Where does your tax money go? In the District of Sooke, it is interesting to note that only 42% of your tax bill funds municipal services directly. The rest is paid on your behalf to other taxing authorities, including BC Transit, Vancouver Island Health Authority, the Capital Regional District, schools, hospitals, and fire and police service. In the Juan de Fuca Electoral area, it depends on which unincorporated community you live in.
Some other Sooke property tax tidbits:
Here’s a question from a reader of the blog:
New homes in British Columbia are subject to the HST of 12%. However, to lessen the impact, there is also a rebate from the Provincial government on a sliding scale, depending on the price of the house. The impact is that you never pay 12% HST on the purchase of your new home. Embedded below is a spreadsheet of the actual amount payable.
That'll buff right out.
In Part 1, I went over how to pursue an offer on a foreclosure or court ordered sale. In Part 2, I detailed how things go down in court. In this post, I’ll go through the ups and downs of closing on a foreclosure and taking possession of the property.
Once the offer has been approved by the court, the petitioner (the bank/lender/mortgagee) submits to the court a draft court order which contains all of the instructions needed to close the sale, such as the purchaser’s full name, the closing date, the order in which financial obligations will be paid off, and so on. The master or judge will approve the draft order and this will be registered at the Court Registry. From this point it is really not that difference from a regular transaction. The buyer retains a lawyer or notary to complete the sale. Funds from the buyer’s lender are sent to the buyer’s lawyer on completion day and transferred to the petitioner’s lawyer and clear title is registered in the buyer’s name.
In part one, I outlined how offering on a foreclosure is different than offering on a regular listing. Now, the lender has accepted your offer and will apply to court to have the sale approved. Again, the court’s role in all this is to ensure that the borrower who is being foreclosed upon has his or her rights protected, and that the lender isn’t simply trying to fire-sale the property to get it off their books. The court will want to see that the offer on the table is the best possible outcome for all involved, especially the borrower.
Depending on location, you’ll have to wait anywhere from 2-4 weeks for a court date (here in the Victoria area, it tends to be about 10 – 14 days). Foreclosure sale applications are heard in Chambers at the Supreme Court of British Columbia. What this means is that there is no jury, and there are no witnesses to give evidence. Instead, evidence is presented in affidavits, sworn and registered with the court before the court date, and is heard by a Master, most usually.
Jan 8
Ah, January – A time to start anew. Maybe you’ve resolved to save more money, start eating healthier, or take up a new hobby. New Year’s resolutions are one thing many people dread this time of year. Another sure sign of the new year is your yearly B.C. Assessment notice, arriving in your mailbox the first week of January.
B.C. Assessment is the provincial crown corporation charged with valuing all the real property in the province, for the purposes of completing an assessment roll, which in turn your municipal government uses to calculate your property tax bill, due in July.
What does your B.C. Assessment value mean? Well, BCA says that it is supposed to represent your property’s market value, that is, the amount at which it would likely sell for given an arms-length transaction and reasonable exposure to the market, as of July 1 of the previous year. In actual practice, this is probably not accurate. Historically, you’d find that B.C. Assessment values were quite a bit below the actual market values, but I’ve noticed in recent years that they’ve been increasing to a more true-to-market level.
This year, in Sooke, I’m hearing from clients and colleagues that values have increased, some dramatically (including mine). But I’m not worried too much about increased taxes. Just because your B.C. Assessment value goes up, does not necessarily translate to increased taxes.
The question of whether your taxes will go up or down is up to your municipality. Each April or so, the municipality finalizes its budget. They take the amount of money (which also includes levies from other jurisdictions that your municipality pays on your behalf (ambulance, school, CRD, Transit, recycling, etc) and then divide it into the total assessed value of all properties in the municipality (which they get from B.C. Assessement). This gives them the mill rate, which is expressed in dollars per thousand dollars of assessed value.
Let’s take an example. Whoville’s staff and council have calculated a total tax bill of $2M. The total assessed value of all properties in Whoville is $320M (as per Seussland Assessment, of course!)
$2M/$320M = $0.00625 (per dollar) x 1000 = $6.25 per $1000 of assessed value.
Cindy-lou Who’s house is assessed at $200,000, therefore she pays 6.25×200 = $1250 in taxes this year.
Now, when you get your assessment in the mail, you’ll want to pull it up online at BC Assessment’s website and compare it to similar houses on your street. If you find your assessment to be out of line with your neighbour’s whose home is similar to yours in age and size and condition, then this might be a case to dispute it. It’s only when your property assessment is proportionally different, ie, much higher or lower than similar properties, that your taxes will increase or decrease more than the normal annual increase.
It’s also important to note that when you hear in the news “Sooke taxes to be up 5% this year” That is often only the municipal portion. This doesn’t necessarily mean your WHOLE tax bill will go up that much. For example, a couple years ago, they said Sooke’s taxes were going up 20% , but Sooke’s portion of my taxes was the smallest portion of the tax bill. The total increase was about $50.
As for assessed values vs home prices? They often have very little to do with market value. Assessed values are supposed to reflect market value as of July 1st of the previous year, but BC assessment doesn’t physically visit each home in the province. They use sales data, municipal building permit records (an addition, for example would add value to your home) and computer models to adjust the assessment rolls each year. I’ve seen houses sold for far under their assessed values, and far over. There is certainly no “rule-of-thumb” percentage above assessed value that you should ask for your home. Any REALTOR® that tells you that is either lazy, unskilled, or both.
If you have any questions, contact me, or put them in the comments below!
Happy New Year!
-Tim Ayres – Sooke Real Estate Professional
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Nov 21
Everyone is curious when they see “Court Ordered Sale” or “Foreclosure” in a listing they find while browsing homes. In this new series, I will take you through the foreclosure sale process in British Columbia, and hope to demystify it and to dispel some of the common myths about foreclosure. I was inspired to write this series because currently, I have 2 foreclosure listings in Sooke, and a good deal of time is spent explaining the process to prospective buyers. Buying a foreclosure listing is not as simple as buying any other house, and there are many pitfalls to avoid and processes to follow if you want to be successful. I won’t get into the details of how the foreclosure process happens and the legal steps necessary before a court can order the property sold. Instead, I’ll pick it up where it becomes relevant to buyers – when the listing hits the MLS® system and the sale process begins.
Not necessarily. Remember, this is a court-ordered sale in most cases. The court is involved to make sure that the home owner’s rights are protected, and that he or she is not taken advantage of by the lender and the prospective buyer. The court decides if the terms of the purchase contract are reasonable and fair. For example, let’s imagine a home owner who has fallen on hard times. His home is in good condition, worth about $300,000, and he only owes $100,000 on his mortgage. He stops making payments, and through a long process, the lender finally gets authority to sell the property. It is unlikely that a judge (called the Master in foreclosure proceedings) will approve a sale for, say, $125,000 because clearly, the bank is trying to dump the property and leave money on the table that could go to the buyer.
The important thing to remember about foreclosures is that they are market-value transactions, in most cases. If a foreclosure is listed at a bargain-basement price, chances are it’s for a good reason, needing repair or maintenance. Also, at court, anyone can show up with an offer on the property, so sometimes an auction-like situation is created at court. More on this in a later post, though.
When you offer on a regular listing, typically, your REALTOR® will insert several clauses in the offer to purchase that allow you to do your due diligence on the property – inspection, approval for financing, research on the title, etc. When you offer on a foreclosure, in most cases, you’ll need to have your ducks in a row ahead of time – you must write an offer subject only to court approval. This means spending money on an inspection, appraisal if necessary, and getting your bank to approve the financing of the property, all before you have a contract in place. This represents a little bit more risk than a typical sale, because somebody else could offer on it or show up in court after your offer is accepted.
So, your REALTOR® prepares the offer, and it is submitted to the lender for consideration. A typical back-and-forth negotation will likely occur, and once consensus is reached, the lender’s lawyer will set a court date for the offer to be approved (typically, 2-3 weeks from acceptance of your offer). I’ll talk about the court process in the next post.
If you have any questions about foreclosures in BC, contact me and I’ll be glad to try to answer!
-Tim Ayres – Sooke Real Estate Professional
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