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The Proposed Income Trust Taxation – Impact to Canada and Investors Around the World

Oct 28

Posted by admin in Investing, Taxes

On October 31, 2006, the Canadian government gave a rather nasty surprise to the market by imposing a new tax on income trusts. Existing trust will be taxed starting from 2011, for new one the effective date is as early as 2007.

The Toronto stock exchange dropped 2.6% and the S&P/TSX Income Trust Index plunged 12%.

What is Income Trust?

It is an entity that is required by law to distribute almost all its income to shareholders as dividends. Because of this the entity pays almost no income tax to the government. This tax-efficient structure is becoming more and more popular in Canada, at the expense of the government (decreasing tax revenue).

REIT, a product popular to retail investors, is a major form of income trusts.

Immediate impact

  • Energy and Telecom among biggest hit: Many of the biggest income trusts are in the energy mining sector (e.g. Canada Oil Sand Trust. Penn West Energy Trust). For the telecommunications sector, stock price of two big trust-conversion candidates, Telus and BCE, had double digit drop leading to an overall 9% drop in the telecom subindex.
  • Foreign investors may be scared away: As income trusts are very popular among foreign investors, the surprise announcement may trigger an exodus of capital away from Canada. This will affect both the stock market and foreign exchange. (CAD/USD dropped >1% yesterday).
  • Bank/insurance sector benefits: Investors will likely reshuffle the capital towards banks and insurance companies, which give relatively high dividends and do not usually have trust structure.

Long-term impact

  • Only slightly negative to investors: Apparently the Canadian government is closing a loophole as the Australians have done in the 1980s. While losing the tax-free advantage, the income trust companies are not worse off than their non-trust counterparts.

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Home Inspections… Just Another Expense?

Oct 9

Posted by admin in Real Estate

Congratulations! You\’ve found the perfect home, and now it\’s time to do the offer and close the deal. If you?re like many people, you may be feeling a cash crunch by this time. You may be wondering why you would want to incur yet another expenditure, such as a home inspection. A valid consideration!

In my experience, a home inspection can do two important things.

Firstly, you will have an unbiased, professional opinion of the overall condition of the home, and an understanding of any areas of concern. You can be made aware of hidden or unrecognizable defects or potential problems in the home.

Secondly and equally important, is the opportunity to have a thorough explanation of how to operate and maintain the home. The inspector can give you a wealth of information about the different types of systems and components in the home. He or she will also cover how each system works, life expectancies, current conditions, and advice that will help you to move in and live more successfully in your new home.

As a purchaser, you can use the inspection as a seminar in home ownership.

10 Tips for Best Value:

Here are some tips on how to get the maximum out of your home inspection:

1. Recognize that from a structural or mechanical point of view there are few, if any, perfect houses. Don\’t be disappointed if the inspector indicates numerous items in the house that are in need of repair, maintenance or monitoring. Most of these items will likely be minor in nature. Only a small percentage of homes have significant structural or mechanical deficiencies.

2. Ask questions. If you\’re not sure – stop the inspector and ask. Inquire about timing for suggested repairs. Should they be done immediately, or can they wait a month, or a year? This will help you determine your budget more accurately.

3. Ask for possible solutions for any areas that need repair. There\’s usually more than one way to make a repair. The more options you have, the better the choices you can make for yourself.

4. A pre-purchase inspection can be used to view the house more objectively. And this can assist you in being more comfortable with your purchase.

5. Realize that the age of the home may have an impact on the condition of the systems and components. However, \”older\” does not necessarily mean problematic. Many older materials and workmanship are of high quality, and have longer life expectancies than their modern replacements.

6. Do your research and choose an inspection company wisely. Not all companies offer the same services and levels of professionalism.

7. Look for someone who is a professional home inspector. Even an architect or an engineer is not automatically a good home inspector.

8. Inquire about the level of experience of the individual inspector. Finding the symptoms and clues of problems, and deducing their meaning can\’t be learned by building new homes, or doing renovations. On-site practical experience is proven to be the best preparation for inspecting resale homes.

9. Look for an inspector or company you feel comfortable with, in terms of their ability to communicate with you. An inspector should be able to empathize with your individual situation – otherwise you may lose a valuable opportunity to learn the most about your new home.

10, Finally, if you can hold that any problems or defects are not something \”terribly wrong\” with the property and look at them simply from \”how much will it cost, in terms of time or money? to correct things – then you\’ll have a better, and more objective understanding of the true nature of the situation.

The Bottom Line:

A pre-purchase home inspection won\’t eliminate all the risk associated with home ownership. It can however, be a value-added, information gathering process that gives you a better understanding of your new home.

Gil Strachan is a professional home inspector, representing Electrospec Home Inspection Services in east-central Ontario, Canada since 1994. Visit http://www.allaroundthehouse.com to learn more about home inspections.

Writen By : Gil Strachan

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Citrus County Real Estate

Jun 29

Posted by admin in Real Estate

County Real Estate

Real estate is the legal term encompassing land with something attached to the land like buildings, particularly property. These are immobile or fixed properties. It is the common jargon used in several jurisdictions such as Australia, Canada, United Kingdom and the United States.

In the US, a county is the local level of government below the federal territory or state. In most Northeastern and Midwestern states, a county is subdivided into town or townships. It can consist of independent and self-governing municipalities. The place of a county’s court and administration is also known as the county seat. Orange County is famous for its tourism and home of attractions such as Knott’s Berry Farm and Disneyland.

Tips on Becoming a Real Estate Agent

Make sure that you are self-possessed individual, patient and hardworking. It is a good idea to have persuasion skills and good communication skills before you choose this filed of work. You may consider taking up personal development or a communication course to bring your skills up.

Collect information about sanctioned real estate institutions which offer various courses by interacting with the Real State Association functioning in your area or the Professional Licensing Commission of your state.

Enroll in a full-fledged or small course and take the written exam essential to evaluate your familiarity with the laws of trading real estate. You need to be a high school graduate and at least 18 years old.

Allow the Real Estate Licensing Commission of your area to conduct a background investigation procedure according to the law. It is essential because of the huge confidential information and the amount of money involved in the deal.

Work with a real estate broker for about 2 to 5 years and gain effectual experience before setting up individual practice. Learn and observe the tricks of the trade.

Read the rest of this entry »

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The Rent Apartments Business In Mississauga And Their relationship With The Mortgages

Apr 8

Posted by admin in Credit

What points you must consider when choosing a mortgage to get into this business?

The elements to get a mortgage are analyzed in this document, in order to get a better understanding of them.

The amount to be lend.

Banks usually granted without additional guarantees, up to 80% of the appraised value of the property. If with your current savings, you reach the 20% left, you are in the profile that banks consider affordable, otherwise you will need very high mortgage rates or additional guarantees.

The mortgage interest rates.

The banks rates are divided most of the times in 3 different groups: variable, fixed and mixed. With the variable rates one of the benefits is that when the rates are low you will pay a cheaper fee, but in the same way when rates are high you will pay more. The fixed rates most of the times are more expensive than the previous ones, but this will give you the confidence to pay the same amount of money all the time. The mixed rates usually will be fixed in the first two to five years of the loan and after that time there will change to a variable interest rate.

The amortization of the mortgage.

The increase of interest over time comes when you chose longer repayment periods (as you can imagine the rise of the final mortgage amount grows as well), nevertheless on the contrary if you chose a shorter repayment period of time the interest will be less since the main amount is returning to the original lender faster (furthermore the total cost of the mortgage decreases); from this perspective a higher quota has to be expected since more capital is amortized in less time.

Other related products

Some banks offer other products that can improve the general conditions of your mortgage; this products are credit cards, insurance (multi-risk and life); do not forget to ask for the cost of each one of these products and compare them with other similar opportunities in the market because some times they add extra expenses to the package and the benefits are not easy to see.

The bank part: commissions.

Commissions are like any other factor in business, negotiable, because some banks can charge more than others, remember that there are just five types of commissions. Opening and study, partial redemption, cancellation, subrogation (change of entity) and modification (novation in financial terms), always try to negotiate this commissions because many people I know have had some commissions reduced to zero.

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How to Become a Real Estate Agent in Canada

Feb 25

Posted by admin in Finance, Real Estate

To become a real estate agent, one must be at least eighteen years of age and have a Canadian High School Diploma or equivalent, and speak English. Each province in Canada is responsible for licensing real estate representatives in that province. However, there is a three-step process common to most, with a Board exam unique to each province. British Columbia will not grant a license to anyone with summary convictions until two years after restitution is made. Quebec will not issue a license to someone with a criminal offense in the prior five years. Check with your province of residence for specific local requirements. They can be found in most cases under the provincial Real Estate Commission or Council.

The first step is to complete the requirements for the Initial License. This must be completed within eighteen months. The program is available by correspondence or on-line. Phase one covers the benefits and limitations of a career in real estate, an outline of the requirements for registration as a real estate representative, an overview of the mathematic skills needed, and an indication of the specialties and career options. Phase two introduces the technical aspects of the profession and covers the statutory laws, rules and regulations governing transactions in real estate. Phase three gives a choice of two aspects of real estate; Residential and Industrial Commercial Investment (ICI).

The residential course is completed during eighty hours of classroom time. Practical aspects of real estate are presented through workshops covering the topics of acquiring listings, marketing, qualifying buyers, preparing and presenting offers. The ICI course requires eighty hours of classroom time. A wide variety of workshops cover topics including office, retail, industrial, multi-unit and vacant land practices.

The next step in becoming licensed is to complete a two-year articling period with a licensed broker. During these two years, one must complete three additional courses. Real Property Law is a mandatory course, with optional courses including Principals of Appraisal, Principals of Mortgage Finance, Principals of Property Management, or Real Estate Investment Analysis. There is also a mandatory Phase 3 course. One may renew a license after completing the articling stage and completing these courses.

To maintain a license, one must complete twenty-four hours of Mandatory Continuing Education (MCE) every two years. Other opportunities to advance one’s career are available in Continuing Education Units (CEU). CEU courses offered include: Agency courses, Practical Approach to Agency, Agency for Profit, Agency for Practice, Dealing with Purchaser Agency in the Agreement of Purchase and Sale, Disclosure of the Real Estate Profession, The Broker’s Toolkit: Standards and Compliance, Conflict Resolution Skills, Valuing Diversity; Increase Profits with Multi-cultural Clients, Housing Technology, and Technology for Profit.

If one wishes to become designated in a specialty, the Real Estate Institute of Canada offers several professional certification programs. These include certifications for property management, condominium management, appraisal specialist, and land planning and development.

Real Estate is a large and varied profession with many opportunities for specialization and advancement.

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An Amazing Investment Opportunity North Of The Border?

Jan 7

Posted by admin in Stocks Mutual Funds

As my articles typically contain equities that both manufacture and obtain most of their earnings in the United States, by some careful examination, I have found an amazing investing opportunity north of the border that is too lucrative to pass up. By purchasing shares of this company, not only will you, as an investor, expect to receive long term growth appreciation to your capital, but solid short term returns as well.

To continue the suspense a little longer, it is clear that investment banks typically perform at amazing levels relative to any other sector for reasons obvious to many. Since they are the master chiefs who deal with IPOs, earning predictions, and overall high information which affect all the markets on a day-to-day basis, it should be expected that investing in a bank, regardless the price, is already an excellent investment. However, when looking at American based banks such as Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, and Bear Stearns, only Bear Stearns have accumulated the same amount of capital gains, percentage wise, when compared to banks situated in Canada. While looking at these Canadian based banks such as Canadian Imperial Bank of Commerce (CM), Toronto Dominion (TD), Royal Bank of Canada (RY), and Bank of Nova Scotia (BNS), each one of these firms have had close to 150% growth in terms of share price over the past five years.

Now you may ask if there is a difference between purchasing one stock over the other to obtain maximum gains. The answer to the question is more than likely no. To be honest each one has very similar fundamentals, and the process of choosing which one to purchase should rely on previous knowledge, preferences, or other information that can be valuable to the inclination of the share price. In terms of what I would purchase can be attributed to Canadian Imperial Bank of Commerce. I choose such a firm, not because it has significant advantages over TD or the Bank of Nova Scotia, but because of more nitpicky details. For example, while most all of the other banks have a P/E ratio in the 10-20 range, looking at CM, the P/E is at an amazing rate of only 1.47. There are not many other stocks in the market where you can find such a ratio in any industry. Thus, what this low ratio means is that CM constantly produces earnings at such a high number that it becomes undervalued in terms of share price of what it actually should be. When this happens, there is a strong possibility that this stock will skyrocket to become close to its estimated real value. In addition to that, CM supports pretty solid earnings as all banks typically do with a strong margin percentage growth from last year to now. While many analysts have labeled this stock as a sell more than a buy, I believe that?s because the stock is near its record high. However, if technical analysis does not fail us, then the upward trend that has been experienced throughout CM?s tenure should continue to provide optimistic results and a strong opportunity for strong capital gains.

Ergo, while picking any of these Canadian banking stocks will yield excellent results, even compared to their American equivalents, I believe that the best of the best can be attributed to Canadian Imperial Bank of Commerce. Even if there is a slowdown in the share price growth over the next few months as the American economy goes into recession, that does not mean the Canadian economy will go through one of the same magnitude if any at all, and thus such evidence provides even more beneficial optimism to purchase any one of these stocks north of the border. Purchasing shares of CM, TD, or other Canadian banking stocks may not yield tremendous capital gains right away, but come another five years, you should definitely expect to see a wonderful rise in terms of share price.

Dennis Biray presents advice on all kinds of topics ranging from finance and investing to fitness to sports. For more information email him at dbiray@gmail.com, or to view other articles written by him visit http://www.biraynetworks.co.nr

Writen By : Dennis Biray

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The Proposed Income Trust Taxation — Impact To Canada And Investors Around The World

Jan 2

Posted by admin in Taxes

Writen By : Y. Ng

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