What's in the news
What's in the news
Headline:
National Bank of Canada pulled its portability option last summer but news of it just hit the market last week.
The backlash was swift and intense, given that the bank made no formal public communication of the change. Portability is a mortgage feature that allows customers to transfer their existing mortgage to a newly purchased property, allowing them keep the low interest rates they secured before the recent surge in borrowing costs.
This can be appealing to borrowers with a low interest rate, especially in a rising-rate environment, as it allows them to keep their pre-exisitng rate and term. It’s also a way to avoid breaking the existing mortgage, which could result in a prepayment penalty.
Mortgage Feature matters
The new anti-filipping tax, what you need to know.
Effective January 2023, if you plan to flip a home you've owned for less than 1 year, expect to be on the hook for taxes on the full value of your profits; the Principal Residence Exemption will no longer apply.
In addition to an upcoming ban on foreign buyers and a vacant home tax in the city of Toronto, the federal government is cracking down on house flipping. On August 9, 2022, draft legislation introduced the government’s new anti-flipping rules to take effect in January 2023.
Flipping has been defined in government documents as “purchasing real estate with the intention of reselling the property in a short period of time to realize a profit.”
The government’s intent behind the new legislation which is commonly referred to as an “anti-flipping tax” is another measure to reduce speculative demand and help to cool the excessive price growth we’ve seen in the past few years.
The Bottom Line: Make sure you speak to a professional accountant if this situation may apply to you.
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