In this very hot market, we are seeing most deals without any conditions, and in particular, no financing condition. However, this is not necessarily a blessing for the Seller. Sales not being completed because of the Buyer cannot get financing. The Seller believes they have a firm Agreement of Purchase and Sale act upon that information to buy a new home. Unfortunately, the Seller finds out when they get close to the closing, that the Buyer cannot close because the price paid for the house is not justified by the bank’s appraisal. The Seller is left in the inevitable position of not being able to complete their purchase.
To make matters worse, there was a multiple offer, and unfortunately the seller selected the perceived best offer, which turned out to be the wrong offer. The offer had only the minimal deposit, so the seller does not have much to fall back on for their damages.
In order for Agents acting for the sellers to protect their clients, the Agents should be making sure that the accepted Agreement of Purchase and Sale have larger deposits. If buyers can not come up with a larger deposit, they probably cannot make up any shortfall in the bank financing either.
If you sold your home in 2016, you will have to report it to the Canadian Revenue Agency in your tax form that deals with Capital Gains, even though any gains remain tax free if you have lived in the house as long as you owned it. The basic information related to the transaction must be filled out on the income tax form including the year of purchase, the proceeds of the sale, and the description of the property. The penalty for not reporting the sale of a home and not having your tax return amended if necessary is up to $8000. This change in reporting will make it easier for the CRA to catch taxpayers who try to claim the principle residence exemption on more than one property for the same period.
Knowledge is Power, which results in more business!
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Prepared by Don Travers, Solicitor with Paquette & Travers
Contact toll free: 1-877-744-2281 Online: www.paquettetravers.com
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