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Real Estate

Real estate investment comes with responsibilities

Real estate may be the vehicle of choice for some investors, but property ownership does bring obligations — including tax considerations, Toronto real estate lawyer Andrew Fortis tells Canadian Lawyer magazine.

“It’s all great and wonderful to buy real estate, but don’t forget, you still have the land transfer tax going in,” Fortis, partner with Hummingbird Lawyers LLP, says in the article.

As Canadian Lawyer explains, Ontario applies a two-per-cent land transfer rate to homes valued at $400,000 or more and recently introduced a rate of 2.5 per cent for properties valued at more than $2 million. The City of Toronto also charges its own land transfer tax as well as a $75 administration charge.

A foreign buyers' tax was also introduced in B.C. last summer and in Ontario earlier this year, in an attempt to cool down those markets, says the article.

In addition, although there is an old phrase that says you buy land because they’re not making any more of it — which means it will always hold value — Fortis adds that people don’t usually purchase property on their own, but require financing, so there is always a risk.

“The bank is your involuntary partner; unless you’re in a cash position, you have no choice,” he says.

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