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Taxes Affecting Residential Real Estate Transactions
David H. Korman
March 11, 2019
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Nobody likes paying taxes and everyone likes to minimize any taxes payable. On every residential real estate transaction, whether a purchase, a sale or an assignment, there are various municipal, provincial and federal taxes that might be applicable and must be considered. This is all in addition to the property taxes that are payable to the municipality and must be adjusted for on every transaction.
When we act for Buyers of a residential property we have to consider the applicability of Harmonized Sales Tax, Provincial Land Transfer Tax, Municipal Land Transfer Tax, Income Tax (Section 116 Withholding Tax and RRSP Home Buyers Plan), and Non-Resident Speculation Tax.
When we act for Sellers of a residential property we have to consider the applicability of Harmonized Sales Tax, Income Tax (Section 116 Withholding Tax and Capital Gains).
When we act for Assignors or Assignees on assignments of a residential property we have to consider the applicability of Harmonized Sales Tax, Provincial Land Transfer Tax, Municipal Land Transfer Tax, Income Tax (Section 116 Withholding Tax and Capital Gains).
Even in the most seemingly straight forward residential real estate transaction there are many factors that determine which taxes have to be considered, for example, new build v. resale, jurisdiction of the property, residential v. mixed residential and commercial, number of residential units, citizenship, residency, primary use, parties (personal, corporate, trusts), age, previous ownership, intention of the parties, marital status, etc.
As a result, it is essential to consult with your real estate lawyer to determine which taxes may affect you and your transaction.
David is a member of the Law Society of Ontario since his call to the bar in 1985. David has over 35 years of extensive experience as a lawyer in residential and commercial real estate transactions, commercial leasing, corporate and commercial transactions, and private and institutional lending. His client base includes individuals, business entrepreneurs, developers, financial institutions, brokerages, and real estate investment trusts.
David takes an amiable and dedicated approach to practicing law. His focus is on providing his clients with the highest levels of legal service. Clients love working with David, as he always works hard in their best interests with a smile on his face. David’s sports background and leadership skills are highly influential on the growth and success of Kormans LLP as he truly believes in fostering the Kormans LLP environment as both a family and a team!
When David isn’t closing real estate and corporate transactions, David is an avid runner, hiker and sports enthusiast. However, what David enjoys most is spending quality time with his wife, kids, grandkids and friends at home, at the cottage, and on travels.
David is a frequent blogger, as well as a lecturer and panel member at seminars, webinars and workshops for real estate agents, mortgage brokers and home buyers. Please make sure to catch “David & David on Real Estate” – David’s featured Podcast which can be heard on RadioPublic, Spotify, Breaker, Anchor and Google Podcasts, and can be viewed on the Kormans LLP YouTube channel!
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