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"Real Estate Bits - 2"

April 2006

Money Matters

Presented By: Nino Pasquariello - Manager - Scotiabank

(416) 932-3885 Ext. #7000

E-Mail: nino.pasquariello@scotiabank.com

Tax Smart Investing Outside Your RSP

• No matter how high the returns from your investments, the real indicator of success is how much is left in your hands after taxes. There are three main types of investment income - interest income, dividends, and capital gains. Each of these is subject to different tax treatment when held outside your registered plan. Depending on your goals, you can plan your investments to maximize your investment success.

Why Invest Outside A Registered Plan?

There are many reasons for building a non-registered portfolio - from the straightforward to the more strategic.

Saving For Short-Term Goals: Maybe you are saving for a down payment on a home, or putting money aside for a vacation. Or perhaps you want to build an emergency fund. In general, the shorter your time frame, the more secure and liquid your investments should be. Term deposits, cashable GICs, high-interest savings accounts, and money market funds are suitable for these goals. Even though the interest you earn on these investments is taxed at your highest rate (see below), the trade-off in terms of security and accessibility can be worth the price

To Complement Retirement Savings: Many investors build non-registered portfolios to complement their registered Retirement Savings Plans (RSPs), especially if they've reached their RSP contribution limit for the year.

At retirement, this approach can help investors keep their retirement plans sheltered from tax for as long as possible. By drawing on non-registered savings to meet immediate income needs, you can leave your RSPs in place for as long as possible.

How Investment Income Is Taxed: When considering investment opportunities, the quality of the investment and its place in your diversified portfolio should always be your main considerations. But tax treatment also plays a role.

Once you have selected the right investments suited to your goals, minimizing taxes is your next step.Education Expenses

Interest Income: Is fully taxable at your marginal tax rate. Bank accounts, term deposits, Guaranteed Investment Certificates (GICs), bonds, and bond funds all may generate interest income.

Dividends: Received from shares of taxable Canadian corporations, and distributions from dividend mutual funds, qualify for the dividend tax credit. These investments are taxed more favourably than interest income.

Capital Gains: Receive the most preferential type of tax treatment. Capital gains are taxed only when they are realized - when a capital asset that has appreciated in value is sold or transferred. Capital assets include equities, mutual fund units, bonds, real estate, and more. Only one-half of the gain is taxable. If you realize a capital gain of $1,000, only $500 will be taxable at your marginal rate.

Tip: Generally, it makes sense to hold interest-bearing investments, such as bonds or GICs, inside your tax-sheltered registered plans, while holding investments that generate capital gains outside your RSP.

Note: If you hold equity mutual funds outside of your registered plans, any capital gains or dividends earned by the fund will be distributed to unitholders - usually at the end of the year. This income is taxable to you.

Tax-Saving Strategies To Explore: There are a number of ways to make the investment-tax rules work in your favour. Consider the following:

Have The Lower Income Spouse Invest: Where two spouses both have earned income, the higher-income earner can pay all household bills and ongoing expenses. This frees up the earnings of the lower-income spouse for investment. The investment income generated should be taxable in the lower-income spouse's hands, at his or her lower tax rate.

Give Your Kids Money To Invest: Under the attribution rules, if you give money to your minor children to invest, any interest and dividends generated will be attributed back to you for tax purposes. Capital gains, however, will be taxable in the child's hands.

Time Taxable Gains: You can choose when to sell or transfer a capital asset and realize the capital gain. If you realize the gain when you're in a low-tax year, you'll pay less tax on it. Investors who take a long-term approach can defer the realization of gains for many years. You might also want to intentionally trigger a capital loss, in order to offset capital gains recognized in the same year.

Tip: When you borrow to invest in an asset that has the potential to generate taxable income, the associated interest expense may be deductible.

Regards,

"Tricks Of The Trade"

"Buyer Documents"

During the process of buying a property in Toronto you'll feel as if you're signing your life away. The days of a hearty handshake and a pat on the back are long gone - but don't worry - your new home will be waiting at the end of the rainbow!

These are some of the documents & brochures you will sign, be given or discuss/update with your Real Estate Agent or Lawyer:

1. Working With A Realtor Brochure.

2. Privacy Brochure.

3. Buyer Representation Agreement.

4. The Agreement of Purchase & Sale (The Offer) - Detailed Clauses.
   - Amendments - If Applicable.
   - Waivers - If Applicable.
   - Mutual Release If A Conditionally
   Negotiated Deal Fails To Come Together As A Firm Agreement.  
    

5. Confirmation of Co-Operation & Representation.

6. Banking Mortgage Pre-Approval.

7. Mortgage Documents With Your Bank.

8. Home Inspection Agreement/Pest Control Agreement/Retrofit.

9. All Legal Documents With Your Lawyer.
   - Any Relevant Information Pertaining To Your Property Taxes.
   - Advice From Your Accountant - Tax Issues.
    

10. Title Insurance Policy - Identity/Mortgage Fraud Protection.

11. Home Insurance Documents & Home Contents Package.

12. A Will - You Should Have One Prepared/Updated Including:
    - Power of Attorney.
    - Medical Power of Attorney.
    - Provisions for Children - Other
    - Dependents - Pets.

Regards,,

Rosemary ...

Okay, Okay - Here's "The Joke"

"IQ Test"

Here's a one question IQ Test to help you decide how smart you really are.

There is a mute who wants to buy a toothbrush. By imitating the action of brushing his teeth he sucessfully expresses himself to the drug store clerk and buys a toothbrush.

Now ...

If there is a blind man who wishes to buy a pair of sunglasses - how should he express himself?

Really think about this before you scroll down for the answer ...

>
>
>
>
>
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He opens his mouth and politely says - "I would like to buy a pair of sunglasses".

Now be honest - Did you get it right?
If you didn't - Do not pass "go".

Guest Columnist

"Granite Transformations"
Wayne & Barbara Lowe
1313 Speers Road, Oakville

(905) 847-3554
Website: www.granitetransformastions.com
E-Mail: granitetransformations@bellnet.ca

"The Countertop That Fits On Top"

Renovating your home - especially the kitchen or bathroom is a great way to enhance the value of your property and to ensure good future re-sale.

Granite Transformations can create custom countertops that "reface" your existing countertops without replacing them. Because they specialize in providing slabs of granite that cover the exisiting countertops there is very little mess or disruption and the end result is a beautiful custom product with a minimum of inconvenience.

Their revolutionary "Trend Product" line imported from Italy combines some of the world's finest granites, quartz and glass mosaics with state-of-the-art polymer technology. You get a heat, stain and scratch resistant surface that is maintenance free and backed by a lifetime, limited warranty - (ask for details).

Granite Transformations can work their magic on kitchen counterops, backsplashes and kickplates, bathroom vanities, wall cladding and shower areas. There are also numerous commercial applications where stylish and cost-effective solutions are called for.

Owners - Wayne and Barbara Lowe and their staff at the Oakville showroom encourage you to visit their facility to select your favourite Trend product and colour from their Rocksolid, Mosaics or Cristallino lines. Their consultants will then come to your home to make the custom template, and then cut the slabs you have chosen from their product lines and install them with the special adhesive used in this re-facing process.

Please don't hesitate to call with any questions.

Regards,

Wayne & Barbara Lowe.

Ask An Expert?

 These are just some of the professionals who can help you with your home ownership concerns. If you subsequently choose to establish a business relationship with any person/company then you should be sure to define the specific details of the relationship or business contract before you proceed.

• Ask A Lawyer?
• Ask A Painter?
• Ask A Surveyor?
• Ask A Designer?
• Ask An Accountant?
• Ask A Tradesperson?
• Ask A Home Inspector?
• Ask A Financial Adviser?
• Ask A Colour Specialist?
• Ask An Insurance Broker?
• Ask An Interior Decorator?
• Ask A Web-Site Designer?
• Ask A Kitchenware Retailer?
• Ask A Landscape Designer?
• Ask An Employment Lawyer?
• Ask A Banker/Mortgage Broker?
• Ask A Firecode/Retrofit Specialist?
• Ask A Garden Sculpture Specialist?
• Ask A Basement Waterproofing Specialist?

The above article(s) provide information that is of a general nature only and is never intended to be a substitute for advice specific to your particular concern. No one should act upon such information without appropriate advice and/or consultation.

Business Referrals: 

Client & Networking referrals are the foundation of a successful real estate agent’s career.  Over many years in this industry I have enjoyed the confidence & repeat business of my clients.  I appreciate your on-going support and want you to know that I will always look after friends & colleagues you refer to me with professionalism, care and respect.

Please Call Me With Any Real Estate Questions.
I'm Always Here To Help!

Rosemary Wright

Sales Representative - Sutton Group-Bayview Realty Inc.

Bus: (416) 483-8000 Fax: (416) 463-0159

Web-Site: www.rosemarywright.com

E-mail: mail@rosemarywright.com

Direct Page: (416) 582-1216

"Professional Service With A Personal Touch"

This newsletter is never sent unsolicited. If you wish to be removed, please reply to this e-mail with the words: "Remove from Newsletter" in the subject line or call me at (416) 483-8000 to request removal.

The intent of the newsletters - "Real Estate Bits " & "Real Estate Bits -2" is to provide information to you regarding real estate. Personal details such as your name, contact information and address are never revealed to anyone without your consent. In accordance with the new Privacy Act, your consent must be given (either implicitly or explicitly) to receive these newsletters. If you do not want to receive my newsletters - please notify me. My newsletters are not intended to solicit Buyers or Sellers who are currently under contract with any Broker.

The information and opinions contained, statistics and articles are courtesy of TREB, CMHC or other individuals or companies and are believed to be reliable, but their accuracy is not guaranteed. Sutton Group-Bayview Realty Inc. and Rosemary Wright accept no responsibility whatsoever for any loss arising from any use or reliance on the accuracy and timeliness of the information contained herein. Every endeavour is made to ensure accuracy. These newsletters do not render financial, legal, accounting, home inspection or professional advice. They are for general educational purposes only. They do not offer do-it-yourself advice. We encourage you to always contact the appropriate professionals or specialists to address your individual needs.

E&OE