Although a lot of people have heard about Family Income Benefit Insurance, most are unaware about what it is exactly. To say in a nutshell, this is an insurance policy which pays your dependants an income in the event of your debt. This income will be given to your dependants till your policy term expires. Generally these policies are opted by young families which wants to protect its dependants against the death of either or both parents. In order to make this policy a little more comprehensive, critical illness cover can be added to it. This is done so that if you suffer from a critical illness and are in no working condition then income would be generated for your family. in this case the person insured doesn’t need to die for a claim to be made.

There are a number of reasons why you would want to opt for a Family Income Benefit plan. One of the major reasons is that it can be included in divorce settlements. It has been seen that although divorcing couples often agree on how monthly maintenance payments are to be made, often the consequences of what happens to the children when either parents die is not looked into. Thus by opting for a family income benefit the children, who are the recipients of maintenance payments are protected against financial difficulties in the event of death of either or both parents. One factor to note here is that at times it might be just a little more expensive to have individual plans instead of a joint one on life policies, however, you get a better value for money as the payout is doubled in case both the parties die during the policy term.

 Firstly you need to know why should you buy life insurance. The things is, in case you meet with untimely death, you not only leave behind a grieving family, you also leave behind a financially crumbled family. After you pass away, your family still has to survive. In case you were the only earning member or the major earning member of the family, then your family would be in a deep soup. Thus, to ensure that your family is able to live properly after you, a life insurance is necessary. If you are choosing a family income benefit policy, you should know how it works. On choosing this kind of a life policy your dependants will be given the payouts on an annual basis from the time of your death, to the end of the term of the policy. This income to the family will be free of tax and there is no restrictions upon the usage in which the money will be put by your dependants. You can pay the premiums on a monthly or an annual basis. you can get the amount debited directly from your bank account.

The premium that you will give on your life insurance will depend on a number of factors. The major factors are the term of the policy and the amount of cover you choose. Other than these, your health, your gender and your age also plays a major factor. In case you are unsure about how much cover to have, you can always consult a financial professional for that.

Author: Financial Awakening Blog

If you still haven’t read Step 1 – Plan ahead. Imagine where you are when you retire, I highly recommend you to read it first.

Real estate investing is not just a great way to build wealth right now — it’s also a great way to build the retirement of your dreams. Whether you are retiring in a few years or in 30 years from now, investing in real estate can help you to meet your goals for retirement. You can adjust your strategy to meet your goals, and the sky is the limit for what you can achieve.

Here are just a few ways that real estate investing can help you to create the retirement of your dreams:

You Build a Nest Egg

Real estate investing creates a nice passive income that will continue to pay you over the years. If you invest in rental properties, you will make ongoing income. If you buy and sell properties, you will make a nice large payout on each sale. In either scenario, you can build up a nice nest egg that you can use to fund your retirement. The more you invest, the bigger the nest egg and the more will be possible during your Golden Years.

You Have Vacation Homes

You don’t have to invest in properties that are local to you. There are many great real estate investing opportunities around the country and around the world. Not only does investing in real estate from other regions help you to diversify your portfolio (minimizing risks and maximizing profits), but it also provides you with homes that you can use for your own vacations in the years to come.

Of course, you will have to wait until they are not being rented out, but simply having a large portfolio of homes increases your opportunities for effortless travel, which will greatly enrich your retirement years.

You Don’t Have a Fixed Income

Many people wait until they retire to do all the things they’ve always wanted to do: learn how to paint, take up new hobbies, travel the world. However, when they finally do retire, they find that they can’t do many of these things because they are on a fixed income, living off their retirement accounts and social security.

By investing in real estate, you will give yourself ongoing passive income that will continue as long as you live. You can enjoy the same standard of living that you always did — and maybe even better.

You Have a Stable Source of Income

Though the real estate market can be turbulent, if you own a diverse portfolio of rental homes, you can create some stability in your income. So long as you have a large enough portfolio, you will be able to weather the ups and downs in the market. Therefore, you won’t have to worry about taking a hit to your income (or at least not a big enough hit that it will significantly change the way you live). You can continue to enjoy the lifestyle you want throughout your retirement.

Forget about your 401(k) and social security. If you want to create the retirement of your dreams, consider investing in real estate and creating a strong passive income stream that will allow you to meet your goals, whatever they may be.

The Author:

Kelly Opferman is a seasoned writer who at this time focuses on her car payment calculator site. Her educational background includes finance, teaching, and economics.

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Author: Ethel Wilson

5 Tips to a Top-Notch Credit Score Rating

Our credit score rating is affected by every financial decision we make. Sometimes we get ourselves in over our heads, racking up so much debt that we can’t afford to keep up consistent payments on our principal and accompanying interest. Every time we miss or are late with a payment, on any of our bills, our credit score suffers. Those bills include those from utility companies, service providers, doctors, and department stores to name a few. When we don’t pay a bill, that information is sent to the organizations that calculate our credit score rating.

The good news is that, even if currently have a bad credit score you can improve it. There is no magic cure, so don’t fall for scammers who promise to “fix” your credit score rating for a fee. It takes time and applied discipline to raise a credit score legally. You may have to change some of your bad habits, but the end result will be a more financially secure you. The following tips will help you to raise your credit score on your own, at no expense, if you apply them.

Improve Your Credit Score Rating Tip #1 – Pay More Than the Monthly Minimum

You should always pay more than the minimum monthly requirement if you want to improve your credit score rating. The credit bureaus don’t only consider how much debt you have, but how long it takes you to pay it off. There is no way of calculating exactly how much time is factored into your actual score, but it is, and minimizing it will boost your credit score rating.

Improve Your Credit Score Rating Tip #2 – Formulate a Repayment Plan

People who are going through difficult times are often not aware that creditors are often more than happy to work with them to formulate a repayment plan. The simple fact is that it is good for both parties involves, and the economy as whole.  Negotiations are better for the lender as it is cheaper than having to hire a collection agency. The consumer gets to salvage their personal credit score rating, and the overall economic debt is lowered as well.

Improve Your Credit Score Rating Tip #3 – Exchange Credit Cards to Debit Cards

Your credit score rating reflects credit card debt more than just about anything else. The most effective way of avoiding it is to pay debts immediately with a debit card. A debit card only detracts from money that is already in your account. There is no credit risk involved; you can only use what is in your account. Be especially careful not to attempt to use more money than you have in your account, as this will significantly affect your credit score rating in a bad way.

Improve Your Credit Score Rating Tip #4 – Get Rid of Store Cards

Today’s wallets are designed to hold as many credit cards as we can accumulate. Many of the credit cards we own are from individual stores that give us in-house discounts for using them. Unfortunately, as much as these cards may earn us points with the stores that issue them, they have a profoundly negative effect on our credit score rating. The more cards we have, the lower our score will be.

Improve Your Credit Score Rating Tip #5 – Comment on Your Report

Occasionally you will find errors on your credit report which negatively impact your credit score rating. This could be the case of a lender failing to notify the credit bureau that you have repaid a loan, or a simple billing error that was not corrected. Your first course of action is to dispute those errors with the credit bureau and the creditor. What many people don’t realize is that there is a section for their own comments in their credit reports. This lets you explain why a debt has not been paid or to point out any incorrect facts. Though commenting won’t directly boost your credit score rating, they may be a determining factor in a lender’s decision to grant you that loan.

Author: Financial Awakening Blog

Capital Gain Tax

If you still haven’t read Step 1 – Plan ahead. Imagine where you are when you retire, I highly recommend you to read it first.

If you ever come across a person who rent out his principal residence and live in a rental basement apartment himself, don’t be surprised. He is actually smarter than you think.

Most people live in their only and biggest investment they have, their principal residence. The benefit is that there is no capital gain tax when you resale your home. Of course, most people would also add that it feels more like home when you actually own it. However, when you think about it, do you really own tha place?!

If you really own the place, why do you need to pay property tax every year? If you really own the place, why can’t you modify your home as you like, but need approval from the city? The truth is, the real owner of the place is still your country, not you. You are just the care taker of the place. Whenever there is a wage hike request from the union, property tax increase is one of the first choice government will consider. Property owners are like pigs waiting for others to slaughter. We are sitting ducks. There is nothing, absolutely nothing the property owners can do to stop subsidizing the teachers, fire fighters, police, CEO of LCBO or ORNGE from getting big salaries or bonuses home. They own the property owners. Now, does it still feel more like home when you own the place?

On the contrary, what are the benefits when you rent out your principal residence?

• You can deduce expenses (mortgage interest, utilities, maintanence, etc) towards rental income for tax purpose.
  • If you live in your own home, there is nothing you can deduce.
• The best place to invest is not necessary the best place to live in
  • You may find a house with good price that can generate great positive cash flow which is far away from where you work.
• From income tax act 45(2), a rental property can still be considered principal residence for 4 years if you need to move because of work location. Check CRA site for more details.
• It is more flexable. You can move whenever you want. You don’t need to sell the house and buy another one.

So do you still want to live in your own house?

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The numerous benefits and high pay outs of binary trade options have made this trade a very popular choice and it has surged ahead of many other career choices in a very short span of time. If you are investing in Binary Options, it may be tough to figure out what the different types of such options are open to you for your investment level and which ones would be the right choice for you. As complicated as this may sound, it is actually pretty easy to figure out which binary trade option would be the best for you. The different types of binary trade options are explained below to make your choice easier.

• One Touch: This binary trade option is one of the most popular ones. It is also called the One Touch Bet and is usually a source of attraction for beginners. This is an option which is bought by the trader for whatever the current price may be and then if the option “touches” the price that has been set, the investment is paid out. But this must happen before the option expires. Once the option expires, the price touching the set ceiling will not have any effect on the investment and it will lapse.

These are popular because of their simplicity. The price barrier that you determine should be as far away from the purchase price as possible since it insures a better pay out. Even then you must be careful not to set it too high as the price may not touch the barrier set by you. Since you can set a barrier higher or lower than the current price, this type of binary option is not affected by the state of the economy since even a falling price could benefit you.

• Ladder:  A relatively newer binary option which is gaining popularity quickly is the Ladder type of binary option. This is a type of trade in which the trader is given a range of different prices which are set at equal intervals from each other in a ladder-like formation. This kind of trade specifies that for the investment to pay off, the particular market must rise past a certain level after a certain period of time.

Several time intervals and price levels are set in this type of trade option and so it makes it a little difficult for a beginner to understand properly. Hence you should opt for this type once you have got a fairly good idea about the binary trade options.

• The High/Low Option: This is another type of binary option which is very popular with the beginners and newer investors. It is very easy to understand. In this type of binary option, the binary broker purchases a call option if he is sure that the price of the option will expire above a certain price barrier or the binary broker purchases a lot of options if he believes that the price will end below a price barrier when it expires.

Even though this option is easy to understand, a lot of research is required to actually get it right and get the full benefits out of it.

Author: Financial Awakening Blog

If you still haven’t read Step 1 – Plan ahead. Imagine where you are when you retire, I highly recommend you to read it first.

How to Choose a Rental Management Company for Your Properties

Buying properties and renting them out is a great way to make a passive income or to fund your retirement. However, managing tenants, collecting rents, and taking care of repairs and other property maintenance can be time consuming and exhausting. All of that work challenges the premise of a “passive” income.

Finding a good rental management company can help you have the best of both worlds — collecting the income without having to put in the work. Not all rental management companies are created alike. Here are a few tips for choosing a top rental management company that will make the process painless and profitable:

Get Recommendations

Start by getting recommendations from others based on their own experiences. People are happy to share their experiences with you — good or bad. If you don’t know anyone who has used a rental management company, look for recommendations online. People seem even more willing to be honest under the anonymity of the Internet. You’ll quickly find the best companies to work with — and quickly figure out which ones you should avoid.

Check Records

Don’t just take someone else’s word for the reputation of a company — check their records. You can look at criminal records to see if the company has faced any lawsuits or other legal actions, and you can check credit records to make sure the company is financially stable. Whatever public documents are available to you can give you a better idea of what to expect from the company.

Review Processes

Once you have a few companies in mind, carefully review their policies and procedures to be sure they can deliver the service you want and meet your goals. Determine how they screen tenants to ensure that you will only get the most reliable renters. Find out what their procedure is for collecting rent and for collecting past-due rent. Make sure you understand how they monitor and meet maintenance needs.

The right rental management company for you will have processes in place that align with your own personal values and goals.

Find Out What Services are Offered

Not all rental management companies will offer the services you desire. Make sure you ask plenty of questions to find out if the services you need are offered. For example, how does the company handle property maintenance? How are emergencies handled? How are properties advertised?

Also be sure to find out what kind of service and support is available to you. For instance, what are office hours? How can you contact someone if needed? The answers to all these questions will significantly influence the type of experience you have.

Understand Fees

Of course, you will have to pay a rental management company for the privilege of not having to oversee the property yourself. Make sure you understand all the fees involved to ensure that you’ll still be able to make a decent profit. In addition to the management fee, there may be additional fees for advertising, maintenance, or past-due collections. Go over the fine print before you sign a contract to make sure you aren’t hurt by any hidden fees or end up paying more for services you thought were included.

It is important to take your time and carefully select the right rental management company. This company can make or break your success with making money with rental properties. Use these guidelines to ensure that you pick the best company to meet your goals.

Do you use a rental management company? Share your tips for how you picked the right one for you in the comments!

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Author: Financial Awakening Blog

If you still haven’t read Step 1 – Plan ahead. Imagine where you are when you retire, I highly recommend you to read it first.

Landlords need to observe a certain protocol for screening their prospect tenants. This screening process must be done before making a final decision to welcome tenants to your apartment. The tenant’s bank account information and credit report have already been checked. Then, you breathe a sigh of relief knowing that the unit is once again back on its paying basis. Unfortunately, days go by and you are starting to encounter several problems with your tenant. To avoid the same problem from recurring, check out the following warning signs that your tenants will be bad:

1.   They are showing reluctance in signing the rental application.

In most cases, tenants who have the potential to be bad would be unwilling to sign any rental application form. Some of them would even immediately suggest skipping the process. They would bribe you to skip such process by showing you a handful of money.

2.   Their record showed multiple employments in two years.

Having this kind of employment record would possibly mean more than just having an attitude problem towards work. This could also mean that the renter is hiding something “fishy” about his real ways of living. So, he transfers to a new employer even before his negative background comes to light.

3.   They do not care about the poor condition of the apartment.

They will insist to move in “quick” even if some parts in the apartment still need to be repaired. They will not even care about having it thoroughly cleaned before they schedule their transfer. This is a sign that the renter just could not care any less about the apartment. Beware because such attitude may prelude to paying problems.

4.   They have multiple home addresses during the previous or recent years.

The act of transferring from one home address to another could be a sign that the renter is not capable to pay rent. He immediately hops to another apartment before his present landlord threatens to sue him for not paying.

5.   There are plenty of them who came in to see the place.

These are the kinds of people who do not seem to belong to one big family. Although they pretend to be a “family” but their actions and gestures only prove them false. In most cases, they only came to look for potential items to steal or a venue for their illicit meetings.

6.   They seem to be in a hurry to move in.

Renters who would insist to move in the soonest time possible is a sign that they are looking for a place to hide. They are also in a hurry to get away from their payment obligation with their previous landlord.

7.   They wear expensive looking things which they often brag about.

There are people who would love to wear expensive looking jewelries, bags, etc. This is because they want the landlord to believe them that they have more than enough money to pay for the rent. But, later you will find out that they do not have permanent jobs and are just making a living out of illegal means.

8.   They seem to be intoxicated.

Beware of renters inquiring about your apartment with a cigarette in between their fingers and looking intoxicated. This is a sign that you can never count on them to talk to you about serious matters regarding the apartment.

Hannah runs Howmuchisit.org, a website that has over 2,000 cost helping guides.  If you want to know the price of something, they more than likely have it.

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Canadians investing in United States #5

Author: Financial Awakening Blog

If you still haven’t read Tips for Canadians investing in rental properties in United  States, I highly recommend you to read it first.

I got quite a few message regarding how to choose between LLC and LLP. I decided to add a post regarding this to answer all the questions at once.

Both LLC and LLP are business structures in the United States. They both provide liability to an extend, but in a different way.

Here is a table listed the highlight of LLC and LLP.

For the sake of real estate holding and operating, we should choose LLC instead of LLP. Remember, LLC can be formed with only one member or more. Do not confuse LLC with multiple members with LLP.

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If you like this topic, you would also like reading

Tips for Canadians investing in rental properties in United  States

How to form a Limited Liability Company LLC part 1

LLC – Articles of Organization

LLC – Operating Agreement

Read more:  Tips for Canadians investing in rental properties in United States | Financial Awakening Blog – Real Estate Passive Income http://financialawaken.com/2012/03/tips-for-canadians-investing-in-rental-properties-in-united-states/#ixzz24I1pB3Y9

Disclaimer: I am not an accountant or tax attorney. There is by no means you should rely solely on my suggestion.

While I have made every effort to ensure that the information contained here is correct and from reliable sources, I do not claim, promise, or guarantee the accuracy, timeliness, or completeness of any content here or any content obtained through the Site. Furthermore, I am not responsible for errors and omissions.

I am not liable for any direct, indirect, incidental, special, exemplary, consequential, or any other damages without regard to the form of any action, including, but not limited to, contract, negligence or other tort claims, arising out of or in connection with the Site, or any content on or accessed through the Site.

All hyperlinks provided on the Site are for informational purposes only and are maintained by third parties that are in no way affiliated with me. Therefore, I make no representations as to the accuracy, completeness, or any other aspect of the information contained and/or obtained from third party websites accessed through hyperlinks.

IRS CIRCULAR 230 DISCLOSURE:  I am to inform you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoided tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

Author: Financial Awakening Blog

If you still haven’t read Step 1 – Plan ahead. Imagine where you are when you retire, I highly recommend you to read it first.

Are you finding it difficult to keep track on your monthly expenses? If the answer is yes, then it is not yet too late. You can still apply all the tools that are available to you at the click of a button and redirect your finance to the right path. Many online calculators are available on the internet that will assist you in allocating the funds required in various daily expenses of your family and plan your budget accordingly. The cutting edge tools of the 21^st century easily accessible in the online platforms are extremely user friendly. Even a novice can utilize it with ease and plan his finance with expertise.

Planning a perfect budget will help you to save a lot of money that prove to be extremely useful in the future after your retirement, for the higher education of your children as well as for your future investment plans. Many of us are not too good with numbers and even with our best effort we are unable to see much outcome. If you have failed to do it manually, then the online calculator is the perfect solution for you. Some of the best online platforms for calculating your finances are Mint calculator and others that can help you to calculate the different aspects of your finance through its various applications like the Cost-of-Commute Calculator, Energy saver, Cost-of-Smoking calculator, Federal Reserve Credit Card Repayment Calculator and others. These platforms organize every aspect of your spending with ease and will keep track of every dollar you spent and would also help you in making decisions easier.

These online platforms are really easy to use as well. All you need to do is to register with them and according to your needs. If you want to prepare a budget for your family, then just feed the total income of the whole family and the major expenses that you need to incur. The cutting edge automated software of the platform will prepare the budget for your whole family and keeping in mind all your expenditure as well as enough saving that will be indispensable for you once you retire.

The debt repayment calculator and the loan repayment calculator are the two applications of these online financial calculators that will help you find out the exact time by which you will be totally debt free. Moreover, if you feed them with a time by which you want to debt free, the calculator will calculate the repayment that should pay in every month to achieve this goal. Whenever you are making a big investment, along with investing for best loans scheme, you should also select a good calculator that will help you to realize all your financial targets.

Many of us have the habit of purchasing things spontaneously. While you are maintaining your budget through the online calculators, you need to honestly incorporate these figures as well. These spending may seem quite trivial but when the accumulated figure for a month or so comes before your eyes, then you would realize how much you could have saved by being more responsible and cautious. However, as the saying goes “better late, than never”, try it now and the end result is going to truly surprise you.

The modern technological development has offered us many useful tools and applications. If we utilize these applications in the right way, a better, happier and much more secured future awaits us. Therefore, do not waste any more time by thinking what you should do. On the contrary do it and how it can change your life totally.

About the Author:

John Pean is a celebrated financial expert has penned this article on online financial calculator. He recommends everyone to go for the best loans scheme and use the online calculator to manage their finance with expertise.

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Almost everyone in their life encounters a situation when they need financial assistance to deal with unexpected and unfortunate events which require immediate money. Incapability to tackle these situations; such as medical expenses, child fees, car repair, accident and so on can put you under great stress and anxiety. Fortunately, to soothe you there is a large number of financial institutions and lenders who are ready to provide you with financial assistance if they find assurance of repayment. To choose appropriate lender and the ideal loan for you, you need to know about the several different forms of financial assistance or loans provided by the lenders:

The various kinds of financial assistance are:

Secured loans:

These are the loans secured against some asset you own which act as a security against the loan amount. The secured asset is known as collateral whose value needs to be equal or greater than the loan amount. Usually, your home is used as collateral and sometimes, other assets too, like your car if the loan amount is low. These loans involve low risk to lenders as if you fail to repay they seize your asset and sell it to get back the loan amount. The interest rate involved is usually low and the better your credit rating the more power you have to bargain for lower interest rates, loan amount and repayment period. Some of the examples of secured loans are vehicle loans, mortgages, home equity loans and home equity lines of credit.

Unsecured loans:

These loans don’t involve any collateral as security against the loan amount; as a result they involve a higher risk for the lenders and lower risk for the borrower. The loan approval and amount is based on the borrower’s credit history and other attributes like income, assets and debts at the time of application. Due to high risk for the lender, they charge much higher rates of interest. Some of the examples of unsecured loans are personal loans, personal lines of credit, student loans and credit cards.

Short term loans:

These are the small cash loans that are taken out over a shorter period of time and are usually repaid by your next pay day. Basically, the loan amount is secured against your next pay. These loans are fast and easily available to the borrower as it don’t involve any credit check, so anyone, even someone with poor credit score can opt for these loans. It involves lower risk for borrowers as it doesn’t involve any collateral. Some examples of short term loans are payday loans and cash advances.

Author Bio: The guest post was contributed by Alicia, financial guest blogger from Manchester, UK. Find out more about her finance related blogs @financeport.

Author: Financial Awakening Blog

If you still haven’t read Fighting with MPAC – Case Study 1,  I highly recommend you to read it first.

We’ve talked about similar lands in the vicinity and ASR from the previous case. We will study a new case this time. This case is about an actual sale that took place just 3 months before the valuation date.

Case WR49892

In this case, the owner purchased a cottage just 3 months before the valuation date of January 1, 2005. He believed that this is the best representation of the current value. On the other hand, MPAC argue that he had a bargain and would like to use the similar properties in the vicinity approach to determine the current value.

The owner then argued that there are differences in the comparables, and it would not be right to use those comparables.

ARB made a decision to lower the assessed value to that of the purchased price because MPAC do not have enough evidence to prove that the owner had a bargain deal.

In this case, we’ve learned that the actual sale price is still the best representation of the current value and it is hard for MPAC to prove that you got a bargain deal.

Also, take a look at 44(3) that we talked about last time.

From Assessment  Act

44(3) For 2009 and subsequent taxation years, in determining the value  at  which any land shall be assessed, the Board shall,

(a) determine the current value of the land; and

(b) have reference to the value at which similar lands in the vicinity  are  assessed and adjust the assessment of the land to make it equitable  with that of  similar lands in the vicinity if such an adjustment would  result in a reduction of the assessment of the land. 2008, c.  7, Sched. A,  s. 13.

According to this rule, MPAC cannot use the similar properties method to increase your assessment. If you run into this situation, it is a good idea to also mention this point.

Please take 5 minutes to read the case. It is not long, but can give you insight of the whole idea.

You can download the case here. -> MPAC Case 2 WR49892

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Author: Financial Awakening Blog

If you still haven’t read Fighting with MPAC – Similar Properties Comparables,  I highly recommend you to read it first.

Case Study

We’ve talked about the process when appealing with MPAC in ARB. In the coming series, I would like to talk about some cases that MPAC will use to fight you. The more you know about MPAC’s tricks, the more you will be prepared. You can find the case as an attachment.

Case DM68210 between Douglas and MPAC

This is a case that MPAC re appeal ARB’s decision. The point of argument in this case is regarding ASR (assessment to sale ratio). ASR is important because it is one of the main weapon MPAC uses to slaughter you. Basically, it is the ratio between actual sale price and assessment value. For example, if you purchase your  house for $500k, and the assessed value is $600k then you have a ASR = 600k/500k = 1.2. The ASR is supposed to be between 0.95 and 1.05. Anything out of that range means MPAC’s estimate system is not working properly.

From Assessment Act

44(3) For 2009 and subsequent taxation years, in determining the value at  which any land shall be assessed, the Board shall,

(a) determine the current value of the land; and

(b) have reference to the value at which similar lands in the vicinity are  assessed and adjust the assessment of the land to make it equitable with that of  similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land. 2008, c. 7, Sched. A,  s. 13.

If ASR is 1.2, MPAC over estimate your property value and you should appeal. However, if ASR is lower than 0.95, MPAC cannot use similar property method to increase your assessment.

Although, I was using property owner’s house as an example, this is not the right way to apply ASR. If you read through the case, you will see that ASR would not be useful if you apply it on only one property. When I say not useful, I mean MPAC can re appeal and over turn the decision, as you can see in the case.

Summary about ASR:

• cannot be used only on one property
• reflect sales values for all homes in a particular vicinity
• when using ASR to compare, the properties need not be similar because ASR represent homes in the whole vicinity, not just one house

If one house has an ASR of 1.2, it only means this house is assessed too high.

However, on the other hand, the actual sale of a particular house is the best representation of current value of this particular house. If you have a sale close to the valuation year, such as 2008, 2012, you can argue with the current value instead of ASR. It is going to be much stronger.

Please take 5 minutes to read the case. It is not long, but can give you insight of the whole idea.

You can download the case here. -> MPAC case 1 DM68210

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Consolidation of payday loan can be very helpful to those who are trapped with payday loans. By this, many payday cash loans are rolled together into single and a monthly repayment plan spanning few months is given. Thus, it converts high paid interest short term loans into a long-term repayment at lower returning rates. With the help of this many can get them out of the debt trap. Peoples in lower middle classes are usually seen to encounter this type of problem. They take up the loan in hurry and are not aware of the exact returning policies.

In order to start the procedure regarding payday loan consolidation, at first you have to go to a payday loan consolidation agency for help. A loan consolidation company on behalf of you will negotiate with the payday lending agency. They may come with a solution of monthly repayment plan. After that you have to make payment to the consolidation company monthly, they will give that to the payday loan lender on your part. Thus with this process you can get relief. For the whole procedure a debt consolidation company with charge a certain amount as their service charge.

There are always both advantage and disadvantage associated with everything, so as with payday loan debt consolidation. As per as advantages are concerned it may be said that it increase the time of repayment by converting the whole short term loan to a long term loan. Thus with it your income to debt fraction increases. Your credit rating also increases. Moreover most importantly it diminishes your extra tension and you can get rid of those collection agents harassing you daily. Now if we now look at the disadvantages then it can be urged that a consolidation agency puts an extra cost on your head as charge for their service. It is very important to choose a good loan debt consolidation agency otherwise it can get you in more trouble. You must be aware of any type of hidden cost that they can charge. Moreover the major disadvantage is that many payday lending agencies are not interested in negotiating with consolidation agents.

Author: Financial Awakening Blog

If you still haven’t read MPAC – Property Assessment and Tax or MPAC – The Wolf in Red Riding Hood,  I highly recommend you to read it first.

assessment act

ARB Hearing

After you received a letter from ARB with the scheduled hearing date, you need to mark it on your calendar. It is probably going to be a month or 2 from the day you receive your mail, and it is extremely easy to forgot the date. If you do not show up in the hearing, you lose the case. Mark also on the calendar a few days before the hearing date so that you have enough time to prepare yourself for the hearing.

You may not win the case if you attend the hearing. However, you lose the case for sure if you do not even show up. It is really easy for one to chicken out a few days before the hearing. Be strong and don’t give up.

Preparation is the key

If you  prepare yourself well, then you will have a lot less fear and it is going to be much easier for you to convince yourself to attend the hearing. You need to prepare the evidence (make sure you serve the evidence 21 days before the hearing day. I’ve seen people going to the hearing without knowing this and got sent home), the report and most importantly,  yourself.

Process in the Hearing

If you read my other posts about MPAC, you will probably recall I mentioned pre hearing. There are 2 streams in the ARB hearing:

• Direct Stream
• Case managed stream

ARB reserves case managed stream for the high worth properties, such as malls ( I am talking about the owner own a whole mall). You are probably going to be scheduled to the direct stream. Under normal situation, they will schedule you right into the hearing. However, if you request, you can have a pre hearing first. In the pre hearing, you can request for discovery, and ask MPAC to provide you with information such as comparables that you pick (instead of those that they cherry pick). This is important because as a normal resident, we do not have assess to what MPAC has access to.

In the hearing, MPAC will present their evidence and then you can cross them with your own evidence. MPAC will then cross your evidence. After that, MPAC will summarize before you do.

There is a few things that you need to prepare before the hearing day.

• Serve the evidence you are going to present at least 21 days before the hearing.
• organize your evidence and how you are going to present.
• Check in the ARB rules and Assessment Act before you go to the hearing. You are going to use the assessment act to argue.

Some example of rules that you are going to need.

Assessment Act

http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_90a31_e.htm#BK58

44(3) For 2009 and subsequent taxation years, in determining the value at which any land shall be assessed, the Board shall,

(a) determine the current value of the land; and

(b) have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land. 2008, c. 7, Sched. A, s. 13.

44(3)(b) stated that one can determine the current value of the land by comparing it to similar properties. One can then adjust the CVA of the property with refer to the similar properties if the adjustment result in a reduction. One point to note here is that this can only be done if it result in a reduction. The assessor cannot use this method to increase the CVA of your property. However, they can use the comparables to determine the CVA of your property if there is no other way to determine the current value.

Assessment base year

MPAC do a major reassessment every 4 years. The last one was 2008 and hence this year, 2012 is going to be the new assessment base year. The increased in assessment will be phased-in in 4 years. All the argument with MPAC will be based on the base year.

For example, if you purchased a property in 2011, and you are disputing the property tax for 2012, you will argue with MPAC based on 2008 CVA.

“current value” means, in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer;

In other words, if you have a recent arm’s length transaction for the base assessment year, then that is the best current value. The transaction will remain useful as an evidence to argue with MPAC if it is within one year of the base assessment year (ie 2008, 2012, etc)

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It does not matter what type of a mortgage loan you may have there comes a times where you will decide that you wish to refinance even if you have a VA loan.  There are many benefits to refinancing your VA loan.  You will need to be sure that the advantages that are listed in the article below will fit your budget and your life style.

Advantages Of Refinancing Your VA Loan

When refinancing your VA loan most people will first look at the advantage of a lower monthly payment.  When you refinance your mortgage loan whether it is a VA loan or some other type of mortgage loan you will normally be given a lower interest rate than what you had previously.  The lower interest rate will obviously lower your monthly payment.

There is also a refinancing option of extending your loan repayment terms.  If you are interested in a lower monthly payment this will an option for you to consider.  Although the drawback is that you will be paying your monthly payments for a much longer period of time.

If you would like to own your home sooner rather than later you can refinance that also.  There is an option for borrowers to refinance their VA loan so that they can request a shorter loan repayment term.  Of course the payments will not be the same.  You can expect your monthly payments to increase and it is possible that you will be required to make more frequent payments.  This decision will need to be made wisely as it will affect your monthly budget.  Be sure you can afford it before selecting this type of a refinance option for your VA loan.

Borrowing Money From Yourself

Have you ever thought that you could borrow money from yourself?  This is a possibility for you if you have equity in your home.  If there is a good amount of equity in your property it is a good idea to have your home loan increased.  This loan will increase with the exact amount of equity you have in your home.  Having this additional money will allow you to pay for unexpected expenses or other expenses such as a new automobile, a wedding, school expenses or need home improvements.

Debt Consolidation

It is also possible for you to consolidate all of your debts with refinancing your loan.  There is the possibility that you could consolidate all of your debts into one monthly payment.  This will include credit cards, personal loans and any other debts that you may have.  This will help you to increase your monthly cash flow and help to pay the monthly payment for your new VA loan that was just refinanced.

There are many different options when refinancing your VA loan that will help you to receive the many benefits of refinancing and achieving a mortgage loan that is the best for your financial situation.  It is recommended that you speak with a home loan specialist before making a decision on which refinance option is best for you.

Author: Financial Awakening Blog

If you still haven’t read Step 1 – Plan ahead. Imagine where you are when you retire, I highly recommend you to read it first.

Last month, Finance Minister Jim Flaherty announced something that affect many of us investors. He tightened Canada’s mortgage industry and it will be in effect today. Yes, today! This is a bad news to us all! Some would argue that it only affect those who stretch themselves to the limit. I disagree. You will understand what my point is if you look at the big picture.

First, let’s review what’s been changed. Under the new rule:

Lenders can only issue home equity loans of up to 80% of the property value

In other words, you will no long be able to recycle as much money as you used to be from home equity line of credit. The previous limit was 85%. However, as an investor, you should not be creating such a high debt to equity ratio on any of your properties anyway. So this does not affect us much.

Maximum new amortization period is 25 years instead of 30 years

I remember last year, March 18, 2011, when they change the maximum amortization period from 35 years to 30 years, a lot of people tried to rush in the real estate market before the effective date. We are now back to 2006! I think this time, it would be the same. For a $2000 monthly payment with interest rate of 3.5%, the difference in amount of money you can borrow from mortgage is around 50k. In other words, you have 50k less purchasing power or 50k less safe zone. This is a nightmare for those who purchased pre construction condos before and closing after today. They might be quality for the mortgage yesterday, but they are not qualify for the mortgage today. What can they do? They are lucky if the builder allow them to do assignment. If not, they probably will lose all their deposit (15% to 20%). This is brutal. We learnt a lesson here. If you are planning to purchase pre construction condo, make sure you get one that the builder allow you to do assignment.

Although this affect us, this is not the big picture that I was talking about. As less people are qualify to get a mortgage loan, the housing market will cool down and the property value will eventually go down. This is not necessary a bad thing, if you have a health debt to equity ratio for all your properties. As the price go down, at least the property assessment will go down and hence hopefully the property tax (if they do not change the tax rate). People will be scared to go into the real estate market and hence more people will rent. You will have a more stable rental income.

However, on the other hand, if you do not have a health debt to equity ratio, you are in big trouble. Let’s say you have a down payment of 10% and the property value go down by 10%, the bank may ask you for the difference or threaten to sell your house. I hope this does not happy to you. Good luck.

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Author: Financial Awakening Blog

If you still haven’t read Step 1 – Plan ahead. Imagine where you are when you retire, I highly recommend you to read it first.

Withholding tax

TFSA has been a great investment vehicle for Canadians. It can help you to make more money without paying tax. However, it also has its weakness. For instance, if you loss money from TFSA, you cannot claim the capital loss. Another problem appears when you  invest in US stocks.

One of my friend told me that he is going to purchase US securities with TFSA. I will have to let him know that there are some differences when you invest in US stocks instead of CA stocks with TFSA.

One major pit fall is that you are going to pay US withholding tax on the dividends. The withholding tax is 15% and we will not get it back. On the other hand, if you invest the US stocks in RRSP, you do not need to pay any withholding tax. That being said, if the stock you are going to purchase do not pay dividends, then it makes no different to you.

I was once tempted to purchase US stock. However, when I looked at the exchange rate difference between buy and sell US currency, I stopped right there. I really don’t want the bank to make so much easy money with all my hard work.

Do not forget to check out our Stock Record Keeping Excel Tool.

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Author: Financial Awakening Blog

If you still haven’t read MPAC – Property Assessment and Tax, MPAC – The Wolf in Red Riding Hood or Fighting Assessment with MPAC, I highly recommend you to read it first.

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Author: Financial Awakening Blog

If you still haven’t read Step 1 – Plan ahead. Imagine where you are when you retire, I highly recommend you to read it first.

condo

When it comes to condo pre construction investment, there is one decision you always need to make: Whether to pay for the premium and purchase a high floor unit or save the money and purchase a low floor unit. The answer would depend on what you need and what are you future plan for the unit. Let’s first look at the pros and cons of high floor and low floor respectively.

High Floor in Condos

Pros:

•  better views: the high floor you are, the further you can see.
• quieter: you will hear much less noise from the road and street. You will also hear less plumbing noise from other units
• more privcy: less people will be able to peak into what you are doing.
• Higher resale value: the premium you pay will be justified when you resale your unit

Cons:

• lower ceilings compare to lower floors
• more wait time for elevators
• harder to exit when there’s emergeency fire

Low Floor in Condos

Pros:

• Convenient: can take either the stairs or eleveators
• Cheaper in price
• can exit easier if there’s emergency fire

Cons:

• Higher risk of burglars
• less privcy: people can see what you are doing when they walk by the street
• Noisy: can hear the noise from street much louder

As I said before, whether higher floor will benefit you or not depends on your plan. Due to the fact that higher floor will most likely get the same rent as a lower floor, if you plan to purchase and rent to get cash flow passive income, it is going to be harder with a higher floor. However, on the contrary, if you are planning to purchase and hold, then higher floor will grant you a better resale value.

It is not a good idea to leave your unit empty while waiting for it to appreciate. So unless you are super rich and do not care about the cash flow at all, then it is a good idea to get a balance between appreciation opportunity and positive cash flow.

You can calculate how much you can afford by calculating the total expenses and compare it with the rent. With this method, you will know which floor is the highest that you can afford, which still produce positive cash flow. You can then lower the floors a bit to create a safe margin.

People will pay more for higher floors in new condos, but not so much for old condos (20+ years). It is a good idea to sell your condo

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Author: Financial Awakening Blog

If you still haven’t read Step 1 – Plan ahead. Imagine where you are when you retire, I highly recommend you to read it first.

With great power comes great responsbility

If one live in a world without worry. Everything is taken care of by someone such as your parents, then there is nothing to worry about. And you can live happy ever after. Except if the one who take care of you pass away, then you start having everything to worry about.

One question arise: How well should you protect your child?

As parents, it is difficult to see your child in trouble without helping them. So to what extent should you help them? If you help them in every simply thing, they will soon learn that they should stop using their brain because you will think for them. They will also stop thinking twice before they make any mistakes because you will fix all the mistakes they commit. On the other hand, it is also not a good idea to give your child too much pressure when they are too young. Afterall, they are still kids and need to have some motivation and fun to create some memory to remember.

Responsiblity is the key

No matter how much or how little pressure you give your child, if they have a sense of responsibility, they are on the right track. If they make a mess, they are responsible to clean it up. You can give them guidance of how to do it, but you should not do it for them. If they want to drink water when they are outside, they should carry the water bottle instead of you carrying everything for them. They should learn that they are responsible for their own well being. Your job is to guide them, not to strip away their ability to take care of themselves.

If they fall down, they should learn to get back up. If your child cannot learn to get up by themselves when they learn to walk, they won’t be away to get back up when they grow up and failed.

Should them how to manage their money

You can store all the money for them, but then money is just going to be a number for them. They should get a feeling of money. If you do not let them learn to handle their own money when you can still guide them, they will do worse when you are away from them. Most young people nowaday cannot save money because they first feel the power of money when they start working. However, if you let them feel the power of money in their early age, they will have a better idea of how to handle money when they later on acquire more money.

Everyone learn from failure. The only different is the scale of fail. You want your kid to fail early with a smaller magnitude.

With great power comes great responsibility.

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