New Home Buyers Beware Or What You Need To Know About Escrow Accounts

Every year, thousands of unsuspecting homeowners buy new homes. These new homes feature granite countertops, new appliances, freshly painted scent and new carpets. At the end, the borrowers were happy to move into the new house where they worked hard. Although they did not know, they were very surprised by the expiration of the property tax for the second year. Let me give you an example. Bill and Mary bought a house for $200,000 in July 2007.

Since the house is new, taxes apply only to land, unimproved property. Taxes are based on land costs and are 3% or $35,000 x 3%, totaling $1,050 per year or $87 per month. Everything is fine until the tax is accumulated in November 2008. The new tax bill is calculated based on a 3% property improvement cost, ie 200,000 x 3%, which makes the new account total tax. $6,000 per year or $500 per month. According to the old escrow account, Bill and Mary can save $87 a month for 12 months a year. They accumulated $1,050.00 but they owed $6,000. Their guarantee account is almost $5,000. If they can’t get the money, the mortgage company will pay voluntarily.

As a result, the mortgage company has now paid taxes, which will increase the monthly mortgage payment by $500.00 to recover the tax it pays and adjust the payment at a price of $413.00 per month. Open a new account. The deposit guarantee is correct. Bill and Mary’s mortgage payments have increased by nearly $1,000. Unable to pay for the new payment, the bank will execute the mortgage and Bill and Mary will move into the apartment. Your credit is devastating and your dreams have vanished.

You can ask me how I can avoid this. First, you must deal with reputable mortgage lenders and they will spend time explaining how to properly set up a secured account. Whenever a new seller offers it, the lender has the opportunity to work with the borrower to create a secured account to prevent a shortage. They can be configured based on improved (estimated new tax bill) or unimproved taxes. It would be much better to deposit too much on a deposit account, which is not enough. It is best to solve the problem before avoiding the problem. Can you pay a $1,000 monthly mortgage?

The tax period is over, but next year? Are you ready to tax? Still will make you feel abused and hurt? Ok, keep reading and you will find useful strategies for tax professionals. If you like most Canadians and you want to reduce taxes, the income division can help you. Before we enter the income department, let’s take a look at the federal personal income tax rate.

First, it is important to maintain a significant gap between participants’ incomes in a revenue-sharing strategy.

For example, Emma and Roger have the same rights or even have been married (this is not important, because customary law and marriage are used in the same way in our tax laws) and they have a 3-year-old child and 18 years old. Emma earned $35,000 in Ontario in 2008 and is the only wife to earn income. The family’s tax return will be $7,368. Now, if Emma pays 18 years old to support her 3-year-old child. Then, Emma can receive the child care deduction amount from its total income before the tax calculation.

As for what happens when she is 18, well, if her annual income is less than $9,600, she will not pay taxes on the amount paid by Emma. The ideal amount for this year is $7,000, which will reduce the family tax to $5,894, which will save Emma $1,474 for the year. If Emma is worried about what the $18,000 will do for the $7,000, she can pay her high school fees, which will cause Emma to be deducted (new tax bill).