Ontario Tax Sale Property Forum
Tax Sale Forum => Questions and Answers => Topic started by: reno on July 23, 2006, 11:39:37 PM
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Hi everyone,
i have been renovating houses all my life, an i am looking to purchase my firm house to renovate and sell myself. i have an invester linedup, but i need to make sure i can find the right property. tax sale properties have always been on my mind, but i just dont know enough about it. can enyone awnser a few of my questions
(1)-where is the easiest place to get ahold of lists of tax sale properties in the gta?
(2)-Upon winning a bid, how many days do you have to pay for the property?
(3)-How long after purchase is the property in your ownership?
(4)-After renovating and selling the house, what kinda of tax issues can i expect?
Thankyou
reno
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Hello reno,
I've been doing a variety of real estate deals in the last few years - almost all have been profitable. And the one that wasn't profitable, I broke even on, so that's pretty good odds, huh? I just started investing in tax sales, but have been researching and following them for many years. Here are my answers:
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Hello reno, Here's the full response sorry for the last 1/2 post LOL
I've been doing a variety of real estate deals in the last few years - almost all have been profitable. And the one that wasn't profitable, I broke even on, so that's pretty good odds, huh? I just started investing in tax sales, but have been researching and following them for many years. Here are my answers:
1. This site is the easiest place to find tax sales, or you can try ontariotaxsales.ca and the Ontario Gazette website - info to get there is somewhere else on these boards (I've seen it somewhere) - but unless you want to pay, or wade through government newspapers, I suggest you watch this sight.
2. If you win the bid, (which will already include your 20% or more in certified funds- which is returned if you lose the bidding process), you usually have 20 days to come up with the rest of the money (usually 80%) if it's closed tender. However, if it's an auction (seems rare in Ontario so far as I can see- there was a recent one in Chatham, but that's all I've heard about), then you have to come up with the money the same day.
3. After you pay the rest of the money, the legal department transfers the deed. You'll get it in the mail a few weeks later (maybe other people have different experiences with this), and I think it also depends on the municipality and how busy they are, or how efficient, etc.) (No legal fees for you though! YAHOO!
4. After selling the house, the tax issues are the same - capital gains tax will need to be paid with your next tax return. (Unless you live in the house you're renovating yourself, then the rules of principle residence apply and it's tax free!) A lot of renovators seem to be doing this, and if you can do it, the gains are even greater.
Good luck.
P.S. You can also ask others for the answers - there seems to be a lot of knowledgeable people on these forums.
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do you always have to wait a year before finding out if you will ge thte house. then is your deposit refunded.
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i mean do your deposit get refunded if you dont get the house
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Yes, if it's an auction, and you don't win or opt out of the bidding, you just don't give them the money order or certified cheque (then you can just redeposit it). If it's a tender sale, then they'll send it back to you within a few days or latest a week, I think. However, if you're second in line and you lost, but the first person doesn't come up with the money after 20 days, then you're offered the opportunity to buy at your tender bid.
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Gap:
Do you know what amount the previous homeowner has to pay back to get the home within the year redemption period? Do they pay the back taxes + late fees or do they pay the winning bid + interest or some other amount?
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My understanding (confirmed by two different municipalities) and by researching the Municipal Tax Sales Act - Ontario Regulation 181/03, is that if for a period of years taxes remain unpaid, they have the option to issue a Tax Sale Arrears Certificate onto the title. Then, from that point on (the date of the tax arrears certificate on title), the purchaser has a one year redemption, and more, if the municipality formally agrees to that, to pay the arrears. After the one year lapses, and in some cases longer, then the tax sale is advertised. And, at that point the municipality must register a Statutory Declaration against the title showing that they have passed the one year period and notified everyone by mail, made all efforts, etc. This happens before the tax sales even get to us.
So, we only hear about it AFTER the one year redemption period is over, which means we're not at any risk of the original owner coming back to haunt us. To further confuse the matter, the original owner has one year after the tax sale to apply to the Superior Court for re-imbursement from the municipality (NOT US) for the profit they made over and above the taxes owing at the time and any other associated fees ($60 to register against the ded, any court costs, etc.). But again, this has nothing to do with us, the new owners of the property. Once you are declared the winner, and you send the other 80% in the tender sale or immediately pay the total bid in an auction, then getting full title to the property is only a formality - you basically have to wait until the city's attorney gets the paperwork ready.
Here is the excerpt verbatim from the Ontario Regulation 181/03, Municipal Act 2001, Filed May 5/2003. Municipal Tax Sales Rules
Schedule 1
Tax Arrears Certificate registered against the land.
"that the land described in the certificate wil lbe sold by public sale if the cancellation price is not paid within 1 year following the date of registration of the tax certficate....can claim entitlement for a share in the proceeds over the tax amount by applying to the Superior Court of Justice within one year."
So, basically when you win, you win. There is no recouping by the previous homeowner AFTER you win your bid and the sale is closed and you are declared the winner; they can just recoup extra money paid out if they apply to the courts. The only exception to this rule is that the municipalities have allowed payment up to and just before the public sale, in which case it's at their discretion to cancel it, and of course, they always do (don't want to look like the bad guy). And anyways, it makes me feel better to know that they have all those opportunities before I have access to their properties. People can fall on hard times. It could happen to me, and I'm happy to know that I get all the chances possible. Hope I've answered the question.
P.S. I have absolutely no knowledge (yet) about anything outside of Ontario and tax sales are provincial matters, so all this only applies to Ontario.
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GAP
You are correct, except for the following:
The only exception to this rule is that the municipalities have allowed payment up to and just before the public sale,
That was the rule that most municipalities followed until a few years ago with a court case that awarded the property back to the old owner after the sale had been completed. Basically, the court said that as along as their name was still on title, the municipality had to accept payment of the back taxes and cancel the sale. Anytime up to minute the tax deed is registered in your name, the old owners can still redeem the property and you are s.o.l. - you get your money back of course. That is why I have been stressing that if you are the high bidder do not waste any time getting the balance of money to the municipality and make the drive to sign the papers the minute they say they are ready - don't wait for a courier, you could lose by dragging your feet.
And as to the previous owner getting their money back. The last property which I purchased, I made contact with the the old owner and advised the elder lady of her rights to go after that money in court - she was very grateful and is pursuing it. If the old owner, or a lien holder (such as a mortgagee) doesn't come forward within a year of the municipality paying the 'excess proceeds' into court, then the municipality has the right to go after it and land a nice windfall.
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I believe that the specific court ruling Frank is referring to can be found here:
http://www.canlii.com/on/cas/onca/2004/2004onca11393.html
I first heard of this new policy at a tax sale in Haldimand back on October 27, 2004, just a short time after the ruling came out.
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Frank, (P.S. Cool picture)
Yes, but so far in my experience, the municipality quickly gets the title stuff ready. I haven't had to wait longer than three weeks so far. That's not a year after you gain title as some people think, it's only for the time between the final tax sale and the title changing hands. And even if they do exert the rights under that court decision, some municipalities may not follow the policy. Informally, there are at least four municipalities that don't seem to even know about that.
However, in the worst scenario, I suppose that you could win the bid, wait a month or so to get it registered and the new owner comes forward, wants to pay and the municipality follows the policy of the decision (or knows about it - and we would have to assume the person knew about it, too), and you lose the property. The way I look at it, so what. I mean, these real estate experiences are extremely rewarding from the learning perspective. I haven't done anything without learning some valuable lessons. AND, you get your money back anyways. You would only be out of pocket your incidental expenses, which you can consider the cost of doing business (and certainly worth the financial pay-back you will make on one of the property you'll win big on...)
If you want to reduce your risk even further, you could, after your due diligence, (title search, etc.) check the internet for obits by typing in the name of the person enclosed in quotes, add a + sign, and quote the town name, this could bring up someone who died a few years before the tax sale - which likely means there's no emotional desire to preserve any property (estates aren't as emotional about their property, especially if the kids or executor's don't know the value, or can't see the potential value), nor are the as quickly aware of the tax sale as someone personally following it would be - giving you the time to get the deed registered.
I just really wanted people to understand that it's not quite the risk people think, in that original owners don't have a year to come back after the sale. It's incorrect information and could scare people away from potential financial freedom, or at least, a bit of financial ease for their families in exchange for a little part time work and a great new learning experience.
Frank, your name seems to pop up a lot and I just wanted to say that reading your stuff has been informative and interesting....Keep on keepin' on. And thank you.
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Gap - I'm assuming that is not your real name, thanks for the kind words. No that is not me in the picture.
I really wanted to emphasize that time is of the essence, whether it is a day, a week, or a year. The first sale that I won took the municipality two months to get me a deed - much too long, and you have to realize that beurocrats have other things on their plates.
You are very non-chalant about it - kind of , oh well, easy come easy go. The first two properties that I bought on tax sales have yielded a three fold return for me. In one case I took the municipality to court over a penny, and it ended up being worth fifty grand to me in the end - not something to sneeze at (find a penny, pick it up).
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Well, KEWL...you're the guy that took the municipality to court over a penny...I remember hearing/reading about that. It's great that you've won so much (X3) is a great return and 50k is a good penny too, why I'd say a dollar! Excellent! Kudos! Congrats! Amazing.
Every time I hear about someone making good money on real estate (in various creative ways), I feel like jumping for joy. There are so many new ways to get ahead including this one. I feel so lucky to have figured this out, and jumped on it. And I'm trying to share whatever knowledge I know and anything I've learned.
I didn't mean to be non-chalant, it's just that I've learned real estate is not about emotion, but primarily about numbers. And these tax sales numbers mostly work great, but if they don't, well that's okay, too - there's always another deal around the corner. I just wanted some of the people who write on this forum (with obvious trepidation) that it's good to go ahead and try something new, that although you should do all your due diligence (homework, or whatever you want to call it), you can make good money.
Sounds like you have, and that's now happening for me, too.
Happy Tax Sales!