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Property Purchase Tax Bc

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Property Purchase Tax Bc Powered By Docstoc
					Model Description

The housing purchase analysis model is intended to provide a comparison of the financial implictions of renting a residential pro
similar property.

The model assumes that the home's price will increase at the rate of general price inflation (the home ownership scenario is as
loss, in real inflation-adjusted dollar terms).

"Scenario 1" describes the case of purchasing a home. Scenario 1 includes up-front costs (downpayment, inspection fees, leg
payments, hydro, gas, etc). Certain of these ongoing costs are assumed to increase over time with price inflation (hydro, gas, r
assumed to be unaffected by the effects of price inflation (mortgage payments). "Scenario 1" also allows the user to include inc

"Scenario 2" describes the case of renting a home. Scenario 2 involves no up-front costs -- only ongoing costs. All "Scenario 2
general price inflation.

In order to use the model, change only the cells in RED (be careful not to change any of the cells in blue).

Given any set of RED input values, the model plots two graph lines.

- the BLUE line estimates the net difference in accumulated equity (including the "paid-off" portion of the mortgage).

- the ORANGE line estimates the net difference in cash flow, ignoring the "paid-off" portion of the mortgage.

In my view, the BLUE line provides the best "acid-test" as to whether purchasing is worthwhile from a financial perspective or n
However, the ORANGE line is also important to consider, because it gives a sense of the actual out-of-pocket cash outlay
required during the period of ownership (this line may have less relative importance to "deep-pocketed" buyers).

Have Fun!
plictions of renting a residential property versus the financial implication of buying a


 e home ownership scenario is assumed not to result in any capital gain or capital


ownpayment, inspection fees, legal costs, etc.), and ongoing costs (mortage
e with price inflation (hydro, gas, repairs, property insurance). Other costs are
 also allows the user to include income from a rental suite (if applicable).

nly ongoing costs. All "Scenario 2" costs are assumed to increase at the rate of


ells in blue).



rtion of the mortgage).

 the mortgage.

 from a financial perspective or not.
ual out-of-pocket cash outlay
pocketed" buyers).
House Purchase Analysis Model (v. 1.03)
Change Cells in RED only!




SCENARIO 1: PURCHASE HOME                                                                                       $100,000
                                                                                                                                                  NET FINANCIAL POSITION -- OWNERSHIP VERSUS RENTING
Intended Purchase Date                                    Jan-08
Purchase Cost of Home                                   $400,000
Down Payment                                             $40,000
CMHC Insurance                                            $9,000                                                 $50,000
Mortgage Value                                          $369,000
BC Property Purchase Tax                                  $6,000                                                                                  Excluding the Value of Home Equity

Inspection Fees                                             $337                                                                                  Including the Value of Home Equity
Legal Fees & Disbursements                                  $750                                                  $0,000




                                                                   Net Present Value (Adjusted for Inflation)
Property Survey                                             $350




                                                                                                                                                                                           Jan-2028
                                                                                                                            Jan-2008




                                                                                                                                       Jan-2013




                                                                                                                                                            Jan-2018




                                                                                                                                                                          Jan-2023




                                                                                                                                                                                                      Jan-2033




                                                                                                                                                                                                                 Jan-2038




                                                                                                                                                                                                                            Jan-2043
CMHC Application Fee                                        $165
Other Closing Cost (Excl. Adj. For Taxes, Water, etc)     $1,602

Mortgage Rate (Semi-Annual)                               6.85%
Effective Monthly Compounded Rate                         6.75%                                                  -$50,000

Amortization (Years)                                          25
Monthly Rental Income from Suite (if applicable)            $500

Annual Property Taxes                                     $2,000                                                -$100,000
Monthly Hydro and Gas                                       $177
Monthly Property Insurance                                  $100
Monthly Repairs and Maintenance                             $100
Annual Taxes, Repairs, Heat, etc.                         $6,524
                                                                                                                -$150,000
SCENARIO 2: RENT HOME

Monthly Rent (Including Heat, etc.)                       $1,200

OTHER INPUTS
                                                                                                                -$200,000
Expected Long-Term Price Inflation                        2.50%
Real Investment Return (i.e., above inflation)            3.50%
Nominal Investment Return                                 6.09%

Monthly Mortgage Payment                                  $2,550                                                -$250,000
Breakeven Month Excluding Home Equity                       none                                                                                                                     Month and Year
Breakeven Month Including Home Equity                   Nov-2037

Agent's commission (Assuming 3.22-100/1.15)               $6,670




MHPAM                                                                                                                                                                                                                                  11/10/2010

				
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