Being in debt to the Canada Revenue Agency can be paralyzing. The very thought of facing aggressive CRA agents is terrifying.
If you owe money to the CRA it will not go away by itself. Also in many cases, taxpayers who have been assessed with a tax debt, become fearful to file future returns. Even if you have not yet filed returns to the CRA, they can notionally assess you and make an arbitrary determination of your earnings based on whatever records they have on file.
If the CRA believes you owe them money, they will come after you. Interest and penalties will accrue at an alarming rate and your tax debt could grow in size by 200-300 percent.
If you own your home, you stand to lose the most. The CRA can attach a lien to your home which could cause a number of problems;
- The bank could call in your mortgage or refuse to renew your mortgage.
- When the amount of the lien exceeds the equity in your home, it makes it impossible to sell or refinance to deal with the tax debt.
- The CRA could force you into power of sale.
Before a lien is registered a homeowner has more options;
- If the amount of the debt exceeds the amount of equity available in the home, the homeowner could refinance the home. At which point they could use whatever equity is available to bargain with the CRA and offer a lump sum payment along with a monthly repayment plan.
- If the amount of equity does not exceed the available equity in the home and there is no lien present, the homeowner has many options. A seasoned mortgage broker could arrange a new first mortgage or a second mortgage to pay off the tax debt.
- If the amount of equity does not exceed the available equity but a tax lien is registered on the home, this represents a more delicate situation. Even if the tax debt is being paid in full some banks will cringe at the mere existence of a tax debt. There are however many major financial institutions that will gladly offer low interest mortgage financing to a homeowner who has a tax debt provided the tax debt is being paid in full.
At the end of the day trying to ignore a tax problem is an expensive proposition and will cost you way more in the long run. Your best course of action is to hire someone who is capable of dealing with the CRA on your behalf. If you are a homeowner there are many mortgage brokers who represent all major financial institutions and specialize in working with homeowners who have tax debt.
If you have no assets and have obtained large tax debts there are also financial professionals who can advise you on debt relief options so that you can move on from your tax debt. For more information about paying your tax debt using home equity please visit http://www.gtamortgagematters.com/
Tuesday, July 26, 2011
Monday, July 18, 2011
Power of Sale in Toronto – Why Do They Happen?
Many people think about Power of Sale and associate it as a consequence to a person who defaults on their mortgage payment. Defaulting on mortgage payments is just one of many things that can trigger a power of sale.
Every mortgage has “standard charge terms”. These are terms that apply to all of the institution’s mortgages. If any of these terms are breached the financial institution could demand to be paid in full. If you can’t pay off the mortgage then the mortgage lender could put you into power of sale.
Here some common standard charge terms that don’t relate with not making your mortgage payments yet financial institutions take very seriously.
1. You must keep your property taxes up to date. Failing to do so could change the banks secured position on title. If they learn that your property taxes are in arrears, they may pay them on your behalf at which point they will demand payment in full from you, or call in your mortgage. If the bank pays your property taxes on your behalf or there is a property lien that has to be removed, you could be subject to administrative fees and legal fees in addition to the property tax arrears and interest.
2. You must maintain valid fire insurance on the property with the bank listed as the loss payee on the policy. Failing to do so is serious because it puts the bank at serious risk to lose their security if there is a fire in your home. If you allow your fire insurance to lapse, the insurance company will inevitably notify your bank. Obtaining fire insurance after a previous policy has lapsed can be expensive – especially if the policy was cancelled for non-payment.
3. You must occupy the residence as your principal residence. Tenants have different rights than homeowners. Lenders will often not extend high ratio mortgage financing on rental properties because the process of evicting tenants is long, expensive and complicated.
4. You cannot perform construction or major renovations on the property without consent from the bank. Many folks start renovations and then run out of money, thereby depreciating the value of the bank’s asset.
Most of these issues, like defaulting on mortgage payments, occur because individuals run into financial problems and simply can’t make ends meet. The ironic thing is that your home may be the answer to these problems. Refinancing your mortgage or obtaining a second mortgage could give you the financial relief and flexibility to clear up financial issues and start you back on a fresh, firm, financial footing.
Unfortunately, powers of sales in Toronto are all too common despite being easily avoided. If you are at risk of your home going into power of sale visit http://www.gtamortgagematters.com/
Every mortgage has “standard charge terms”. These are terms that apply to all of the institution’s mortgages. If any of these terms are breached the financial institution could demand to be paid in full. If you can’t pay off the mortgage then the mortgage lender could put you into power of sale.
Here some common standard charge terms that don’t relate with not making your mortgage payments yet financial institutions take very seriously.
1. You must keep your property taxes up to date. Failing to do so could change the banks secured position on title. If they learn that your property taxes are in arrears, they may pay them on your behalf at which point they will demand payment in full from you, or call in your mortgage. If the bank pays your property taxes on your behalf or there is a property lien that has to be removed, you could be subject to administrative fees and legal fees in addition to the property tax arrears and interest.
2. You must maintain valid fire insurance on the property with the bank listed as the loss payee on the policy. Failing to do so is serious because it puts the bank at serious risk to lose their security if there is a fire in your home. If you allow your fire insurance to lapse, the insurance company will inevitably notify your bank. Obtaining fire insurance after a previous policy has lapsed can be expensive – especially if the policy was cancelled for non-payment.
3. You must occupy the residence as your principal residence. Tenants have different rights than homeowners. Lenders will often not extend high ratio mortgage financing on rental properties because the process of evicting tenants is long, expensive and complicated.
4. You cannot perform construction or major renovations on the property without consent from the bank. Many folks start renovations and then run out of money, thereby depreciating the value of the bank’s asset.
Most of these issues, like defaulting on mortgage payments, occur because individuals run into financial problems and simply can’t make ends meet. The ironic thing is that your home may be the answer to these problems. Refinancing your mortgage or obtaining a second mortgage could give you the financial relief and flexibility to clear up financial issues and start you back on a fresh, firm, financial footing.
Unfortunately, powers of sales in Toronto are all too common despite being easily avoided. If you are at risk of your home going into power of sale visit http://www.gtamortgagematters.com/
Monday, July 11, 2011
Taxpayer Relief is Not the Fastest Way to Solve Your Tax Problem
If you have a tax debt that has interest and penalties assessed and you have a serious medical problem, suffer from financial hardship, have been the victim of a disaster or you can prove that the CRA (Canada Revenue Agency) has made an error, you can make an application for Interest and Penalty Relief to the CRA.
This is a long process and a large percentage of these applications end up being declined. This is usually the case because taxpayers make the applications themselves and do not provide the sufficient evidence needed to prove their claims.
Even if a taxpayer has been accepted for taxpayer relief it could take 1-2 years before a decision is made. In the meantime, interest will continue to accrue and if (like in many cases) it is not accepted – you will have to pay the extra interest and will face aggressive collection action.
Homeowners have even more to worry about because once a property tax lien is applied the CRA will notify mortgagors, such as the bank. This will raise awareness of the tax dispute/issue and the outcome of this could be long-term destruction to your relationship with your bank.
If you own your home and have a tax dispute, tax debt or believe you may qualify for taxpayer relief, we recommended using your home as a tool to satisfy the CRA, then pursing your dispute.
Refinancing your home to pay off your tax debt will result in much less interest than the interest charged by the CRA. Using a mortgage as a tool to pay your tax debt can enable you to pay off large debt with very little impact to your budget/monthly payments.
Most banks will shy away from working with a customer who has a large tax debt - even if you are borrowing the money from them to pay the debt in full. The mere existence of a tax debt will lead to many banks flagging you as a high risk.
There are however many Credit Unions, Trust Companies, Mortgage Investment Corporations and even private lenders who will extend mortgage financing to individuals who have a large tax debt even if there is a lien on their property.
There are many mortgage solutions for taxpayers, who are in need of refinancing, to deal with tax debt. These include first mortgage refinancing, second mortgages and home equity lines of credit. A good mortgage broker will be able to access all funding sources and products so that you can see all of the options that exist. Also a mortgage broker can be trusted with all of your financial information without rendering judgment or damaging your banking relationships.
The fastest way to deal with a tax debt is to pay it off. If there is an underlying dispute or you want to apply for penalty relief – if it is granted the CRA will pay you the money. You can apply it to your mortgage as a lump sum payment to principal. For more information about the fastest way to solve your tax problem please visit http://www.gtamortgagematters.com/
This is a long process and a large percentage of these applications end up being declined. This is usually the case because taxpayers make the applications themselves and do not provide the sufficient evidence needed to prove their claims.
Even if a taxpayer has been accepted for taxpayer relief it could take 1-2 years before a decision is made. In the meantime, interest will continue to accrue and if (like in many cases) it is not accepted – you will have to pay the extra interest and will face aggressive collection action.
Homeowners have even more to worry about because once a property tax lien is applied the CRA will notify mortgagors, such as the bank. This will raise awareness of the tax dispute/issue and the outcome of this could be long-term destruction to your relationship with your bank.
If you own your home and have a tax dispute, tax debt or believe you may qualify for taxpayer relief, we recommended using your home as a tool to satisfy the CRA, then pursing your dispute.
Refinancing your home to pay off your tax debt will result in much less interest than the interest charged by the CRA. Using a mortgage as a tool to pay your tax debt can enable you to pay off large debt with very little impact to your budget/monthly payments.
Most banks will shy away from working with a customer who has a large tax debt - even if you are borrowing the money from them to pay the debt in full. The mere existence of a tax debt will lead to many banks flagging you as a high risk.
There are however many Credit Unions, Trust Companies, Mortgage Investment Corporations and even private lenders who will extend mortgage financing to individuals who have a large tax debt even if there is a lien on their property.
There are many mortgage solutions for taxpayers, who are in need of refinancing, to deal with tax debt. These include first mortgage refinancing, second mortgages and home equity lines of credit. A good mortgage broker will be able to access all funding sources and products so that you can see all of the options that exist. Also a mortgage broker can be trusted with all of your financial information without rendering judgment or damaging your banking relationships.
The fastest way to deal with a tax debt is to pay it off. If there is an underlying dispute or you want to apply for penalty relief – if it is granted the CRA will pay you the money. You can apply it to your mortgage as a lump sum payment to principal. For more information about the fastest way to solve your tax problem please visit http://www.gtamortgagematters.com/
Monday, July 4, 2011
Property Tax Assessments and Property Tax Arrears
Property tax assessments are important because they determine the value that will be used by the municipality when calculating your annual property taxes.
Property taxes are one of the few debts that take priority on a property. What does this mean? If you were to default on your mortgage payment with property tax arrears, the property tax arrears must be paid otherwise property ownership could be transferred to the Queen. If a lender were to take possession of a property in the event of a mortgage default, they would not be able to sell it without first paying the property taxes.
It is for this reason that many lenders will collect your property taxes in conjunction with your mortgage payment each month and remit your property taxes on your behalf.
Most mortgages contain standard charge terms. These terms require that the borrower keep their property taxes up to date. If you have property tax arrears, your bank could do one of several things, these include:
1. Sending you a notice demanding that you pay your property tax arrears
2. Paying the property taxes on your behalf and then demanding payment in full
3. Calling in your mortgage and demanding to be paid off – in extreme cases
Property tax arrears can cause a snowball effect. Missing even one year of payments can cause thousands of dollars of debt to accumulate. You cannot go bankrupt on property tax debt because it carries with the land. If you have property tax arrears, the faster you deal with the issue, the better. Ignoring the problem will only cost you more in the long run because you will pay interest on the debt and if they file a lien on your property, you will have to hire professional help to get it removed.
Here are some helpful tips for dealing with property tax arrears.
1. Consider the big picture. If you owe too much in property tax arrears to pay off and/or you have other debt, a consolidation may be the best choice.
2. You can consolidate debt through obtaining a loan or mortgage. Refinancing your mortgage to consolidate debt is an effective solution because the interest rate will usually be low, giving you lots of flexibility when setting the amount of your monthly payment.
3. Do not walk in to your bank and ask for a loan to pay property tax arrears. Although well intentioned, this could disrupt your relationship with your bank. Pursue a relationship with a licensed mortgage broker where you can openly discuss the issues. A mortgage broker can recommend transparent solutions with financial institutions that will be open to helping you resolve your situation.
4. If you refinance your mortgage, ask that the lender collect your property taxes with your payment so that you don’t have to worry about it again in the future.
For more information about property tax assessments and property tax arrears please visit http://www.gtamortgagematters.com/
Property taxes are one of the few debts that take priority on a property. What does this mean? If you were to default on your mortgage payment with property tax arrears, the property tax arrears must be paid otherwise property ownership could be transferred to the Queen. If a lender were to take possession of a property in the event of a mortgage default, they would not be able to sell it without first paying the property taxes.
It is for this reason that many lenders will collect your property taxes in conjunction with your mortgage payment each month and remit your property taxes on your behalf.
Most mortgages contain standard charge terms. These terms require that the borrower keep their property taxes up to date. If you have property tax arrears, your bank could do one of several things, these include:
1. Sending you a notice demanding that you pay your property tax arrears
2. Paying the property taxes on your behalf and then demanding payment in full
3. Calling in your mortgage and demanding to be paid off – in extreme cases
Property tax arrears can cause a snowball effect. Missing even one year of payments can cause thousands of dollars of debt to accumulate. You cannot go bankrupt on property tax debt because it carries with the land. If you have property tax arrears, the faster you deal with the issue, the better. Ignoring the problem will only cost you more in the long run because you will pay interest on the debt and if they file a lien on your property, you will have to hire professional help to get it removed.
Here are some helpful tips for dealing with property tax arrears.
1. Consider the big picture. If you owe too much in property tax arrears to pay off and/or you have other debt, a consolidation may be the best choice.
2. You can consolidate debt through obtaining a loan or mortgage. Refinancing your mortgage to consolidate debt is an effective solution because the interest rate will usually be low, giving you lots of flexibility when setting the amount of your monthly payment.
3. Do not walk in to your bank and ask for a loan to pay property tax arrears. Although well intentioned, this could disrupt your relationship with your bank. Pursue a relationship with a licensed mortgage broker where you can openly discuss the issues. A mortgage broker can recommend transparent solutions with financial institutions that will be open to helping you resolve your situation.
4. If you refinance your mortgage, ask that the lender collect your property taxes with your payment so that you don’t have to worry about it again in the future.
For more information about property tax assessments and property tax arrears please visit http://www.gtamortgagematters.com/
Subscribe to:
Posts (Atom)