The house tax

We know the T2 gang, spending billions they do not have, are likely to be gunning for small business with the Doctor Tax. Speculation is mounting rapidly that Ottawa is about to increase capital gains taxes, giving your mutual fund an unwelcome kick and making that investment condo look even worse. Now we have chatter that the dividend tax credit could be a target, whacking seniors who replaced do-nothing GICs with divvy-producing equities for income.

But, alas, it may get worse. Is Justin Trudeau setting the scene for a House Tax?

Actually, it’s already been set. And you read about it first on this pathetic blog. Remember almost six months ago when Wild Bill Morneau brought in a series of measures to (we were told) chill the real estate market? One that slipped beneath the radar was the need for all taxpayers to register their real estate transactions with the federal government in order to claim tax-free capital gains. We were told at the time this was to spank foreign buyers trying to use the dodge.

But, really? Here is what we said at the time:

“Buried in the announcement, the background paper, the technical paper and then deep into the CRA website are significant changes to how your Big Brother government will now be policing your family home. Under the guise of whacking foreign buyers – a tiny percentage of whom have been claiming the ‘principal residence’ exemption to avoid capital gains tax – the T2 gang have given the CRA the ability to whack you.

It’s a first in Canadian history. You’ll have to prove your home is your home. If you don’t, the money made on its appreciation will be fully taxable. The suggestion that homeowners selling or buying their personal residence will be a required to report it on income tax forms sounds innocent, but it’s anything but.  Twenty years from now as pressure is put on funding government pensions, having a record of net wealth tied up in the family home could place unexpected challenges upon those looking to retire.

Says housing analyst Ross Kay: “Anyone who believes today’s suggestion that Canadians are now required to give the government the details on selling the family home is not thinking.  The government is using the illegal actions of NON-Canadians as an excuse to monitor Canadians’ retirement finances – not something this country should stand for.”

Here are the facts:

  • Taxpayers must report the sale of the family home if you’re claiming an exemption from capital gains tax (in the past that exemption was automatic. If you don’t comply, no exemption.
  • The CRA will have authority at assess capital gains tax on real estate that is not reported on the tax return for the year in which it is sold.
  • Ottawa will work with provincial governments (which maintain land registry operations) to ensure that all residential real estate transactions are recorded and taxed as required.
  • The tax return, starting next April, will require details on the date a property was acquired, the proceeds of disposition and a description of the property. To qualify for a capital gains tax exemption, you must complete and file a separate Schedule. The full exemption may not be granted, depending on the details provided.
  • If you sell your home but forget to include this information on your return, the CRA will not allow the proceeds to be tax-free. In that case you must ask the CRA to amend the return. This amendment will be granted “in certain circumstances” but may also come with a penalty equal to the lesser of $8,000 or $100 per month from the sale date to the request date.
  • If you have a suite in your home, then sell it, the selling price must be split and reported. Part of it will qualify to the tax exemption and part will not. In markets with elephantine gains in home prices, this could be quite the bombshell.

Effective today your personal residence is a fully-taxable commodity unless you take specific steps to avoid it. By taking those steps, you’re also providing the government with information never previously gathered. Will Canadians accept this? Bill Morneau and his boss think so. After all, they wrapped it in anti-Chinese emotion. How brilliant was that?”

Well, the form is now out, as a page in the T1 tax return. Here it is:

If you comply, there’s a permanent record of what an address sold for, and how much you personally received. Valuable information for any government establishing a property registry in advance of applying a potential tax on real estate, or wanting to track what windfall gain an individual may have made. If you don’t fill it out, you’re pooched – taxed on the entire profit.

Some people believe, with so much of Canadians’ net worth having been shifted from financial assets into real estate that no government can afford not to tax it. Others are musing people might be granted a certain lifetime limit for tax-free real estate gains, then be nailed for amounts in excess. After all, it is fair wage slaves are sucked dry with levies on employment income, while a house in Vancouver or Toronto can double in value, giving millions, tax-free?

Of course not. And this government’s all about fairness, right?

209 comments ↓

#1 tracking windfall on 02.13.17 at 6:34 pm

wanting to track what windfall gain an individual may have made

I am pretty sure that any time a movement on a bank account hits over 15G, the bank reports it already.

Even if it does not, CRA can get the information from the financial institution any time, without a warrant.

#2 BobC on 02.13.17 at 6:34 pm

Allow me to repeat myself. The day will come you’ll be begging for a Trump.

#3 squeegee on 02.13.17 at 6:34 pm

They could squeeze billions just by going after the house flippers who sold in the last say 5 years.

#4 what's next? on 02.13.17 at 6:39 pm

Interest deduction on mortgage?

#5 not 1st on 02.13.17 at 6:40 pm

Garth everything is going to be hit. Does it make sense to squirrel away in a TFSA when that will be a target in the next decade or so?

And those suckers with big cash in RRSPs are going to be feeling it big time.

And last but not least, god help our millenial brothers and sisters.

#6 begging for a Trump on 02.13.17 at 6:40 pm

Allow me to repeat myself. The day will come you’ll be begging for a Trump.

That day arrived already.

#7 Donn on 02.13.17 at 6:41 pm

#1 tracking windfall, you are correct except it was 10K or any series of transactions that are obviously close to this threshold. (ex. $9990 five times) That was the number 7 years ago when my wife retired from one of the big 5.

#8 Mad cow on 02.13.17 at 6:43 pm

If they axe the dividend tax credit, doesn’t it mean the effective rate on those profits will be the personal rate + corporate rate? If so, that is effectively taxing those dollars at 66%+. Why would I continue to hold Canadian investments when I can invest in better companies across the border with the same tax treatment?

#9 Happening now on 02.13.17 at 6:46 pm

Then if this is all fair etc then why not properly tax all the foreign residents who reside in Canada but make there $$ elsewhere ????, or how about the CRA looking into the incomes of all the “students ” and ” homemakers” who claim little or no income yet buy multi million $$ homes…..why not ????

#10 Fraser Valley on 02.13.17 at 6:47 pm

What is wrong with having to report when you sell your principle residence? Big deal if you are honest. Bring it on so the flippers can be taxed properly. Now the gov’t can pull the sales data away from the MLS system too. Double win. I don’t see the problem for honest citizens.

#11 Hotdogs from Heaven on 02.13.17 at 6:48 pm

The form does not look to have a box for apartment/suite number. Don’t they realize how many people in this country now live in condos? Idiots!

#12 Barney Rubble on 02.13.17 at 6:49 pm

Love the blog, Garth. Please keep up the “good work” and sound advice.

Question for you: In one of your books you suggested Canadians have a heavy-duty safe anchored in their basement, and have a ready supply of cash in that safe “just in case”. Is there any reason one could not/should not use a bank safety-deposit box for this cash instead of the safe?

That was 2008 advice, and only for those who were wusses. I see no need for this today. Go buy an Audi. — Garth

#13 MF on 02.13.17 at 6:49 pm

#143 Ace Goodheart on 02.13.17 at 4:38 pm

-A couple questions,

If government issues bonds to finance it’s debt, wouldn’t hire rates be more attractive to investors? Isn’t that why there is interest to begin with?

“Mostly because our main trading partner, the USA, whose government borrowed for 50 years to run a money losing (and economic prosperity creating) military experiment in world domination, is broke.”

The debt is massive yes, but military spending does not make up as much GDP spending as you think:

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2034rank.html

You can argue that a strong military is what has helped the US maintain it’s status as a super power. A lot of people (myself included) also believe a strong US military is a force for good in the world. Without the US military at the top, just imagine who would be next. Everyone who is not in the US sphere of influence has a garbage worldview.

MF

#14 Alberta Ed on 02.13.17 at 6:50 pm

That would add another thread to the Green Screw carbon tax.

#15 when the whip comes down on 02.13.17 at 6:54 pm

Hi Garth, and what of a self employed person claiming office use of home amounting to say 15% of its square footage? If this has been used as such since the original purchase date I would presume the principal residence exemption for 15% of any capital gain has been impaired. Is this correct?

#16 Anthony on 02.13.17 at 7:01 pm

Don’t own a house, nor am I a tax cheat, so it’s easy for me to say that this is fine.

I know of one case of where someone paid off a basement dweller to set their address for a year to avoid cap gains tax.

Also, I know someone who “got a deal” on their condo from someone as long as they don’t set their address to the unit or apply for the Ontario trillium benefit. They had a stack of the landlord’s mail by the front door… I assume tax evasion.

#17 InvestorsFriend on 02.13.17 at 7:01 pm

Is there any real change to the personal residence exemption?

You report the gain and you get the exemption IF you qualify.

Who does this harm besides those who were formerly failing to split out the gain when they had a rental suite? They were supposed to be doing that split all along. Not to mention claiming the income all along, no?

#18 Pete from St. Cesaire on 02.13.17 at 7:04 pm

Oh yes, this is all coming and much much worse too. I foresaw the global financial collapse coming when I was just 13 years old and I have lived accordingly, as a minimalist. Some people have asked me why if I saw it coming I didn’t move away; I reply that there will be basically no where to run to.
Like Garth says “it’s not different this time”. Well that applies to empire collapses too. So enjoy your money while you can. Your gold, TFSA’s, RRSP’s, homes, everything is already gone. History repeats itself. The chapters in history are like the chapters in a book; the end has already been written and laid down in black & white, we just haven’t arrived at the last chapter yet.
The greatest fool is the one who is still holding his full ‘net worth’ when the system finally unravels. Spend your time wisely, it’s the only money you have.

#19 cecilhenry on 02.13.17 at 7:04 pm

The more numerous the laws, the more corrupt the government.

Canadians have been voting to transfer wealth and power to a big secular government. This is the result.

Indeed, they have completely abandoned responsibility and independence for a veneer of virtue signalling and humanistic self aggrandizement.

Socialism ends when you run out of OTHER people’s money to steal.

This will end badly if not abruptly reversed.

Government needs a 50% haircut. When government shrinks, freedom for the citizen grows.

#20 InvestorsFriend on 02.13.17 at 7:06 pm

Tax Fairness?

It’s hard to have a discussion of tax fairness with people who think that taking away or reducing any existing tax break (lowering the TFSA limit, getting rid of the bizarre Income Trust situation) is simply outrageous.

Basically, no discussion is possible or needed. The government was elected and must impose any tax changes it deems appropriate. There is simply no point in trying to get those that will pay more to agree. Just impose (after a vote) any needed changes. That is the JOB of government.

#21 X on 02.13.17 at 7:08 pm

Got it…if you rent out your basement for cash, no paper trail (despite the consequences that could result in getting a non paying tenant out), you get full tax free capital gains on the sale of your home….if you collect a cheque and pay taxes on your rental income, you are taxed again when you sell your home.

Too many taxes will result in more cash only transactions….

#22 Pete from St. Cesaire on 02.13.17 at 7:09 pm

BARNEY RUBBLE:Is there any reason one could not/should not use a bank safety-deposit box for this cash instead of the safe?
——————————————
You must be kidding. Here is a simple task. Check into what happened in Argentina. They alerted the elite of the impending collapse giving them time to move their assets to safe heavens; then they broke into the bank safety-deposit boxes of everyone else and confiscated all of the contents.

#23 Doug t on 02.13.17 at 7:10 pm

And this is why the masses are waring against governments and the establishment around the globe – sh*ts getting real more and more.
Next up – cashless society brought to you by the same bums to utterly control what you thought was yours – get ready

RATM

#24 The Great Gazoo on 02.13.17 at 7:11 pm

#12 Barney Rubble,

Hey dumb dumb, where’s Fred? Is he working at the quarry or home with Wilma?

Gazoo

#25 X on 02.13.17 at 7:12 pm

Actually curious to see how much $ this brings in for the gov’t….I have no problem with ensuring those who are miss using the principal residence exemption have to pay their RE investment taxes.

The amendment fee sounds like a cash grab on those who don’t use an accountant too.

#26 Why Fuss? on 02.13.17 at 7:12 pm

Why worry about things you have no control over? This country is moving in a socialist direction, those who don’t recognize that, are not reading the writing on the wall. Canada is pooched! The only way our government can continue its bloating, is by taxing us into oblivion. We are all too busy with being politely Canadian and social justice warriors, that we don’t see that we are like lambs being led to slaughter. We think we are so sofisticated and enlightened debating useless things like which gender neutral pronouns are the least offensive and Oh, what a brute that Trump is. . .meanwhile back in the great white north the blood letting is taking place. It’s times like this, that I am glad I am a dual citizen.

#27 Leebow on 02.13.17 at 7:14 pm

Won’t they need to recognize a loss and give credit if an investment property is sold at loss?

#28 Would you like some cheese with that whine? on 02.13.17 at 7:16 pm

Garth,
This “house tax” is a good thing, isn’t it?
But you blog about it like it is a bad thing?

Am I missing something?

#29 45north on 02.13.17 at 7:18 pm

Speculation is mounting rapidly that Ottawa is about to increase capital gains taxes,

as I said it’s quite possible that Ottawa will collect less after it increases the tax on capital gains. I don’t see why the opposition shouldn’t embarrass the Government on this:

http://www.greaterfool.ca/2017/02/09/the-resistance/#comment-499547

#30 Doug t on 02.13.17 at 7:20 pm

#10

Yeah the old “honest civilians” BS – just keep letting Big Brother get more inquisitive about your comings and going – it’s about freedom and privacy for gods sake. With your attitude we all will be surrounded by CCTV in no time and stopped on the street for ID checks for no better reason than power and control pffft

#31 Cdn Mom on 02.13.17 at 7:24 pm

“Valuable information for any government establishing a property registry in advance of applying a potential tax on real estate, or *wanting to track what windfall gain an individual may have made.* If you don’t fill it out, you’re pooched – taxed on the entire profit.”

This does not provide a windfall gain amount, as no info as to expenses to create that gain are provided. Interest expense? Extensive renovations? Addition to building?

Expecting selling price to = gain is the same as a company’s annual income = annual profit. Totally bogus.

CRA would end up losing in court.

#32 Taxed out on 02.13.17 at 7:25 pm

I think we all need a trust fund like T2’s……….now how does that go

#33 Mondo on 02.13.17 at 7:25 pm

) <— there I closed that bracket for you. :)

#34 When Will They Raise Rates? on 02.13.17 at 7:27 pm

#10 Fraser Valley on 02.13.17 at 6:47 pm

What is wrong with having to report when you sell your principle residence? Big deal if you are honest. Bring it on so the flippers can be taxed properly. Now the gov’t can pull the sales data away from the MLS system too. Double win. I don’t see the problem for honest citizens.
—————-

First they came for the flippers, and I did not speak out—
Because I was not a flipper…

#35 Ryan M on 02.13.17 at 7:27 pm

For me, this is all connected with the future of health care. After this year, there will be no hiding how much wealth you accrue by selling your home. For instance, the government will not want to subsidize seniors in residential care who have $500,000+ in the bank. All sorts of new rate formulas will be devised from this – wait and see.

#36 };-) aka Devil's Advocate on 02.13.17 at 7:31 pm

WOAH!

#37 Y m o 3 on 02.13.17 at 7:32 pm

What if you buy a tear down and build new? Will your property be seen as ‘appreciating’ by 100s of ks in a year?

#38 };-) aka Devil's Advocate on 02.13.17 at 7:35 pm

That could go so terribly wrong.

I might be so inclined as to give up my citizenship in exchange for some Americans.

#39 Metaxa on 02.13.17 at 7:36 pm

Hey #2, #6
Did you make note of T2 deploying true Statesman-like behaviour while Trump tried to bear paw him like he does…
http://theslot.jezebel.com/trump-tried-and-failed-to-pull-his-strange-trademark-ha-1792300523

T2 absolutely defeated your man, you can see it in his face as he concedes. That is the kind of behaviour a bully respects.

#40 S.Bby on 02.13.17 at 7:38 pm

They’d better not mess with the dividend tax credit. Those shares are bought with after tax money and the companies have also already paid tax on their earnings. It would be double taxation.

#41 Ret on 02.13.17 at 7:38 pm

If people are flipping houses, lying about who really owns and lives in rental properties, and playing the CRA for suckers with rental incomes from illegal basement suites, I am not sure why such liars and cheaters deserve to get a free ride?

I honestly don’t believe that the single family home, used as such, is behind Bill Morneau’s increased monitoring of property transfers.

Honest people, doing honest things, have nothing to fear from the CRA on this matter, in my opinion. Let’s ratchet down the quantum leaps in logic and hysteria.

If you have lived in a residence for years and have made a nice tax free gain, what is wrong with the government wanting a simple statement from you regarding the sale of the property.

If you want to play games, lie, and cheat your fellow Canadians, you deserve whatever the CRA wants to levy against you.

Ride’em Wild Bill!

#42 AK on 02.13.17 at 7:40 pm

#2 BobC on 02.13.17 at 6:34 pm
“Allow me to repeat myself. The day will come you’ll be begging for a Trump.”
——————————————————————
It’s already here.

What do you think Kevin O’Leary has been doing the past month ?

#43 };-) aka Devil's Advocate on 02.13.17 at 7:42 pm

United Federation of Pacific Northwest States and Provinces UFPNW.

We Give THE USA everything East of Saskatchewan.

They (USA) give us Washington State, Oregon, California, Idaho, Montana, Utah and Arizona.

#44 Rabbit One on 02.13.17 at 7:43 pm

Principal Home capital gains exemption rule is there for many years.
It was just not enforced, because it was based on honest declaration.
this extra piece of paper is to give hard time for honest tax payers, not to the group the government (if it does really) aims for.
I personally know too many family or individuals claimed false principal residence exemptions.
I always think B.C. is so unique, government in ON would never really understand how it is.

#45 Bytor the Snow Dog on 02.13.17 at 7:44 pm

I don’t see anything wrong with this. All it does is make you report what is already happening.

The upside is they will now have stats on essentially all RE transactions. That’s a good thing.

I understand scope (tax) creep but let’s take this one step at a time.

#46 DBB on 02.13.17 at 7:45 pm

Now the dividend tax credit too? Wow. Hope someone is warming up his seat in the opposition in 2019. Or are we collectively so financially illiterate that he may actually get away with these games?

#47 Nero on 02.13.17 at 7:45 pm

Ahaaa aha ahaaa…

sorry….

Pay unto Ceasar what is Ceasars.

Pass me my fiddle….

#48 Jay on 02.13.17 at 7:46 pm

Anything Vancouver can do, we can do better! #torontorules

https://betterdwelling.com/city/toronto/3-in-5-toronto-neighborhoods-see-detached-home-prices-rise-over-20/

#49 Leo Trollstoy on 02.13.17 at 7:46 pm

In Toronto I just started getting voice mail from people who will “but my home with cash”. Interesting. Annoying. Scary.

#50 Jay on 02.13.17 at 7:47 pm

Hey, this is post number 2,590! Merry Garthmas!!!

#51 Agent 99 on 02.13.17 at 7:50 pm

I think this may help flag the dishonest foreign buyers who declares no income and sells a $10 million dollar home.
Way to go Justin!

#52 R. Murphy on 02.13.17 at 7:53 pm

Really they should tax all housing sales – start in Etobicoke.

#53 46 and 2 on 02.13.17 at 7:54 pm

Whatever it takes to stop the flippers I am all for it.

If anyone cannot prove that the residence sold is not the primary residence then is should be taxed as a capital gain, period.

#54 mathman on 02.13.17 at 7:55 pm

It seems easy to me. Set up a special task force, cross reference all tax returns with owner occupied homes and viola, you find out who has not been declaring rental income. You have to include your address on your tax return. A Waterloo computer science student could figure this out in 20 mins. You offer these folks a tax amnesty, which could be 25-50% of what they owe and fill the Gov’t coffers. You can thank me later JT2.

Second easy fix – people flipping have gotten financing somehow, take the mortgages of the major banks, cross reference the addresses with the mortgagee and see if they still own said property and or are filing a tax return under a different address.

Playing by the rules is how I live my life, time for our Government to root out the “corruption” in the RE market and stop asking me to pay more, which is already many multiples of the ave industrial wage.

I’m tired of filing my taxes this time of year, when thousands are screwing the system in plain site. JT2 should ready Atlas Shrugged, although it may be written at too high a grade level for him to understand.

Math

#55 traderJim on 02.13.17 at 7:56 pm

As long as a majority of people want government to take money from others to give to themselves the move to ever higher taxes is inevitable.

I figured that out long ago and decided to go on strike and stop funding other people’s ‘entitlements’.

I’ve found some ways to live well while paying little tax, all perfectly legal. Not hard to do if you’re self-employed or retired and don’t need a lot of income. (Being debt free is a big help, obviously).

If you value living as opposed to material things, it can work really well.

For example, by building my own home, instead of paying a contractor $200,000, I do everything except the really difficult jobs myself.

Not paying someone else $200,000 is the same as ‘earning’ $400,000, more or less. The big loser is Mr Taxman, he doesn’t get to tax my $400k in ‘earnings’ or the contractor’s $200k either. Win win!

I happen to really enjoy this kind of work, so that’s just a bonus.

Even Trump will not be able to stop the move to ever higher taxes. He might delay it a bit, that’s all.

Looking forward to the day the rest of the productive world wakes up and smells the coffee. You’re just prolonging the inevitable.

There are much smarter ways to live than working half your life for someone else’s benefit.

#56 InvestorsFriend on 02.13.17 at 7:57 pm

The Global financial Crisis Had No Impact on Most Canadians

#18 Pete from St. Cesaire on 02.13.17 at 7:04 pm said:

Oh yes, this is all coming and much much worse too. I foresaw the global financial collapse coming when I was just 13 years old and I have lived accordingly, as a minimalist.

***********************************
You did well to predict the financial crisis.

But your response was totally wrong. The correct response was to get a part-time job and then buy stocks after the collapse.

Sort of typical adult Canadian investors responded to the financial crisis in three ways:

1. Panicked and sold equities near the bottom or at least at large losses. Sucks to be them.

2. Did nothing and rode through it and it had no net impact. Bit like a scary roller coaster ride. Scared the crap out of them but in the end it had zero impact.

3. Bought the shares of those who panicked and therefore benefited nicely from the crisis.

People forget that every dollar lost by the people in group 1 was picked up by people in group 3.

Volatility is the best friend of the intelligent investor.

Groups 2 and 3 also continued to benefit from the normal long-term gains of the market. Group 1, well you might meet them at your Saturday night doomer meetings.

#57 prairiegopher on 02.13.17 at 8:07 pm

The government needs more money so selfie-boy can take more trips or maybe get another nanny.

#58 Rexx Rock on 02.13.17 at 8:08 pm

T2 is smart,with his good looks and charm .Canadians will be taken to cleaners.I love it,like I said the government is flat broke and its coming for your money.Buy foreign real estate,bitcoin,gold anything they can’t get their dirty hands on.Thats why they want a cashless society.Good luck because everybody’s going to need it.

#59 InvestorsFriend on 02.13.17 at 8:11 pm

Cash versus Money

#23 Doug t on 02.13.17 at 7:10 pm said:

Next up – cashless society brought to you by the same bums to utterly control what you thought was yours – get ready.

***************************************
We are already there.

Years ago Yoggi Berra apparently said that Baseball Players at that time got paid in cash, “which was almost as good as money”.

These days, cash (in large amounts) is no where near as good as (electronic) money. Cash today remains a convenient and anonymous way to transfer small amounts of money but it is quickly becoming obsolete.

If you could take your whole pay check in cash, would you? Not likely.

Would you literally accept a mountain of cash if you sold a house? Not likely.

Cash is just about obsolete. Get over it.

It just caused confusion anyhow as people thought that money was paper cash when the essence of money is in fact, and always has been, transferable credit. Money is an intangible claim on goods and service. The amount of goods and services that one unit of money (say a dollar) will buy is set in the market and governments also try to control the overall erosion of purchasing power (inflation). It all works wonderfully well.

Cash is dead! Long live Money!

#60 Rabbit One on 02.13.17 at 8:13 pm

#12 Barney Rubble
>use a bank safety-deposit box for this cash instead of the safe

I know many people do, but if you read the Safety Deposit Agreement at big 5 banks, it says keeping cash (in any currency) is prohibited.

#61 Nonplused on 02.13.17 at 8:15 pm

Garth,

If things keep trending as they are I don’t have to worry about paying a capital gains tax on my primary residence but I may have a loss to declare. Just got my assessment, down again. But, surprise surprise the mill rate is going up. Calgary is not Vancouver. I suppose I will have to fill out the new form anyway if I want to be able to declare it.

Anyway I hate capital gains taxes especially on things like houses. It’s simply an inflation tax. “Oh look you bought a house for $100,000 in 1970 and sold it for $500,000 in 2017? Pay tax on the difference.” But there is no difference it simply describes the reduction in purchasing power of the dollar. If you want to buy another house with the proceeds you can’t after paying the tax so it is simply a capital tax not a capital gains tax. Capital gains taxes are only even close to honest in a zero inflation environment, which we never have except briefly.

Anyway we can see where this is all going. Tax rates need to be at about 200% of income to finance the lefty wet dream of a socialist utopia, so that is why they are coming for anything you might own now too. They already take 50% of anything the productive earn, then charge HST on much of the rest, and then if you managed to save anything capital gains on that too, plus property taxes. Now, they want to tax inflation. Oh and don’t forget that if you have a spare $1.50 to buy a Slurpee, most of the cost of that is taxes paid by 7/11, their employees, and their suppliers.

I said 200% because then the government has to go out and borrow almost as much as they bring in. You get the odd year they don’t have to but not very many.

We are moving towards as close to a 100% tax rate as they can achieve. And they say it’s only on the rich but as I’ve explained before doctors bake their taxes into their fees same as plumbers and tow truck drivers do, so everybody pays it. It’s just optics.

It’s like the stupid “carbon tax”. Just doubling the HST would have the same effect, but that couldn’t be sold as “for your own good”.

#20 InvestorsFriend

“The government was elected and must impose any tax changes it deems appropriate. There is simply no point in trying to get those that will pay more to agree. Just impose (after a vote) any needed changes. That is the JOB of government.”

Um, no. You are talking about mob rule and that was not the originally designed purpose of government in either the US or Britain (and hence Canada).

The 3 main JOBS of government are:

-The protection of personal liberties including property rights,
-The protection or the borders both from attack and from illegal invaders,
-The enforcement of law and order.

Over time there has been a lot of mission creep including infrastructure, health care, social security programs, etc. but you won’t find any of that in the US constitution or the original British and Canadian constitutions before T1 rewrote ours.

#62 Ponzius Pilatus on 02.13.17 at 8:17 pm

#35 Ryan M on 02.13.17 at 7:27 pm
For me, this is all connected with the future of health care. After this year, there will be no hiding how much wealth you accrue by selling your home. For instance, the government will not want to subsidize seniors in residential care who have $500,000+ in the bank. All sorts of new rate formulas will be devised from this – wait and see.
——————-
Can’t wait for time when old geezers are taxed on assets and not on income alone.
Gross unfairness.

#63 Patrick on 02.13.17 at 8:18 pm

Garth do you think the cdn gvnmnt will eventually create a death/estate tax like in the US?

#64 bigtowne on 02.13.17 at 8:18 pm

Back in the 60’s hitchhiking across Canada my heart was touched by the kindness of regular ordinary Canadians. We were such an unassuming and humble and open book faced class each able to welcome and forgive believing in that awkward but sturdy backdrop of Canadianess in our today and tomorrow.

Those days are history but I remember them like some kind of weird sci fi bestseller on a dreamland utopia.

Garth for PM

#65 jerry on 02.13.17 at 8:20 pm

If a capital gains tax should then be applied by CRA, should then a home owner also be allowed to reduce that gain by demonstrating applicable and qualified expenses?

And what might those qualified expenses consist of?

#66 Ponzius Pilatus on 02.13.17 at 8:23 pm

#46 Leo Trollstoy on 02.13.17 at 7:46 pm
In Toronto I just started getting voice mail from people who will “but my home with cash”. Interesting. Annoying. Scary.
————–
Welcome to Vancouver 2012/2013.
Scary indeed. buckle up.

#67 Bill Eastley on 02.13.17 at 8:27 pm

Rob Ford is rolling over in his grave with all these new taxes from True-Dough. Aka Real Money he is taking from you!

#68 Braj on 02.13.17 at 8:29 pm

#18 Pete from St. Cesaire on 02.13.17 at 7:04 pm
Oh yes, this is all coming and much much worse too. I foresaw the global financial collapse coming when I was just 13 years old and I have lived accordingly, as a minimalist. Some people have asked me why if I saw it coming I didn’t move away; I reply that there will be basically no where to run to.
Like Garth says “it’s not different this time”. Well that applies to empire collapses too. So enjoy your money while you can. Your gold, TFSA’s, RRSP’s, homes, everything is already gone. History repeats itself. The chapters in history are like the chapters in a book; the end has already been written and laid down in black & white, we just haven’t arrived at the last chapter yet.
The greatest fool is the one who is still holding his full ‘net worth’ when the system finally unravels. Spend your time wisely, it’s the only money you have.

Any logical recommendations?

#69 Wrk.dover on 02.13.17 at 8:36 pm

Trader Jim #55 is just hinting about the tip of the iceberg.
The whole point is to have a low buck house in a low buck town, and a low buck life, with money left over to have great life.

When Forrest Gump said “having money meant one less thing to worry about”, he was dead wrong.

This entire blog is about money worries. But I love a good story.

#70 Don P on 02.13.17 at 8:37 pm

#41.

Re: unreported flipper and suite income

Some people start suites in Ontario to get the money to pay their heating bill. T2 is gonna find there’s a limit to how far he can go.

Funny thing about this is that increasing taxation means T2 will get let revenues.

As for you, Ret, hopefully none of your family and friends have businesses that would lose significant revenue when a portion of customer base gets taxed.

No one knows how big this is and how it plays out. I bet luxury car sales drop.

#71 Dr. Talc on 02.13.17 at 8:37 pm

Bill Morneau lied, by omission, to all Canadians, his lies are on video tape.

To paraphrase Bill Morneau:
“I’m lying to you, by omission, but I want you to report honestly on your tax returns”

The lawlessness is coming from Ottawa, folks on the ground were following the rules at the time of the disposition, which they may have postponed.
this is the same government that uses tax money from non homeowners to give hst rebates to homeowners who do renos, and of course they also subsidizes every episode of flip or flop, property bros, Holmes, Bryan ad nauseam

#72 Trojan House on 02.13.17 at 8:37 pm

“You’ll have to prove your home is your home.”

I wonder if TrueDough has to pay tax to live at 24 Sussex? I highly doubt it.

JUSTIN TRUDEAU – NOT MY PRIME MINISTER

#73 Harry Butt on 02.13.17 at 8:40 pm

What if you don’t live in half your house?

#74 genbizx on 02.13.17 at 8:41 pm

Since we’re on the topic of taxation, the CRA doesn’t strike me as a very effective agency when it comes to catching tax cheats. Cheating is rampant. Lots of under the table work being done. Try to run a small business legitimately and the taxes and regulations are a huge burden…very demotivating. It seems to me that a great amount of tax revenue is being lost and the government is powerless to stop it. It’s a major issue in this country but gets no attention because nobody in government wants to acknowledge yet another area that is completely outside regulatory control. Ask me to believe stats on foreign ownership? You gotta be kidding…nobody really knows. The stats are from people who honestly reported. You think it’s hard to find ways to hide ownership? Naive. This government will introduce new ways to hose honest Canadians and continue to shrug their shoulders at the blatant cheating while quoting their useless stats about everything. What a train wreck…

#75 brian on 02.13.17 at 8:44 pm

Another smart move by T and crew. I wonder the effect in the months leading up to the deadline – If I had a rental property with unrealized capital gains I would sure sell before the deadline to declare and save 25% – expect a glut of listings – if anyone is paying attention

#76 Jason on 02.13.17 at 8:46 pm

Sigh, and just got my diversified portfolio setup, wonder what the fallout might be for preferred share etfs if the rules for taxes on dividends changes.

#77 OttawaMike on 02.13.17 at 8:46 pm

It should all work out.
By the time the tax kicks in house prices will have “melted” and there will be no gains to tax. Or are we not saying that prices are going down now??

#78 Nonplused on 02.13.17 at 8:51 pm

#72 Trojan House

“JUSTIN TRUDEAU – NOT MY PRIME MINISTER”

like

#79 Andrew Woburn on 02.13.17 at 8:56 pm

I’m not sure what is so Orwellian about this policy as it just reflects the law as it always stood. If you buy a house to live in it long term, no problem. If you buy a new “principal residence” every 18 months, questions should be asked. Now they will be.

As to decreases in the dividend tax credit, what do you think will happen to blue chip TSX shares? Get ready for bargains as the lemmings rush out.

#80 Andrew Woburn on 02.13.17 at 9:06 pm

Begging for a Trump?

“In light of this, and out of worries about the White House’s ability to keep secrets, some of our spy agencies have begun withholding intelligence from the Oval Office. Why risk your most sensitive information if the president may ignore it anyway? A senior National Security Agency official explained that NSA was systematically holding back some of the “good stuff” from the White House, in an unprecedented move. For decades, NSA has prepared special reports for the president’s eyes only, containing enormously sensitive intelligence. In the last three weeks, however, NSA has ceased doing this, fearing Trump and his staff cannot keep their best SIGINT secrets.”

Alternative facts? It will be interesting to see how right wing talk radio deals with Trumps crush on Russia.

http://observer.com/2017/02/donald-trump-administration-mike-flynn-russian-embassy/

#81 Nancy Estabrooks on 02.13.17 at 9:11 pm

If Trudeau doesn’t ask “how high?” When Trump says “Jump,” he’ll be called a “so-called Prime-Minister.” So keep asking “How High?” Justin, and we haven’t even started talking marijuana yet!

#82 Smoking Man on 02.13.17 at 9:12 pm

Flew into cayo coco today then a road trip to the town of moron. Shit they pronounce it Mu-Ron.

And they wonder why I suffer from the ridiculous English language. ….

On a quest to find some one who met Hemingway. It was a false leed. Ended up in a 3 star resort pretending to be 5 star.

It fits me like a perfect suit. ….

Love this shit hole communist out post where poverty is everywhere. But it’s people happy, kind, glowing with love.

What am I missing here.

How did the Trump T2 bro feast work out today?
For get about fake news. I got no news.

#83 Hash on 02.13.17 at 9:17 pm

Can someone tell me how do they intend to tax a non resident or a foreigner who owned property or properties made a windfall and never filed a tax return because they don’t have to? How do they get taxed?

#84 Chaddywack on 02.13.17 at 9:18 pm

Remember all it takes is one pissed off tenant to report a landlord to CRA.

My previous landlord tried to hose me out of $150 of the damage deposit saying that the apartment was “not clean to his standards” (even though it was spotless). It was a pathetic attempt to try and pocket some extra money.

I’m not saying I reported him, but let’s just say I know of people who have used CRA’s online leads form a few times in the past for situations such as those. Especially when the landlord is a jerk to you as a tenant regularly and demands payment in cash with no contract and no receipts.

#85 mortgagebroker on 02.13.17 at 9:19 pm

soooooo depressing!!!! Trudeau and Wynne suck the big one. why can’t we just have good leaders???

next up , patrick brown and kevin oleary

#86 HH on 02.13.17 at 9:23 pm

Garth,
My starting point is I don’t trust governments, like you! Should I be doing a buy/sell agreement every year on my principle residence such that I establish a higher cost base down the road? The last thing I need is a 40 year old cost base, of a low number, when I sell my house 20 years from now?

#87 Brendan on 02.13.17 at 9:26 pm

I hope this doesn`t lead to a wealth tax

#88 genbizx on 02.13.17 at 9:27 pm

great way to raise tax revenue:

eliminate provincial governments on the east coast, territories, and parts of the west and form regional governments. Some of them are just too small…smaller than some Canadian municipalities that need more representation and money. All we need is West region (around 11 million including maybe 100,000 in north regions), Ontario (around 14 mill), Quebec and East Coast (around 11 mill).

Make cities at certain populations a new category with increased powers, ie not subservient to the new regional governments. We have a bunch of municipalities across Canada that have larger populations than entire provinces and the current system is just out of date and wasteful.

#89 john on 02.13.17 at 9:30 pm

I see no change other than the way it has been in the past regarding principal residence which is still tax exempt?So the only people who have anything to fear IMO are the people who have or intend to try and cheat the system so what is unfair about that?

#90 Andrew Woburn on 02.13.17 at 9:37 pm

Begging for a Trump? 2

“Hannity and Drudge are among the loudest — if not the most powerful — voices speaking to the hard right base. Their unforgiving attacks on Obama, Democrats and the old-school Republican establishment stirred the populist resentments that shaped today’s Congress.

So, the speed with which these conservative media titans have turned on their creations — the politicians they helped put in power at the Capitol and White House — is a sign of the deep divisions already splitting the ruling Republican majority in Washington.

The right-wing media-led assault that won elections with the promise to disrupt Washington politics is now confronting reality. As the governing party, the GOP is now accountable for what comes after the party disrupts and tears down existing programs.”

http://thehill.com/opinion/juan-williams/319139-juan-williams-trump-and-gop-collide-with-reality

#91 Barb on 02.13.17 at 9:38 pm

I smell a hammer ‘n sickle armband blowing in the wind.

And of course CRA will have to hire hundreds of new recently-failed CGA grads just to administer the program and liaise with the provinces. All in a new wing with desks and computers. And a DB pension plan.

#92 45north on 02.13.17 at 9:38 pm

reckless mortgages in Toronto: Ross Kay talking about house prices in Burlington Ontario: how can a bank approve a mortgage on house with a sold price 67% more than the assessed value? there’s been really lax lending going on now for about 19 months:

at the 26:00 mark:
http://www.howestreet.com/2017/02/13/what-is-the-trump-handshake/

I feel an Argentina moment coming

#93 TRT on 02.13.17 at 10:03 pm

This is great news!

Hopefully the government goes through with this measure and penalizes multiple homeowners who declare all of them their principle residences.

Maybe also increase the capital gains inclusion to 100% for residential real estate.

These measures will reduce speculation in housing.

#94 GT on 02.13.17 at 10:04 pm

The government wants lower house prices and more tax dollars. They will accomplish both by forcing the baby boomers to sell earlier by taxing the principal residence .

#95 traderJim on 02.13.17 at 10:05 pm

#62 Ponzius Pilatus

Well I give you credit for your honesty.

Great example of a leech who thinks other people’s money belongs to him.

Doesn’t even pretend that he deserves it.

#96 Doug t on 02.13.17 at 10:07 pm

#59

yes yes let’s all go full algorithm and just live via electronic everything from our basements – I don’t need the government (or anyone else) knowing what, where, why, when or who with I do financial transactions pfft

#97 TO MORNEAU on 02.13.17 at 10:08 pm

Mr. Morneau:

—> 100% Capital gains inclusion rate for houses <—-

#98 traderJim on 02.13.17 at 10:14 pm

Reading these comments it seems like every other person is pissed that ‘other people’ aren’t paying enough taxes.

Now everyone likes fairness and hates cheats, but how about considering the idea that taxes for everyone should be drastically reduced?

Crazy idea, I know. Which is why things will not change so better figure out how to join ’em, ’cause you can’t beat ’em.

#99 dr. talc on 02.13.17 at 10:21 pm

#83 Hash on 02.13.17 at 9:17 pm
Can someone tell me how do they intend to tax a non resident or a foreigner who owned property or properties made a windfall and never filed a tax return because they don’t have to? How do they get taxed?


His Canadian lawyer who closes the deal withholds money for cra (30%?), if he want the money back he has to file
The whole foreign buyer thing was a straw man
this is about the PR exemption and HST
every Canadian is the real target

#100 AisA on 02.13.17 at 10:27 pm

They are dropping napalm on a smoldering heap, ask me if I’m happy closing on a home 20 minutes from work for 125k with a locked 3.24 for the next 7 years. Crash and Burn baby, can’t give a hoot. Sure it needs 60k in renovations, really, can’t hoot.

800k to 1 million plus gut jobs, can only be the product of adulterated street drugs. We are very far from Colombia after all…

#101 InvestorsFriend on 02.13.17 at 10:30 pm

Dividend Tax Credit and Double Taxation

#40 S.Bby on 02.13.17 at 7:38 pm said:

They’d better not mess with the dividend tax credit. Those shares are bought with after tax money and the companies have also already paid tax on their earnings. It would be double taxation.

************************************
The avoidance of double taxation is why the dividend tax credit exists. But there might be an argument that the share owners do not pay the corporate tax, customers do, in which case there is no real double taxation.

The argument about those shares were bought with after tax money is silly and has no merit at all. What other kind of money do people legitimately have other than “after-tax” money?

A rule that profits on investments made with after tax money would be preposterous and allow investors to compound up huge gains tax free. It would mean only the wages of labour are taxed and there would be no tax on the owners of businesses. Ludicrous.

#102 InvestorsFriend on 02.13.17 at 10:34 pm

Who pays Taxes

Poor people don’t

The middle class does

Really rich people don’t pay much because they earn their money through capital gains and dividends. They do face high marginal tax rates but that’s not an issue if the vast majority of your earnings are in untaxed capital appreciation, half taxed capital gains, and favorably taxed dividends.

The middle class, especially the lower middle class should support some reduction in the huge advantages that the richest people are enjoying.

Perhaps guys like you with rich government DB pensions are a more worthy target. There are certainly more of you than rich dudes. — Garth

#103 BG on 02.13.17 at 10:34 pm

The socialist liberal era is a nightmare.
Please someone MAKE CANADA GREAT AGAIN.

#104 joblo on 02.13.17 at 10:43 pm

They won’t stop until they get it all.
Next up Inheritance Tax.

#105 ww1 on 02.13.17 at 10:46 pm

#37 Y m o 3 on 02.13.17 at 7:32 pm
What if you buy a tear down and build new? Will your property be seen as ‘appreciating’ by 100s of ks in a year?

If you buy a “tear down” and build new, you might also want to hire a competent tax accountant> Someone who can explain to you the simple concept of adjusted cost base. You will be much less angry once you do.

#106 Ronaldo on 02.13.17 at 10:49 pm

#5 Not first

”And those suckers with big cash in RRSPs are going to be feeling it big time.”
———————————————————-
Absolutely. One of the reasons I melted mine down before turning 71. Total tax trap.

#107 Andrew Woburn on 02.13.17 at 10:50 pm

53 46 and 2 on 02.13.17 at 7:54 pm
Whatever it takes to stop the flippers I am all for it.

If anyone cannot prove that the residence sold is not the primary residence then is should be taxed as a capital gain, period.
=========================

Actually capital gains normally arise on the sale of “capital property”, property which is held to earn a stream of income over time like an office building. If you buy a house to flip, the house is considered to be an inventory item purchased only to be sold at a profit, like an auto would be for a car dealer, and the gain is trade profit taxed at 100%.

#108 Gulf Breeze on 02.13.17 at 10:53 pm

Canada is in trouble. There is a deep divide between the haves and have nots that may have to be bridged with extraordinary measures.

Capital gains charged to those who have become instant millionaires in the last few years, just because their butts were parked in Vancouver, isn’t such a bad idea.

It will cool the RE market a little and generate tax dollars. It may also encourage those who should be investing in the economy, instead of real estate to do so.

The situation is very likely going to become dire. Capital gains on real estate will be the least of our worries.

Begging for Trump? We will be begging for FDR or the Swedish model of government, where nobody wins big time, but nobody loses and ends up on the streets either.

The vision is going to change.

#109 windjammer on 02.13.17 at 10:57 pm

Ok so I asked a question that you had already answered in your post. Now I’m one of those guys. Oy vay. Anyhow I have opened a self directed rrsp so that I can transfer money out of my non registered to defer tax on the capital gains by putting it into rrsp’s
I have another question and I’m pretty sure you didn’t answer it in this post. Can I invest in all the same things in the rrsp account as I can in non registered account. Keep your powder dry.

Yes. — Garth

#110 joblo on 02.13.17 at 11:09 pm

PEI population less than 150,000
and it’s a province?
What a laugh, Kanaduh!

#111 joblo on 02.13.17 at 11:11 pm

PC slogan 2015: He’s just not ready!
PC slogan 2019: He’ll never be ready!

#112 TRT on 02.13.17 at 11:12 pm

#35 Ryan M on 02.13.17 at 7:27 pm
For me, this is all connected with the future of health care. After this year, there will be no hiding how much wealth you accrue by selling your home. For instance, the government will not want to subsidize seniors in residential care who have $500,000+ in the bank. All sorts of new rate formulas will be devised from this – wait and see.

—————–

Yup, use the $500,000 home equity first for any health care homes or GIS payments.

#113 WUL on 02.13.17 at 11:17 pm

I ain’t exactly “au courant” on real property and tax law having studied the subjects about 32 years ago so I have to hit the library and dig deep. I have been pondering a disposition of my house in Cowtown namely a transfer from me and my wife to me, my wife and my kids as joint tenants. That would mean that when the Missus and I expire the kids submit a simple form at the Land Titles Office for transmission upon death instead of an estate sale of the house.

I note the form calls for an entry of disposition proceeds. I’ll try “$1.00 and natural love and affection”.

Any blog dogs keep the Income Tax Act on their nightstand? Can I expect a posse of G-men from the CRA at my funeral?

#114 penguin on 02.13.17 at 11:25 pm

Having done tax returns for one tax season at a tax preparer company, this will be a nightmare for them. Expect to see the cost of preparing a tax return to rise in 2018.

#115 Frank on 02.13.17 at 11:27 pm

I don’t see the problem here. The government knows what your income is and taxes it accordingly. Why is your house so special?

If you have a suite in your home, then sell it, the selling price must be split and reported. Part of it will qualify to the tax exemption and part will not. In markets with elephantine gains in home prices, this could be quite the bombshell.

We’ll catch illegal suites? Good.

#116 Madcat on 02.13.17 at 11:27 pm

Lol!! Yes!! This is actually good news!! Unless you own a bunch of properties that you purchased as an investment to make profit… This will encourage people to buy homes for living in and raising their families instead of flipping for profit… Looks like it could be a good tax to me…

#117 Madcat on 02.13.17 at 11:31 pm

Too funny. I wanted Trudeau gone yesterday but after reading this post I’m back in love!!

#118 Paul on 02.13.17 at 11:58 pm

If people think there will be a change the taxing of basement apartments good luck.
The owners can’t pay the mortgage with out the rent and the renters can’t afford to buy.
There are thousands of basement dwelders.

#119 Fortune500 on 02.14.17 at 12:13 am

I guess I don’t see what the big deal is.

The government has created extremely favorable conditions for ‘investing’ in your personal residence. Over the years this has resulted in extreme valuations, massive windfalls and bidding wars.

Left unchecked we will have a population of landed gentry passing their homes on to their more fortunate offspring as values soar for decades well above inflation.

Why should all other investments be taxed heavily, but people’s homes (which lets be honest culturally we now all view as investments) are left alone. Obviously imbalances will occur as investors continue to poor money into this tax-free ‘investment’.

If the government and the population of Canada wished for principles residences to not be treated as investments then we should not have engineered them to be so. But it’s too late.

I say flat tax on any money making investment and then choose your poison.

#120 Spectacle on 02.14.17 at 12:42 am

1). Hey smokey, enjoy the time off. But stop acting like an “American Abroad” if you want to experience Cuba.

#82 Smoking Man on 02.13.17 at 9:12 pm
Flew into cayo coco today then a road trip to the town of moron. Shit they pronounce it Mu-Ron.
Exactly My point here…..

On a quest to find some one who met Hemingway. It was a false leed. Ended up in a 3 star resort pretending to be 5 star.
2). Nobody of importance will present their self or invite the intrusion smokey. Eg: dinner and drinks at the bar with Oliver Stone, same place where Hemmingway and friends actually ate and drank ( and drank…). Pic of the original Old Man and the Sea character met up after Hemmingway went boating. He (friend/ character) is still alive, and inspired the character. Good time to read the Old Man and the Sea, for yourself!

Love this shit hole communist out post where poverty is everywhere. But it’s people happy, kind, glowing with love.

What am I missing here.
3). Your missing Cuba. Can’t go with an agenda. In fact getting away from the surveillance is the reason to go there. Why go to Cuba. To be able to buy lunch for everyone in the restaurant ( a hidden gem of a place) . Ps: tip very, very, very well and genuinely make friends. Cuba will open up for you. It takes time though.

How did the Trump T2 bro feast work out today?
4). Ever see an anaconda ensnare it’s prey? The soon to be departed creature justifies the squeeze, just watch their eyes though : the poker tell. Trump will use T2 (the idiot narcissist, failed actor ) like a human crayon to spell out Trumps agenda for the world to see! The battle has been won.

5). Like the blog handle ” Trojan House”, I’d add ” tax” to that handle tonight. Our own errors, used against us, Wait, someone’s at my door ( tax reaper).

Apology for long rant, regards, M

#121 InvestorsFriend on 02.14.17 at 12:54 am

Who shall we Tax more

Garth responded to me at 102:

Perhaps guys like you with rich government DB pensions are a more worthy target. There are certainly more of you than rich dudes. — Garth

****************************************
Thanks for thinking of me. You are right a lot of people with rich DB pensions.

Those are already taxed as regular income but we could certainly take away the pension income deduction. Maybe the pension income split thingy as well. Why should pension income be split but not income from working? (Thanks for the suggestion!)

We could also start taxing the pension funds themselves especially when they buy entire companies, that formerly paid tax, and load them up with debt to artificially move the income up to some non-taxable part of the pension fund. (An outrageous tax leakage which also weakens the balance sheets of the purchased corporations)

Let’s keep in mind that every tax break is made up somewhere else by a higher overall tax rate or by added borrowing since tax breaks don’t lower government spending. Someone’s got to pay the taxes. The working middle class are getting a raw deal.

And don’t worry, I will also be somewhat hit if the capital gains tax inclusion rate is increased or the dividend tax rate increased. But mostly I just do buy and hold in my corporate account and that allows me to compound wealth with no tax due until I sell. Same in my small personal margin account. That’s what all the REALLY wealthy families mostly do (Westons, Rogers, Shaws, Thomsons, Billes, and others) Then they hire advisers to figure out some way to avoid capital gains taxes on those fortunes even at their death. Fair?

#122 will on 02.14.17 at 1:08 am

I agree with #10 fraser valley

I don’t see the problem for honest citizens.

#123 paulo on 02.14.17 at 1:09 am

I Think it is a forgone conclusion that the tax man is and will ,sooner than you think be looking for his cut of the action in the residential real estate market. its simply to big of a piece of cheese.
with thousands of houses,sitting vacant obviously flippers waiting out the 1 year rule to claim exemption , i do not see any mention of that, a check box in the new reporting form …. ummm
look for a life time cap on exempt cap gains from the sale of a residential principal residence in the next budget.
also look for a tax withholding on sales involving numbered companies payable on transfer of title yep they have this scam figured out
Expect that the fed is talking to provincial taxation departments and cross referencing say Tenant tax credit claims at the provincial level,with your federal return,and the information you are now required to submit annually as to use of your property
in short they already got ya if you are not playing by the rules.
just a warning to the thousands of would be speculators and green horn landlords” beware ” changes are in the wind

#124 Bobby on 02.14.17 at 1:30 am

I can certainly see our illustrious PM try to mine the monies in the housing market, but I’m wondering if he has thought this all through. From many of his other policies, we know many were made on the fly.
Sure there are capital gains made in a rising market, but what happens if the market collapses and people find themselves selling in a down market. Or perhaps they are underwater? Can they claim the loss? Perhaps the solution is to tend towards the US system where mortgage interest is tax deductible.
With so many failed policies and discarded promises one can’t help but wonder how long this PM will last. I didn’t vote for this group of clowns as I expected very little from them. So far I haven’t been disappointed.

#125 conan on 02.14.17 at 1:36 am

We need to Sherlock the situation. A kabillion dollars is going to be transferring to the next generation over the next 30 years.

Maybe a few other innovational changes, so that the pillaging is not so dire. I expect the USA to do the same thing. Trump or no Trump, it’s a happening.

https://www.youtube.com/watch?v=l6B-8V4LyaU

Now think about what companies you should invest in.

#126 Terminal Loss on the + side on 02.14.17 at 2:02 am

I would expect a lot YVR RE speculators will like it if they bought at the peak and have to sell at a loss.

Big G will now be giving them a tax deduction upon selling.

#127 Tony on 02.14.17 at 2:13 am

It depends where the home/homes are. In cities such as Calgary you couldn’t sell a house at any price and it would likely sit on mls for years at the very least.

#128 millenial82 on 02.14.17 at 2:24 am

Ah, maybe we could use a term or two of the Libertarian party in command. Sure, no experience whatsoever. Perhaps the benefits would outweigh the consequences for long term benefit. Consider that point of no return. What socialist based society would ever vote on a new platform focused on stripping government of scope and powers. Seems the free lunch promise wins votes every time as pride of personal responsibility is almost out the door. I think the next Ontario provincial election should tell us where we are at. I expect Wynne to promise all sorts of promises filled with smoke and mirrors so let’s see if everyone is smart enough to sort through them all.

#129 Smartalox on 02.14.17 at 2:29 am

Well, now the only piece of the puzzle that is missing is to have every province offer a provincial income tax deduction for rent paid, geared to income, like Ontario does.

If you’re earning under a certain amount, you can deduct your rent. The deduction is diminished above a certain amount, and high rollers that take Garth’s advice to sell and rent pay their share of tax.

But at the same time, the government has a record of the amount of rent paid, and the name and address of the landlord. It’s quite elegant, relying on tenants’ greed to crack down on landlords’ greed.

Of course, the information on Ontario’s tax returns are entered longhand, so it’s highly unlikely that the information is actually used for anything, but it does help keep the landlords professional.

#130 A belieber on 02.14.17 at 2:49 am

Quck question Garth, when I bought my Bieber tickets I grabbed a few extra (the perks of a fan club: pre-sales!!).

I’m thinking I’m going to make a healthy profit on these, (probably better than most of you guys do on your portfolios…lol). Is there capital gains tax on those? I don’t think there is and I gotta say I’m making a killing on these! How’s that for some financial literacy

#131 Euro observer on 02.14.17 at 3:12 am

Give the sheeple more credit, ‘increase’ their ‘wealth’ and then tax them to death on capital ‘appreciation’, house appreciation. Then hit them with small business corporation fake rules (subject to ‘interpretation’ by CRA) that do not apply to big corporation, CPP increase, non-retirement, rob them of their savings through zero interest rates and stellar inflation, carbon taxes, what have you (LGBT taxes, …), and transfer taxes, while making them happy with the ‘ever-increased-value-of-their-home.’

Absolutely Brilliant.

#132 Dan.t on 02.14.17 at 5:26 am

Really don’t like the big brother aspect of it but something has to be done to stop real estate from being speculated on.

People need affordable places to live. Either to rent or buy and there has been so much shaddy activity for years and years as government incentives were given to goose the market.

In BC especially i suspect it’s brutal the amount of cheating that has been going on. I know back in the day, some who were trying to abused tax credits to buy homes, lied on mortgage application (like the usa, Canada would give you a mortgage if you could fog a mirror but not so much last years) and I suspect the real estate cartel (realtors and it’s marketing machine) have abused the system even more. Won’t even start on foreign money- I’m sure there was nothing illegal going on there (yeah right).

Where there is a ton of money to be made and it is virtually unregulated and has been encouraged by GOVERNMENT polices, what do you think will happen.

The problem is people need homes and places to live. Turning that into a casino like mentality just screws everyone.

I also heard first hand from someone who bought a few years ago. Trying to be conservative and not wanting to over extent to buy a condo, the realtor saying, ” if you can come up with more, you can get an extra room apartment- it’s gonna be worth 20% next year so it’s a great investment”.

First this guys is a realtor not an investment guru. Obviously not if his investment advice is to enslave yourself with as much debt as possible to buy 1 asset (a condo none the less) that is guaranteed to ONLY rise in value. Unfortunately now the vast majority of Canadians believe this as fact…until its no longer fact (which is coming).

Higher sales prices, higher commissions.

Let me know how long you would keep your job Garth if you said that to a client “well, Bob, i think you should try to come up with an extra 50 grand, so we can get you into XYZ stock, because it’s pretty much guaranteed to go up 20% next year”.

Got a bit off topic, but fine, the government wants to tax investors and any investment gains I made, then tax real estate speculators, find out who is buying all those empty houses and condos in Vancouver and tax them accordingly.

and if you have a residence that you bought in 1995, thank the government for encouraging the biggest housing bubble gasbag in history- so you can cash out with a 10,000% return-why shouldn’t a portion of that be taxed- government giveth and taketh away.

#133 Pepito on 02.14.17 at 6:47 am

As numerous other posters have stated, the rules have not changed. So, I must presume that you are opposed to the more stringent enforcement of existing laws already in place. Why? Would you prefer the current system which is wide open for abuse?

#134 The real Kip on 02.14.17 at 6:57 am

Meh! I’m good with it. It looks like one simple form to fill out at tax time if I sell and, as you’ve already pointed out, I can’t afford to sell and buy my own house so, no problemo!

As for a whack on Mutuals and other investments, who cares? Not me!

#135 Halt CMHC on 02.14.17 at 7:08 am

Let the banks take all the risk like they should. End of problem. Throw in foreign tax and boom housing bubble would correct and cut prices by 50% in a year.

#136 Reply to #61 on 02.14.17 at 8:05 am

A free market cannot solve all economic problems. What about public goods and the free rider problem? How do you deal with negative externalities?

#137 crowdedelevatorfartz on 02.14.17 at 8:09 am

@#48 Devils Advocate
“I might be so inclined as to give up my citizenship…”
********************************************
Promises promises. Stop teasing us. Its unkind.

#138 B on 02.14.17 at 8:14 am

I feel like this is just the first step towards taxing all real estate capital gains somewhere down the road. Pretty lame my generation will likely be hit with this in order to help pay for Boomer pensions. They didn’t pay anything on their houses, and I won’t get a pension – doesn’t sound fair to me Justin.

Funny how a conservative government might actually be the only hope for avoiding death-by-taxes on the young, given that JT is currently the twinkle in millennials eyes’… Maybe a good angle for campaigning in the next election?

#139 crowdedelevatorfartz on 02.14.17 at 8:14 am

@#82 Smoking Man
“Love this shit hole communist out post where poverty is everywhere. But it’s people happy, kind, glowing with love….”
*******************************************

They are happy because they get to fleec gringos like you….
If you want to see a real shithole “communist” outpost, fly to Caracas Venezuela and complain about the food at the 5 star hotel……

#140 Wrk.dover on 02.14.17 at 8:22 am

There was an income/wealth survey here last year that had an overwhelming rate of participation. Perhaps a real estate survey would get the braggarts to respond in droves too, with questions such as:
*how many houses do you own followed by these questions for each of them
*year of purchase
*price
*%down
*age of house at that time
*your age at that time
*amount owing or number of years it took to pay off
*number of years owned
*value
*property tax
*insurance cost (this one could show some interesting discrepancies across the nation)
*% of your net worth in house equity

Results of which would show just how house horny we / Garths investment class groupies are, and how not hard done by we will be when an asset tax arrives.

#141 crowdedelevatorfartz on 02.14.17 at 8:26 am

@#110 Joblo
“PEI population less than 150,000
and it’s a province?”
********************************************
True enough and I suspect that in the next 25-50 years….. due to decreasing tax revenue to run things, the Maritimes will be force to consolidate their govts into one region with a population of about 3 million( NS, NB, PEI and NFLD) but 150 years ago, when there was no Kanuhduh (as you so quaintly have dubbed it) west of Ontario and the Premiers were drinking and eating their faces off in Charlottetown PEI trying to decide how to set up the Confederation …… they had to include the smallest Province due to its cash tax revenue and its political influence…….times have changed.
Dont be too smug.
Apparently the only province providing money into the Federal Equalization program is BC….all the rest are debt wracked penniless beggars.

#142 Reply to #113 on 02.14.17 at 8:30 am

Here are the CRA tax rules, as requested:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/127/trnsfrs/trnsfrs-eng.html

http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s1/f5/s1-f5-c1-eng.html

#143 crowdedelevatorfartz on 02.14.17 at 8:35 am

@#43 Devils Advocate

“We Give THE USA everything East of Saskatchewan.

They (USA) give us Washington State, Oregon, California, Idaho, Montana, Utah and Arizona.”
********************************************
I didnt realize you smoked dope.
They dont want everything east of Sask.
The water, oil and fish are all to the west.

Lived in BC all your life and never heard of “Cascadia”
The fictional country consisting of Cali. ,Oregon, Wash, BC and Alaska?
The idea has been kicked around for years.
Never happen, the US is a Republic. No State can leave.

#144 the Jaguar on 02.14.17 at 8:42 am

Yo! For those of you in parts of Canada east of the prairies who might not be familiar with the eccentricities of the bring cash province ( B.C.) here is a little known fact for you: Most homes in BC have secondary suites. Even high end homes. It’s a cultural norm. They are not bothered by musty basement dwellers. Lower mainland, BC interior mostly, but that covers the most populated areas. Legal, mostly illegal. Don’t know the actual percentage, but would guess maybe 65-70%.
Have seen nothing about this new tax rule inclusion in the national newspapers. As usual Garth provides a tremendous service to all of us by talking about it on the blog.

#145 Euro observer on 02.14.17 at 8:43 am

#142 Reply to #113

Fair market value fop the shacks is 25 % of the manipulated government value.

So tell CRA to take a hike.

#146 Samantha on 02.14.17 at 8:47 am

Capital gain tax on Canadian primary personal residence will never happen, this is just fear mongering. To introduce such a tax means a political suicide for at least a generation, and politicians cannot afford that…

#147 The Technical Analyst, CSTA, CPD on 02.14.17 at 8:49 am

…and the pendulum swings the other way.

#148 Madcat on 02.14.17 at 9:01 am

Hi Garth, is this tax effective immediately or next April?

#149 IHCTD9 on 02.14.17 at 9:07 am

T2 and Co are just getting warmed up. Crosshairs are set on the wealthy and the young. Wealthy means you own a house, young means anyone under 35.

Boomers win the game, Gen X’ers come in second place. The Greatest Generation never had much chance due to depression and wars, Millennials are being cluster-bombed by the same leftwing hemispherectomy survivors they helped vote in.

As already noted, a brokeass government will eventually need to pay the piper, and lawn ornaments like T2 and his trepanned cabinet can’t come up with anything more creative than more tax.

Glad I’m not a kid these days, at least the wealthy can renounce their Citizenship and bail.

#150 NoName on 02.14.17 at 9:11 am

House of cards…

http://www.thedailybeast.com/articles/2017/02/13/white-house-leaves-michael-flynn-twisting-in-the-wind.html

I wonder which version of “this” song was playing while he was signing his resignation.
v1
https://www.youtube.com/watch?v=qnHVMcPyMXc
v2
https://www.youtube.com/watch?v=ZD3thRb6uOg
probably v2, just for the simple reason, more is better…

#151 traderJim on 02.14.17 at 9:26 am

Sorry to beat a dead horse here but what’s with all the hate for people who make money off government’s stupid policies? (i.e. Flippers, RE agents, home owners)

The government that created CMHC and the Central Banks that have flooded the world with extreme amounts of cash are the culprits, not the people who see the result of government created bubbles and instead of being crushed by it go along and make money off it.

Blame is completely misplaced if you ask me.

And like I said, I learned long ago you can’t beat ’em, so you might as well join ’em.

(Until the big reset happens, then we can get back to behaving like responsible adults once again)

#152 Mike in Edm on 02.14.17 at 9:38 am

A tax (even a small amount) on the property gain of your primary residence will never happen. Even if T2 implemented it, people all across Canada would be heading to Ottawa with pitchforks and torches, but give it 2.5 more years and the cons will use that as a huge election promise to abolish it.

#153 IHCTD9 on 02.14.17 at 9:40 am

#140 Wrk.dover on 02.14.17 at 8:22 am

Results of which would show just how house horny we / Garths investment class groupies are, and how not hard done by we will be when an asset tax arrives.
___________________________________________

That would be interesting info for sure. But, in normal markets with a house purchased and paid for via a mortgage is not an asset – it’s a black hole for money.

Mortgage interest alone depending on rates could easily double the cost of your house at 25 years. All the things that come with owning a home for 2-3 decades could well double it again.

My property taxes alone will add up to almost 50% of the original purchase price at the 25 year mark. If I move out at 80 years old, the taxes by themselves will have cost me more than the house did.

If the government thinks that normal market houses bought by normal folks are assets, then their “asset” tax will actually be just taxing the COSTS of ownership.

#154 Bat Flipper on 02.14.17 at 9:43 am

TBH, it isn’t that hard to find properties with basement suites. I am sure they can search any property by address and see who has ever lived there. I’m sure if you rent out the basement, room, etc. then the CRA will know and tax even if you have a cash deal with the tenant. I don’t think any landlord has ever said to a tenant not to use the address as their own. Anyways, if you have a basement dweller, you will be subject to the new tax on your cap gains. If you rent for a portion of the time, I wonder if they will take into consideration the time it was rented vs not rented. Only time will tell I guess.

For me, not worth it to rent with appreciation the way it is.

Next, the government is really just using this tool as a reporting tool to get the inventory on housing for potential future taxes.

If houses always went up, wouldn’t you tax that? No sense throwing money away, when the government sorely wants it.

In the last few years, we have witnessed the power of big government to change industries or even destroy them overnight, tax, spend, and manipulate capitalism in such a way that it doesn’t even resemble capitalism anymore.

Ask any High School or College Student and they will tell you that they will be happy if they can even get a job.

#155 Bat Flipper on 02.14.17 at 9:44 am

Also, with the new rules, who in the hell would ever buy a rental property?

#156 TRT on 02.14.17 at 9:47 am

There is a huge loophole around capital gains. What if the transaction takes place overseas and the true amount of the sale is not reported?

Maybe base sale price for on assessment for capital gains tax purposes?

#157 45north on 02.14.17 at 9:56 am

Is Justin Trudeau setting the scene for a House Tax?

I’m thinking he’s caught in the same kind of thinking as BC’s Christy Clark. she thought that real estate was an inexhaustible source of wealth which she could tap. She rushed through legislation just in time to see it dry up.

#158 Capt. Serious on 02.14.17 at 10:02 am

The form does not look to have a box for apartment/suite number. Don’t they realize how many people in this country now live in condos? Idiots!

Actually, the Canada Post approved way to denote an apartment number or suite number is number-street address number. So, 3-222 Happy Heart Rd denotes the 3rd unit of 222 Happy Heart Rd.
Not so stupid after all.

#159 IHCTD9 on 02.14.17 at 10:02 am

#138 B on 02.14.17 at 8:14 am
I feel like this is just the first step towards taxing all real estate capital gains somewhere down the road. Pretty lame my generation will likely be hit with this in order to help pay for Boomer pensions. They didn’t pay anything on their houses, and I won’t get a pension – doesn’t sound fair to me Justin.

Funny how a conservative government might actually be the only hope for avoiding death-by-taxes on the young, given that JT is currently the twinkle in millennials eyes’… Maybe a good angle for campaigning in the next election?
_________________________________________

When it comes to millennials, I feel bad for them. I feel bad for them in the same way I feel bad for a guy who blew his hands right off juggling a few loaded .45 magnums.

From what I see youth doing in various RE markets, you can forget about any reprieve, they don’t know what the hell is going on. If T2/Wynne get another mandate, you younger folks are done like Sunday dinner my friend. It’s near too far gone right now to even consider fixing under our system. One more JT/KW majority and Canada will be knocking from the bottom end.

Plus, there may be more guys out there like me voting swan dive next election. I’ll be voting for the worst possible candidate on the financial front, and right now; that means more Liberals. Sorry buddy!

I see some millennials starting homesteads and/or living a minimalist lifestyle. I understand the thinking well, these are the smart ones. Something for you to consider as any other way, you will become the beast of burden for future governments to utilize in their bid for solvency. The way things are going, no working stiff is going to be trying overly hard to make lots of money in Canada.

#160 TRT on 02.14.17 at 10:05 am

Regarding suites in basements and proportional capital gains;

In Surrey BC, their online services state which homes have legal suites. The owners pays yearly fees so they know it too.

So will this be enforced when they sell a home?

#161 Prairieboy43 on 02.14.17 at 10:08 am

HGTV House flippers followed by Tax This Property?

#162 };-) aka Devil's Advocate on 02.14.17 at 10:38 am

#143 crowdedelevatorfartz on 02.14.17 at 8:35 am

I am Cascadian inasmuch as the culture and politic of all those provinces and states align with mine more than that of the rest of Canada.

#163 };-) aka Devil's Advocate on 02.14.17 at 10:45 am

https://upload.wikimedia.org/wikipedia/commons/thumb/a/ae/Flag_of_Cascadia.svg/500px-Flag_of_Cascadia.svg.png

#164 traderJim on 02.14.17 at 11:01 am

I wonder how many people with basement suites are declaring the income?

I bet it’s under 25%

A lot of folks will be facing huge tax bills if CRA decides to look into it.

#165 NoName on 02.14.17 at 11:07 am

#149 IHCTD9 on 02.14.17 at 9:07 am

And where exactly they will go?
http://www.thestar.com.my/news/world/2017/02/11/missing-china-billionaire-taken-from-hong-kong-hotel-in-wheelchair–source/

#166 YoungWB on 02.14.17 at 11:10 am

All that has really changed is CRA administrative policy – previously they did not required you to report the disposition of your home to claim the PRE, but now it must be reported. Seems like a prudent move to me to at least gather some data, but we’ll have to wait and see if it results in meaningful reassessments or additional taxes. I used to prepare a lot of personal tax returns, and what I do know is that when we would get new clients we found that unreported rental income and dispositions of secondary residences, rental properties , and hybrid properties (i.e. house with a rental basement) were rampant. Another big thing people often missed were deemed dispositions occurring from a change of use – for example, changing a house from personal use to a rental results in a deemed disposition unless you file an election. I wonder if the government will eventually require all real estate purchases to withhold a percentage of the purchase price and remit it to CRA (this is already required if the seller is non-resident), and the seller then has to file their tax returns and prove the disposition is non-taxable to get the withheld money back.

#167 MORNEAU on 02.14.17 at 11:34 am

#164 traderJim on 02.14.17 at 11:01 am
I wonder how many people with basement suites are declaring the income?

I bet it’s under 25%

A lot of folks will be facing huge tax bills if CRA decides to look into it.
—–

More like ZERO for anyone with kids or a GIS pension. The rental income would reduce Child Benefits or Guaranteed Income Supplement payments.

#168 Maggie the Teck Writer on 02.14.17 at 11:34 am

Blacklock’s Reporter notes that Conservative MPs were “appalled” at CMHC’s efforts to reduce overbuying of housing, especially by first-time home owners.
Evan Siddall explained that in CMHC’s view, “substantial support already exists for first-time homebuyers. It’s possible to have too much of a good thing.” When attacked for this, he explained, “When a party gets too strong, you take away the punchbowl.”

Guess this bunch of Conservatives is hoping to prolong the drunken house party until the last dog is hung.

#169 IHCTD9 on 02.14.17 at 11:42 am

T2 and Politicians like him will be ushering in a flurry of activity from folks to offset the additional vacuum that is being applied to our wallets.

1. Offset heating Bill – 1695.00 saving, and (-195.00) taxes starting next year.

2. Offset electricity Bill – TBA, might not be worth the effort

3. Offset Gasoline Bill – TBA – but looking possible so far to eliminate it 95%

4. Max that RRSP, the return will be a record for us this year for sure.

5. Buy used/needs repair – so far this year savings have been $2800.00 on costs compared to new and 450.00 saved in tax.

6. Take a look at what’s for sale on the local Reserves. Savings can be YUUUGE.

7. Barter and Trade, might as well start getting used to it. Doesn’t save or cost you any money – but everything is tax free.

8. Spending habits and lifestyle inflation. Harder to modify long term than you think. But some folks could not save more on both costs and taxes on anything else. Tax avoidance totals and cost eliminations will likely run into the thousands – and that pays you every single year. Skip the smoking, drinking, gambling, security blanket purchases, self esteem purchases, vanity purchases. The list from which you could whittle expenses away is virtuously endless. .

9. If you like farming stuff you can go further still. Raise chickens and turkeys, grow a veggie garden, check out the farmers markets and roadside vendors (tax free a lot of times).

10. Your formal work and savings strategies are up to you. The options and consequences of the choices here are pretty well understood. The potential to save on taxes paid here are huge. Some big trouble here too if you’re not very smart.

#170 Michelle on 02.14.17 at 11:55 am

Garth, I don’t see why a primary residence shouldn’t be seen as an asset that’s taxable upon sale, or that is taken into account when considering one’s net worth. As it is now, people living in multi-million dollar homes are eligible for all sorts of publicly funded benefits. Why should I be footing the bill for a millionaire’s social assistance benefits (or, in some cases, Canada child benefit)?

Also, you are always, rightly point out that the oldsters are holding all the assets and the young are getting screwed. How is it fair that someone who bought their house 40 years ago for nothing and has made an absolute killing should benefit tax free, while still collecting money from taxes payed by the young?

#171 BillyBob on 02.14.17 at 12:04 pm

Man, I will laugh my butt off if they go after housing for tax revenue, hard. So much undeclared rental income, so much straight out lying and cheating on principal residences. I just wonder if the CRA has the stomach to actually crack down, after basically turning a blind eye to it for decades.

Ah, Canada. Where the term “mortgage helper” was coined, where you need to rent space in your home to strangers just to be able to make your payments.

What a sick mentality.

#172 Gulf Breeze on 02.14.17 at 12:05 pm

#35 Ryan M,

My mother had 200,000.00 in the bank and a clear title town house worth 650,000.00 when she went into extended care.

The govt subsidized nearly all of her care. Now if the capital gains on her condo had been taxed after it sold, to would have offset the subsidy.

The system currently is weighted in favor of those who own their own homes, as opposed to those who rent and those who wish to start businesses, or invest in other ways.

The government has to tax its citizens, one way or the other for universal healthcare, for starters. As wealthy boomers benefit disproportionately from that system, they should be charged capital gains on their homes when they sell.

I am a wealthy boomer, by some standards and though all of the capital gains taxes are going to affect me in a big way, I am happy to pay to insure I continue to live in a country that is civilized, compassionate and rational.

#173 SeeB on 02.14.17 at 12:13 pm

The hyperbole is in full swing today. I wonder where the deplorables were when C-51 was being signed into law.

Trudeau has turned into a disappointment, especially on the TFSA and election reform front. He’s completely gutless and beholden to the whims of populism and polls. Hate him all you want, but he’s a lot more like Harper than many of you will admit.

As far as proving ownership of a house is primary residence, I fail to see how this is Big Brother anything. Your name should be on the deed of any property you own, and adding a checkbox saying “Primary” will not be the disaster many of you think it will be.

———

#6 begging for a Trump on 02.13.17 at 6:40 pm

Allow me to repeat myself. The day will come you’ll be begging for a Trump.

———

Ha! Last I saw, on a US/Can 10:1 basis, he was planning to spend WAY more than Trudeau, but collect fewer taxes. This is the very same move that the steerage section here feels will be a complete disaster in Canada. This is the denial of reality from the deplorables that has normal folks feeling worried sick about where the world is heading.

#174 Ace Goodheart on 02.14.17 at 12:16 pm

RE: #13 MF on 02.13.17 at 6:49 pm:

“If government issues bonds to finance it’s debt, wouldn’t hire rates be more attractive to investors? Isn’t that why there is interest to begin with?”

Of course higher rates would be more attractive to investors. That goes without saying. However the rates are not set based on what is attractive to investors, they are set based on what the government can afford to pay. It is a circle. If the economy does well, tax revenues go up, and rates rise. If the economy does poorly, tax revenues go down, the government borrows to “stimulate the economy” and rates go down.

My concern is that what has ended up happening is that the government has borrowed so excessively, that rates cannot rise anymore, as there will never be enough tax revenue to both fund the interest payments and continue with current program spending. So you have a “structural” currency devaluation, in the form of perpetual low rates. Raise the rates and you are printing money. There is no other way out of it. They can never collect enough tax to pay for all of the debt.

“You can argue that a strong military is what has helped the US maintain it’s status as a super power. A lot of people (myself included) also believe a strong US military is a force for good in the world. Without the US military at the top, just imagine who would be next. Everyone who is not in the US sphere of influence has a garbage worldview.”

I don’t take a position on the issue of whether or not the USA’s military exploits have been a good thing for planet earth, on this forum. This is a finance forum. The position I am taking on this is that the USA has borrowed a lot of money to become a “global superpower” and due to tax havens and low tax rates for the wealthy and way more being spent on the military than ever was produced in the economy, they now have a structural deficit and a trillion dollar debt.

They can neither balance their books, nor pay off their debt, and they will continue to spiral into insolvency. There is no way out of that, other than, once again, printing money.

With regard to US military spending not having as much of an impact on the economy as I have said it would, you need to remember the “spin off” industry. For every one dollar spent on military, there are probably ten dollars that spin off from that, through the wonders of debt financing. Give a person a 100k per year job in an industry that creates military equipment, and through the wonders of debt financing and delayed payment plans, you create a million dollars in economic activity. Same thing happens in Canada, only it is social spending here.

#175 James on 02.14.17 at 12:17 pm

#82 Smoking Man on 02.13.17 at 9:12 pm

Flew into cayo coco today then a road trip to the town of moron. Shit they pronounce it Mu-Ron.

And they wonder why I suffer from the ridiculous English language. ….

On a quest to find some one who met Hemingway. It was a false leed. Ended up in a 3 star resort pretending to be 5 star.

It fits me like a perfect suit. ….

Love this shit hole communist out post where poverty is everywhere. But it’s people happy, kind, glowing with love.

What am I missing here.

How did the Trump T2 bro feast work out today?
For get about fake news. I got no news.
………………………………………………………………….
Your man Trumps second flop.
Michael Flynn’s resignation as national security adviser removes an immediate political headache for the White House but will do little to dispel suspicions about his ties with Russia that now threaten to envelop President Donald Trump’s nascent administration.
Flynn quit late Monday as controversy raged over revelations that he misled Vice President Mike Pence — who then defended him on television — over whether he discussed US sanctions with Moscow’s ambassador to the US before the inauguration. Such a move could be a breach of the law.

#176 James on 02.14.17 at 12:19 pm

News for Smoking guy stuck where he wont get fake news.
The Senate’s second-ranking Republican and other GOP senators are calling for an investigation into connections between President Donald Trump and Russia, and want former National Security Adviser Michael Flynn to testify. Trumps team already has some major cracks.

#177 Ace Goodheart on 02.14.17 at 12:31 pm

My “thesis” on high house prices, is that they are a “canary in the coal mine” type problem, and a symptom of a bigger problem, which is my above mentioned structural delayed currency devaluation. I just look at government debt, look at interest rates, and then imagine how much money the government would need to collect, to pay the interest on the debt, at various interest rate levels.

What I see is low interest rates, necessary for continued government spending, and house prices which correlate to those low rates, in a forward view as to what the value of the currency should be, if rates were normalized.

For every one percent increase in interest rates, at current government debt levels, you need to devalue the currency by a percentage. If you get to three percentage points, which would be a normalized interest rate, the value of the currency at that point should correlate to the actual value of a house, adjusted for inflation. What I see is that house prices have risen to the point where they would be, if the currency was devalued enough, to allow our governments to pay interest on a 4% debt level.

So I figure, when the inevitable happens and governments are forced to raise rates, the amount that they have to devalue the currencies in order to do this, will correspond to the extra value added to houses during the period of low interest rates. This would mean houses are not actually over valued, they are just priced to take account of a future devaluation of currency.

The houses are priced this way, because money is only worth what interest you can get on it, and currently the interest rates are very low, so money is not worth as much “house” as if rates were higher.

#178 Boots on the Ground in Ptld on 02.14.17 at 12:33 pm

#124 Bobby
*Perhaps the solution is to tend towards the US system where mortgage interest is tax deductible.

—————————————————————
No idea how much of this article is factual (does anyone understand any of the US tax code?) but thought I’d post as reply to the comments mentioning mortgage interest deduction in US. Since living back down south I’ve been trying to sort out which country makes the most sense for us to be in. Pick your poison is how I’m coming to see it. Like others have said, seems in the end its a wash?, the cost of health insurance emptying pockets the same way all the taxes up North do.

http://www.slate.com/blogs/moneybox/2017/01/04/republicans_are_secretly_killing_the_mortgage_interest_deduction.html

#179 Victor V on 02.14.17 at 12:46 pm

Fed’s Janet Yellen says waiting too long to raise rates would be unwise

http://business.financialpost.com/investing/market-moves/feds-janet-yellen-says-waiting-too-long-to-raise-rates-would-be-unwise

Yellen did not say if Fed policymakers expected the economy would warrant three interest rate increases this year, as they last signaled in December. Nor did she give indications whether the first rate hike of the year might come at its next meeting in March or at the subsequent June meeting, which is when most analysts expect a rate increase.

#180 Euro observer on 02.14.17 at 1:04 pm

#172 Gulf Breeze on 02.14.17 at 12:05 pm

I am a wealthy boomer, by some standards and though all of the capital gains taxes are going to affect me in a big way, I am happy to pay to insure I continue to live in a country that is civilized, compassionate and rational.

——————————-
Great words (earning my respect) but unfortunately it is too late for that.

GTA and Vancouver have nothing to do with a ‘civilized, compassionate and rational’ place.

These are just memories from times, unfortunately long gone. Now we live in LGBT rights/she-nazi/sunny way times, so adjust accordingly. Pay nothing. If you pay they will steal it. Working for you enemy is a weakness.

#181 Deplorable Dude on 02.14.17 at 1:06 pm

#176 James

There are no nefarious links between Trump and Russia, this is the ‘Deep State’ attempt to undermine Trump.

This article has exquisite analysis of just what exactly is occurring in the swamp called Washington.

https://theconservativetreehouse.com/2017/02/14/michael-flynn-resigns/

#182 cracks on 02.14.17 at 1:09 pm

#176 James on 02.14.17 at 12:19 pm

The Senate’s second-ranking Republican and other GOP senators are calling for an investigation into connections between President Donald Trump and Russia, and want former National Security Adviser Michael Flynn to testify. Trumps team already has some major cracks.

Cracks like Bush and Clintons had for ties to the Saudis.

#183 Victor V on 02.14.17 at 1:12 pm

Canada’s banking sector is on fire as stocks hit record highs four days running

http://business.financialpost.com/news/fp-street/canadas-banking-sector-is-on-fire-as-stocks-hit-record-highs-four-days-running

#184 jess on 02.14.17 at 1:28 pm

begging for a trump? rlly?

what does he mean when he says words? reporter asked
Mr. Cook on fake news and what it does to the mind
“Get your news straight from the president.” Lamar Smith republican rep. stated. omg !

john oliver tonight hilarously scary
https://www.youtube.com/watch?time_continue=1143&v=xecEV4dSAXE

#185 ALFRED E. NEUMAN on 02.14.17 at 1:33 pm

This could really discourage landlords from investing in renovations and upgrades that normally serve to enhance their rental resale values, right?

And the degree to which that will be true, dependant upon the to-be-announced applicable cap-gain tax rate?

#186 };-) aka Devil's Advocate on 02.14.17 at 1:47 pm

I do have to admit; over the course of a quarter century career as a REALTOR®, I certainly have watched it ramp up, more recently, to the point of absurd obsession. The social value of housing to neighbourhoods to cities and the country has taken a back seat to the economic we have become dependent upon.

#187 Damifino on 02.14.17 at 1:51 pm

Yo! All this talk of chipping away at the capital gain exemption, dividend tax credit and a crackdown on fraudulent principle residency claims.

Well, I suppose T2 is going to need a lot more cash than he first thought back when he promised a balanced budget by 2019.

Soon he’ll be legalizing weed and taxing the bejeezus out of it. But he’ll find out…

You can’t get blood from a stoner.

#188 mike from mtl on 02.14.17 at 2:02 pm

#164 traderJim on 02.14.17 at 11:01 am
A lot of folks will be facing huge tax bills if CRA decides to look into it.
########################################

Still find it, uhm quaint, how the CRA ‘knows’ and taxes (naturally) even the mundane interest on GICs to the cent. However RE is somehow based on an honour system straight out of the 19th century even though that’s many orders of magnitude.

Guess all our ‘canadian way’ is based off RE if history is any guide/

#189 Doug t on 02.14.17 at 2:03 pm

next up – 50% tax on all lottery and casino winnings

#190 IHCTD9 on 02.14.17 at 2:06 pm

#173 SeeB on 02.14.17 at 12:13 pm

Ha! Last I saw, on a US/Can 10:1 basis, he was planning to spend WAY more than Trudeau, but collect fewer taxes. This is the very same move that the steerage section here feels will be a complete disaster in Canada. This is the denial of reality from the deplorables that has normal folks feeling worried sick about where the world is heading.
____________________________________________

Aye,

Trudeau has spent jack on our economy, or on Canada’s GDP growth.

Trump is spending big to supercharge the US economy

Trudeau is taxing the living crap out of Canadians because his government is near insolvency due to deep sixing our economy.

Trump is cutting taxes to supercharge the US economy.

Oh, but if you were trying to say that all spending and taxation is the same no matter which way it goes or for what goal – well then please carry on being worried sick, etc…

#191 traderJim on 02.14.17 at 2:08 pm

#170 Michelle

You give a perfect example of why government redistribution of wealth is always doomed to failure.

The rich have more influence, lawyers and often smarts, so they get the wealth re-distributed to them.

Meanwhile the poor schlubs believe the politicians who say they will tax the rich and give to the poor. Hahahahahahaha

Can’t believe they not only still get away with that scam, but in fact it’s more popular than ever.

People always get the government they deserve. If you vote for redistribution hoping you will be the beneficiary, you deserve the result, and it won’t be the one you expect.

#192 Rainclouds on 02.14.17 at 2:34 pm

Probably the vast majority of residential mortgages issued in Vandelusional had “rental income” as part of the calculations to determine eligibility. The banks have no problem with this.

Sooo, can Rev Canada audit the approved mortgage applications that sit in the bank to easily determine who to target in the first round?

#193 James on 02.14.17 at 2:57 pm

#181 Deplorable Dude on 02.14.17 at 1:06 pm
#176 James
There are no nefarious links between Trump and Russia, this is the ‘Deep State’ attempt to undermine Trump.
This article has exquisite analysis of just what exactly is occurring in the swamp called Washington.
https://theconservativetreehouse.com/2017/02/14/michael-flynn-resigns/
……………………………………………………………………
Oh yes its true many, many, many people told me so. Your FAKE news, your a Bad Hombre. Give me a break dude Washington is covered in excrement on both sides of the fence. Trump is connected just like Tony Soprano was.

#194 IHCTD9 on 02.14.17 at 2:58 pm

#189 Doug t on 02.14.17 at 2:03 pm
next up – 50% tax on all lottery and casino winnings
__________________________________________

I got no problem with that one :)

#195 James on 02.14.17 at 2:59 pm

#182 cracks on 02.14.17 at 1:09 pm

#176 James on 02.14.17 at 12:19 pm

The Senate’s second-ranking Republican and other GOP senators are calling for an investigation into connections between President Donald Trump and Russia, and want former National Security Adviser Michael Flynn to testify. Trumps team already has some major cracks.

Cracks like Bush and Clintons had for ties to the Saudis
…………………………………………………………………
Dam right Bush and Clinton weren’t clean either but they are not Presidents right now so I don’t give a sh*t about them. Lets stay on topic. Trump hasn’t had a day in office without turmoil.

#196 westcdn on 02.14.17 at 3:01 pm

Hmmm. My venture into option trading leaves me cold. Although I got the call right, the rewards didn’t match my expectations in the short term. It is becoming obvious to me to win in this option game you have to bet long term. More for this leaf to learn.

#197 SeeB on 02.14.17 at 3:21 pm

#190 IHCTD9 on 02.14.17 at 2:06 pm
#173 SeeB on 02.14.17 at 12:13 pm

Ha! Last I saw, on a US/Can 10:1 basis, he was planning to spend WAY more than Trudeau, but collect fewer taxes. This is the very same move that the steerage section here feels will be a complete disaster in Canada. This is the denial of reality from the deplorables that has normal folks feeling worried sick about where the world is heading.
____________________________________________

Aye,

Trudeau has spent jack on our economy, or on Canada’s GDP growth.

Trump is spending big to supercharge the US economy

Trudeau is taxing the living crap out of Canadians because his government is near insolvency due to deep sixing our economy.

Trump is cutting taxes to supercharge the US economy.

Oh, but if you were trying to say that all spending and taxation is the same no matter which way it goes or for what goal – well then please carry on being worried sick, etc…

——————————————-

Well, either Trudeau has spent jack as you say, or, according to other folks in the steerage section, is spending us into oblivion. Which is it?

Your ability to take the same action, paint it in a different light depending on the actor, and then pretend it actually IS different is astounding. That’s the very cognitive dissonance which has people frustrated with the Trump crowd.

#198 SeeB on 02.14.17 at 3:25 pm

Addendum

My apologies, I should have specified that the similar action referred to spending, not the taxation component. Which taxation move is better is a different conversation.

#199 Bobby on 02.14.17 at 3:26 pm

For #186 DA,

I think we can all agree that the real estate industry has taken a front seat in having many believe that buying a house was an investment, not a place to call home. How about the inaccurate comparisons to the TSX, the continued comments that real estate always goes up and probably the misinformation about buying a house that realtors pass on to first time buyers. I recall one new realtor telling me I was foolish to have monies in a solid pension fund, real estate was supposedly where it was at. A get rich quick scheme.
Once this all shakes out, and it will, I see a major shake up in the real estate industry. Just imagine the hue and cry when the Liberals come after taxes for secondary suites or mortgage helpers. Where will that money come from given many homebuyers are already stretched. I wonder how many realtors were honest and said to prospective buyers that their mortgage helper was in fact income that had to be reported. I doubt many. In the end, when it all comes crashing down, many who had made a bad decision in buying a home they couldn’t afford will be looking for someone to blame. My guess is their first target will be their realtor!

#200 Wrk.dover on 02.14.17 at 3:51 pm

#169 IHCTD9 on 02.14.17 at 11:42 am

2. Offset electricity Bill – TBA, might not be worth the effort

———————————————

grid tied solar is only viable way. O.K. if you want to put your money in a tangible asset of sorts. Cheaper to buy electricity, until rate hits twenty five cents.

Solar water pays better. Mine works.

Utility power is a gift.

#201 JimH on 02.14.17 at 3:56 pm

Sean Spicer just now: “Yesterday the president had an incredibly productive set of meetings and discussions with PM Joe Trudeau of Canada.”
==================================
Ah, yes! We’re getting there! And to think just the other day, the PM was referred to as, “Justin who???”

#202 IHCTD9 on 02.14.17 at 4:13 pm

#200 Wrk.dover on 02.14.17 at 3:51 pm
#169 IHCTD9 on 02.14.17 at 11:42 am

2. Offset electricity Bill – TBA, might not be worth the effort

———————————————

grid tied solar is only viable way. O.K. if you want to put your money in a tangible asset of sorts. Cheaper to buy electricity, until rate hits twenty five cents.

Solar water pays better. Mine works.

Utility power is a gift.
———

Last I checked, the grid tie deal in Ontario was crap. Plus you had to buy insurance to do so. That was years ago though. Solar is always at the back of my mind, but it sure puts limits on lifestyle. I’d hate to lose the dryer… :)

I pay .25 kwhr right now, that is high enough to get me thinking about making some myself. I have yet to fully work out the full impact of opting off the grid. My hunch is probably not happening, Wynne is scared to death over hydro bill rage, so I think our rates might be dropping some here shortly…

#203 IHCTD9 on 02.14.17 at 4:46 pm

“Well, either Trudeau has spent jack as you say, or, according to other folks in the steerage section, is spending us into oblivion. Which is it?”

I said “spent jack ON THE ECONOMY”, the steerage section is also correct that he is spending like crazy (on other stuff like global warming handouts for foreign countries) as we now have a deficit almost 32 times larger than we did when Harper got the boot.

So it’s both

“Your ability to take the same action, paint it in a different light depending on the actor, and then pretend it actually IS different is astounding. That’s the very cognitive dissonance which has people frustrated with the Trump crowd.”

There’s nothing the same about fueling an economic hurricane, and throwing billions down the global warming black hole, or covering bad policy and lack of results with new taxation. Here’s how it works:

Trump cuts taxes to repatriate foreign funds, bring business back to the USA, create jobs, and create revenue.

Trudeau raises taxes because his government is swan diving towards insolvency. No jobs, no businesses, no revenue.

Trump spends like crazy on anything he can think of that will attract new business, make new trade deals, create new jobs

Trudeau blows billions fighting climate change, keeping the mattress(s) at Bombardier stuffed full, and transferring money all over the place trying to appease the UN. I don’t disagree with all his spending, but alas, no jobs, no businesses, no revenue.

You don’t like Trump? No problem, I have plenty, and I mean PLENTY of reservations about the man myself. But I’m not such a fool, nor so blinded by partisanship not to see he is making one HELL of an effort at improving the US economy.

Trump policy may fail. Trudeau policy is CERTAIN to fail.

#204 InvestorsFriend on 02.14.17 at 4:48 pm

RRSPs are NOT Tax traps

The Blinfd Leading the Blind

#106 Ronaldo on 02.13.17 at 10:49 pm supported
#5 Not first who said

”And those suckers with big cash in RRSPs are going to be feeling it big time.”
———————————————————-
Absolutely. One of the reasons I melted mine down before turning 71. Total tax trap.

******************************************
The above claim is dead wrong. Except in unusual circumstances, such as a senior on GIS, anyone following that misinformed view and avoiding or melting down an RRSP is hurting themselves financially.

I have demonstrated the math on how, for most people, RRSPs allow YOUR share of the contribution to the RRSP (net of the tax refund) to grow not only tax free but usually with a negative net tax in that most people pay a lower percentage tax than the percentage refund received.

Extremely few people are going to face a higher marginal tax rate in retirement (even with old age clawback) than they had when they made the contributions. If the government contributes 40% of the funds in “your” RRSP and then only takes back 35% of any withdrawals then that is effectively negative taxation. The mistake people make is forgetting that “their” RRSP was always effectively only about 60% “theirs” and the government was in as about a 40% partner all along. They were poorer than then they thought.

Most recently I explained it in detail here:

#43 InvestorsFriend on 02.11.17 at 5:50 pm

But we are firmly into a world where people believe what they want to believe.

#205 Bezengy on 02.14.17 at 5:05 pm

Socialism – Everyone talking taxes, no one talking about making money.

#206 anc0dia on 02.14.17 at 5:11 pm

re # 92

“reckless mortgages in Toronto: Ross Kay talking about house prices in Burlington Ontario: how can a bank approve a mortgage on house with a sold price 67% more than the assessed value? there’s been really lax lending going on now for about 19 months:

at the 26:00 mark:
http://www.howestreet.com/2017/02/13/what-is-the-trump-handshake/

I feel an Argentina moment coming”

This is a good question. How are the banks allowing financing to be done on properties that are 50-60% over 2016 assessments? Isn’t this a huge risk for the banks?

#207 T2 on 02.14.17 at 9:35 pm

T2s report, just for some perspective:

*how many houses do you own: 0, live at 24 Sussex in Ottawa, taxpayers pay the rent and all expenses (eg. monthly hydro is $10k), 24 Sussex assessed at $9.67m in 2016
*year of purchase and price: N/A, not necessary for me to mess with details like home ownership and banking
*% down: $0 by me, 100% by taxpayers
*age of house at that time: house built in 1866, were eligible to move in in 2016 (150yrs old at that time) but we wanted expensive renos done, estimated in the Nov ’16 National Post between $38-562m (Harper was fine without the renos) and Canadian taxpayers are beating down our front door to pay
*your age at that time: 44
*amount owing or number of years it took to pay off: taxpayers will never stop sending the government money and my government continues to borrow, so never
*number of years owned: by me, 0
*value today: well after the renos it should be worth a lot more than $9.67m!
*% of your net worth in house equity:0

But it’s ok, I am transparent. And I understand home ownership. Since my Dad didn’t protect property right in the Canadian Constitution, you could say myself and my government own all the homes in Canada!

I’ll sign off there as a lot of you have some heavy new tax paperwork to get on top of. For example, CRA tells me that half of the homes sold just in Vancouver last year had suites and half of those weren’t reporting the income. With average net rents of $1k and the penalty of 100% of the unreported income (and don’t forget the 5% interest rate…just because) on only Vancouver taxpayers will ship me $1bn in extra taxes in April.

And you people wondered where the $ for the Paris climate change commitment would come from. Don’t worry! T2 to the rescue!!

Maybe you people should all be renters like me?

Toodles!

-T2

#208 GreaterFool on 02.14.17 at 11:12 pm

So Garth, I got this add on my facebook timeline from some real estate team here in Victoria.
I told them to stop fooling people saying that real estate is an “investment” and so they replied:

“xxxxxxxxx Estate Team: Actually people buying their own homes strengthens the individual and our overall economy. People need to live somewhere. Basic supply and demand forces prices higher in the more desirable areas. This is not a Canadian issue, it’s global. Also, the valule of diamonds value is a myth created by the world diamond cartel, very successfully. https://www.gemsociety.org/article/are-diamonds-really-rare/

I hate Realtors…..

#209 Tudval on 02.15.17 at 8:55 am

Scaremongering. The govt is simply taking steps to crack down on tax evasion. No government will last beyond the next election if it imposes a tax on principal residence. Not T2, T3 or Tinfinity.

If they do, they’d have to make mortgage interest deductible. The result will be stagnant home prices (so no tax revenue) and revenue loss by giving the deduction. Even bureaucrats are smart enough to see that there would be nothing to gain in the end.