The basement

Landlord math was on display here over the weekend. It’s almost as amusing as developer math, used by clever people like Brad Lamb to make you beg to buy one of his condos so you can start making 18% a year.

Face it. With real estate at current levels it’s about impossible in an urban centre bigger than Tatamagouche to buy a house or a condo, rent it and be in positive cash flow. The only way amateur landlords can make themselves feel better is to (a) ignore half their mortgage payments saying ‘the tenant is paying off the loan,’, (b) forget about the opportunity cost of the downpayment, or (c) believe the price of their property will rise forever.

Of course, lots of people have grown rich by acquiring buildings, renting them out for decades and profiting from an historic bull run in real estate. But those days are over. Most amateur landlords are currently in negative cash flow. And Landlord Math is nothing but accounting fiction.

First, you can’t count all the rent you collect as revenue without considering mortgage principal payments (along with interest) as an expense. Second, buying a $600,000 condo to rent out with a $120,000 downpayment and $15,000 in closing costs means you’ve lost the use of $135,000 which could be netting 6% from a balanced portfolio. That’s almost $700 a month. Add it in. And as for capital gains, those days may well be ending. In fact they did years ago in places like Calgary and Edmonton. They barely exist in Montreal. And the tide may be going out in the GTA.

Anyway, be careful. Now that Ontario has ushered in universal rent controls – and rents are already absurdly low compared to the value of properties – it’s almost certain the money you collect each month from a tenant will not cover the amount leaving your bank account. Mortgage payments, condo fees, property taxes, insurance, maintenance and an allowance for vacancies – not to mention the cost of getting a drunken iguana out of a toilet trap – all add up. So with rents capped and everything else uncapped, this is a dodgy investment.

But what about renting out part of your house? Is that a slam dunk – since you already own it, and live there?

Obviously a lot of people think so. Especially in Vancouver, where the average family long ago lost the ability to afford the average home. A poll two years ago found 43% of people with houses rent out their basements or laneway structures (a.k.a. garages). That’s double the rate in Toronto (20%) and vastly above the national average (14%).

Some of these people (impossible to know how many) never claim expenses as deductions from their taxable incomes because they don’t declare the rental income they’re receiving. This, of course, makes them criminals. Tax evasion is a serious deal. So they’d better hope their tenants don’t use that address on their annual tax returns.

The rest of the folks, who legitimately report the rent, add it to their employment incomes and pay tax at the higher marginal rate which results, get to deduct a portion of their residency costs. But I’ll bet many of them have no idea what surprise waits in store down the road when they come to sell. The basis of this is the change which came in last October forcing anyone selling a property to apply for the Principal Residence Exemption, instead of automatically receiving it. So the feds are building a fat database on residential real estate which can then be used to check against all kinds of other things – like your tax records showing rental income, or the pasty guy in the basement who used that address to file HST for his online porn business.

What does this mean if you have a suite?

Well, it’s complicated.

If you rent out your whole house and move to France for four years, no problem. You can still claim the PRE if you sell and make a profit. More than four years, and the exemption is lost.

If you lease a portion of your house, you may lose a hunk of the PRE when you sell – which could be devastating in cities like Toronto and Vancouver where properties have inflated wildly. The CRA says if your home is altered in order to accept a tenant – like adding a new entrance or having a kitchen in the basement – then it fails a simple test which would have preserved your PRE. Any structural change made to accommodate a renter means the leased part of the house is subject to capital gains tax when you dispose of the property. The adjusted cost base (ACB) is determined by the date you started to rent.

So, if you leased a space in 2005 equivalent to 30% of your (then) $500,000 house which you just sold for $1,000,000, you probably have a taxable capital gain of $150,000. The good news is half of that is tax-free. The bad news is the other $75,000 must be included in your taxable income.

Gee. Renters win again.

149 comments ↓

#1 Victoria Real Estate Update on 05.22.17 at 7:13 pm

DETACHED SALES 10% BELOW GREATER VICTORIA’S 5-YEAR AVERAGE IN APRIL

GREATER VICTORIA DETACHED SALES IN APRIL 7.5% LOWER THAN IN 2015

Don’t expect local realtors or the local media to spread this information to Victorians.

Instead, expect them to continue to attempt to direct the public’s attention away from any and all important sales stats which indicate that Victoria’s market is quickly nearing its peak.

In the case of Victoria’s R/E board, expect more excuses for the shocking year-over-year detached sales plunges that we have seen every month in 2017. Snow was the excuse in February as detached sales tanked 25% year-over-year and a late spring was the excuse in April as sales crashed 43% from year-ago levels.

These excuses, of course, came after the local board predicted that 2016 sales levels would continue in 2017. That (FOMO) prediction, “Demand Likely To Continue In 2017”, came three days into the new year on January 3, 2017.

GREATER VICTORIA DETACHED SALES DROP 6% FROM MARCH TO APRIL

This is something that doesn’t happen very often. Sales typically increase from March to April as the all-important spring buying season ramps up.

Over the past 5 years, sales from March to April have increased anywhere from 11% to 34%. Last year’s increase was 24%.

That sales actually fell from March to April this year really stands out, given all of the realtor-generated FOMO that’s been circulated over the last 2 years. I’d like to hear the local board’s excuse for this.

In the past 12 years, sales dropped across Greater Victoria from March to April only in years that the market began a price correction or in years in which prices continued to fall in an established correction.

WAVING A BIG RED WARNING FLAG

As I’ve said, when a housing bubble market is at or near its peak, sales fall. Falling sales is a housing market’s way of waving a big red warning flag at potential buyers, telling them that if they buy now they will inevitably face a bleak financial future, brought about by massive drops in the value of their property.

This is what the bust part of the boom-bust housing bubble cycle brings. History has shown, with housing bubbles all over the world as proof, that once the boom is finished the bust is impossible to avoid.

After the peak, any new bubble-blowing policy becomes ineffective against the forces that take over and bring about the market’s inevitable correction. The correction is really just the market balancing itself, as it always does, after an extended (policy-fuelled) extreme price run-up that has left price-supporting market fundamentals several years (many think over a decade in Canada’s case) behind.

SIZE MATTERS

Housing bubbles were intentionally blown in Canada and the US with the implementation of lax mortgage lending policy after 2000.

Victoria’s current bubble price run-up (+199%) dwarfs the price run-ups in San Francisco (+116%) and Seattle (+92%) as the US bubble peaked.

History has also shown that a housing boom (bubble) is always followed by a housing bust.

In San Francisco’s inevitable bust, 84% of its price gains were lost while 69% of Seattle’s gains evaporated in a market where prices didn’t even double.

House prices in Victoria have TRIPLED since bubble-blowing policy was implemented after 2000. Over the same period, income gains have amounted to only a fraction of housing price gains.

Obviously the bigger the price run-up in a bubble, the higher the percent of gains lost in the inevitable bust (in general).

Compared to bubble cities in the US, price corrections in non-bubble cities were much smaller. For example, the correction in Dallas was only -11% and in Denver -12%.

NEAR-PEAK BUYERS

House prices in bubble markets always fall back to (and almost always overshoot) the level where market fundamentals can support prices.

This is especially disastrous for peak and near-peak buyers. Obviously entering the market at or near the peak always ends up being a huge financial blunder which often permanently ruins a household’s financial situation.

As bubbles peak and prices stop rising, some peak buyers realize that they’ve made a huge mistake and regret buying, knowing that prices will fall. Indeed buyer’s remorse became a big thing in the US as prices fell there. Gath has written about how quickly buyer’s remorse has come into play recently in Toronto. It will happen in Victoria as well (as always, no specific date for that).

WARNING SIGNALS

Victoria’s market keeps sending important warning signals to potential buyers as it quickly approaches its peak. Near-peak buyers will be forced to deal with massive drops in the value of their properties.

History has shown that there is no plateau in a housing bubble and that a brutally destructive outcome awaits every bubble. No exceptions.

#2 Mark on 05.22.17 at 7:14 pm

“but are you seriously arguing that someone who bought a house in the GTA or GVR in 2013 wouldn’t be in the money if he/she sold today?”

A few individual cases clearly are. The Realtors and housing hypesters of course will promote those cases (many of which transactions were sham transactions between related parties and/or involved significant re-investment). But for the most part, an individual identical property will not sell for more today than it did in 2013. And transactional fees and spreads still need to be deducted.

Investment portfolios, in comparison, advocated by Garth et al, are absolutely smoking real estate, especially investment real estate. And have been since that 2013 apex.

#3 Greaterstool.ca on 05.22.17 at 7:22 pm

Huh…..who knew

#4 OttawaMike on 05.22.17 at 7:23 pm

Rent controls increased in Ontario. Great that will give landlords even more incentives to ensure your their tenants live in a rat hole.

#5 waiting on the westcoast on 05.22.17 at 7:25 pm

As I tell my entrepreneur wannabe friends… It’s all about cashflow!

I have been in Victoria for the past few days scooping out houses to rent. Very tight market. Rents are almost as high as Vancouver…

That said, nearly every home I looked at was owned as a second or third investment property of a tradesman. And they are leveraged but are talking up what they have been able to buy and what they are worth…

Everyone is talking up the “Chinese wave” leaving Vancouver but what this reminds me of was 2007 in Portland, OR. Lots of money and good times floating around.

#6 Sir James on 05.22.17 at 7:25 pm

Bitcoin = $3000 CDN

#7 Fish on 05.22.17 at 7:29 pm

Thankyou, You are great!!!!

#8 Chaddywack on 05.22.17 at 7:30 pm

My previous landlord in Vancouver tried to screw me out of $150 of my damage deposit when we left because he said “it wasn’t clean enough” (pointing to a small nail hole in the wall and a fingerprint smudge on a door). The place was fully professionally cleaned, spotless, and he was just being petty to try and pocket some extra money. Eventually he gave us it back.

I was pissed off so I reported him to CRA online through their leads website. (https://apps.cra-arc.gc.ca/ebci/bscs/l3adz/internet/initial.do?target=login&lang=en&program=qa)

Told them how much I was paying in rent and gave all his info. If he was declaring his rent he’ll be fine, they’ll just review it and close it, but if he wasn’t……here comes the audit.

I figured if he was going to be petty, so would I. This is yet another way those that aren’t declaring rental income can get caught. And believe me CRA does review all leads……in fact, most Child Tax Benefit fraud cases caught are reported by angry exes!

#9 Linda on 05.22.17 at 7:35 pm

Ah no more cute dog pictures?!

#10 ole Doberman on 05.22.17 at 7:40 pm

Gartho I’ve been reading the greaterfool since 2009 when i found an article copy on the mens washroom floor.

How much longer can i hold off my mom telling her RE is not a good investment and equities are the way to go? Renting is getting embarassing.

#11 Porsche on 05.22.17 at 7:42 pm

Distant relative never paid Capital gains tax on a rental when he sold and the Feds put a lien on his personal home.
He’s f *ked

#12 I'm Not Poloz on 05.22.17 at 7:45 pm

Poloz aims for a 40 to 50-cent Loonie this year. From a speech he made at Drummondville, Quebec:

“As entrepreneurs, I’m sure you know that global trade has recovered only partially, as the world economy is still working through the fallout from the crisis. Compounding the issue for exporters, of course, has been the relative strength of the loonie. While it has come down in the past several months, it is still more than 40 per cent higher than it was in the early 2000s.

Many people in this room may be wondering why the Bank of Canada did not do more to limit the appreciation of the loonie, or to weaken it after it rose. After all, we have said time and again that stronger exports are needed to bring our economy home.”

Poloz insists that the Loonie is 40% higher at 90 cents than it was in 2002 when it was at 62 cents. This man scares me financially.

I don’t like a 40-cent Loonie. Poloz’s salaries can always increase to real inflation, while his Deputy Governor can always work in the Red Light District of Toronto to meet the increased demand of American tourists on a devalued 40 cent Loonie.

#13 AK on 05.22.17 at 7:47 pm

“Gee. Renters win again.”
——————————————————————
A good reason not to be a landlord in this country.

#14 Social Justice Warrior on 05.22.17 at 7:47 pm

All of this is socially just and good. Landlords should subsidize tenants because landlords are rich and greedy and tenants are disadvantaged and discriminated against. Taxing capital gains and property taxes is simply a way of making sure the wealthy pay their fair share and recognizing the extremely unjust advantage they have.

#15 Mike Rosenberg on 05.22.17 at 7:49 pm

In today’s market, renting is 100% a no-brainer. I recently saw a 4 bedroom house in Oakville for sale for $1.5 million and the exact same house is also for rent for $3500 per month (it is on MLS). I fail to understand why anyone in the right mind would pay the ridiculously high price for a home today and likely take on a massive mortgage (hence paying rent to the bank instead while taking on all the price risk given how big the bubble is), instead of just renting and saving extra money in a diversified account (and not having the risk of a major price correction). It is shocking how people so stupid to be paying these prices for homes in Toronto and Vancouver.

#16 Unbalanced on 05.22.17 at 7:52 pm

I love a warm happy story!

#17 Scruffy on 05.22.17 at 7:53 pm

Hi Garth – love the landlord stories. Really opens peoples eyes up to the economic challenges of being a landlord in Vancouver and the GTA. I follow your advice and have only posted once before, but read the blog and comments religiously every night. Love Smoking Man – the guy is hilarious and smart. Would love to get your advice in future blogs on how to select EFT funds – what to look for and what aspects are important in considering the various products that are available to us amateur investors. Thanks in advance and keep up the great work. Canadians need it.

#18 crowdedelevatorfartz on 05.22.17 at 7:54 pm

Hmmmm.
One assumes the CRA has had these rules on the books for quite some time.
Its a shame the govt mandarins in power over the past 10 years were too gutless to let loose the taxation “Dogs of War” long before the present real estate debacle we are experiencing now reared its ample Kardashian derrier .
Too little too late.
No one expects the CRA to catch them…
The market and our rapacious appetite for debt will be our undoing….not the beancounting dweebs from Planet Ottawa

#19 Welcome to Slurrey on 05.22.17 at 7:54 pm

Let me count the number of people with basement income that dont claim it …..and have gotten caught for tax evasion ………………… its zero , so owners win again for now

Hardly. People are busted all the time for not declaring income. It is a significant risk to take. — Garth

#20 Ace Goodheart on 05.22.17 at 8:03 pm

“not to mention the cost of getting a drunken iguana out of a toilet trap ” – this is weird s*&t. It’s a holiday. So I’m guessing Gartho has been imbibing something or other? Otherwise I don’t get this? I’m sitting here on my third beer, after a day spend in the garden in my paid for Mount Dennis house (paid $329,000 cash in 2012, now worth apparently $800,000) and even I don’t get the drunken Iguana joke…

Income: This country continues to be a pleasure palace for the wealthy, and a work camp for everyone else.

If a person, for example, earns $150,000 per year working, they pay tax like this:

https://simpletax.ca/calculator

Enter in $150,000 in income from employment. Your taxes paid in Ontario are $45,911.00

Enter in $150,000 in income from self employment. Your taxes paid in Ontario are $50,041.00

BUT:

If you decide not to work. Like, you don’t want to actually help out Society at all. Don’t want to do anything productive. Don’t want to make a difference. You prefer drinking home brew beer on your patio. Here is what happens, if, say you make 50% of your income from capital gains on your investments and the other 50% from dividends, in Ontario:

You pay $16,834.00 in income tax.

A whopping $29,077 savings, if you work and $33,207.00 savings if you run a business.

So why don’t we all do this?

Because most of us are drowning in debt, with no capital, no savings, we consider mortgages to be assets and we cling to employment income even though it is the second most expensive method of earning money, tax wise. We look forward to “retirement” which will likely be a few years of health problems and adjustment followed by early death, caused by all the health problems we accumulated while we were “working”.

People: Save your money, pay down your debt. Debt is a virus that kills you quite literally. A mortgage is not an asset. You want to earn income off of your money, not off of yourself. The idea is to get every dollar working as hard as it can, for you. Dollars working, are taxed less than you working. So why are you working?

Anyway that is my holiday public service announcement. Cheers!

#21 yorkville renter on 05.22.17 at 8:05 pm

if your investment is cash-flow negative, then it’s called an expense.

today’s prices are outrageous… why buy?

#22 Warren- the lagging indicator on 05.22.17 at 8:06 pm

“mounting unemployment or a tax discriminating against foreign dudes. Instead, markets are like water, eventually finding their own level, no matter how many channels or dams man builds.” – Garth
__++__

This is all true of course, until Trump builds a dam.
Do you think that some white people (or should I just say slave-owners?) in the past thought they were actually taking responsibility for, rather than ownership of, in order to justify owning slaves? Sort of how most of us think of our pets. I don’t know why that thought just popped into my head.

Now that Trump is the new Saudi prince, I guess the prop up of oil prices in the 40 to 50 range is on until the glut gets relieved somewhat and then it is back to the Permian to finish off wells and gain market share for the USA. It is also pretty well a given in my mind that the BOC will raise rates in the first quarter of 2018 following the FED which seems improbable now but looking back from then, who would have guessed that oil would have recovered like that, right.

ps- I am sure the DNC will surely be offering a reward soon for information to find the murderer of Seth Rich and of course would not impede the investigation in any way. My guess is that a shaky Podesta will be out soon in order to deceive and deflect.

#23 North Burnaby on 05.22.17 at 8:10 pm

The market is different here in YVR

#24 Nonplused on 05.22.17 at 8:12 pm

Another aspect of capital gains taxes that makes them so ugly is the gain is often accumulated over many years, but you have to recognize it all in the year of the sale. This can really mess with your marginal rate.

For example let’s say your rental property goes up $100,000 in 10 years. Instead of recognizing a $5,000 (50% inclusion) in each of the 10 years, which might not affect your marginal rate much, you have to recognize $50,000 in the year of the sale, which will push almost anybody into the top bracket. It will be even worse if they eliminate the capital gains deduction and move to 100% inclusion, where in this example you’d have to include $100,000, which for almost everybody would result in a $50,000 tax bill. All this after you’ve already paid something like $40,000 in property taxes over the 10 years (or more).

This means that if you have a rental property now that is deep in the money you should look at dumping it now. Let’s make another example and say the property is up $200,000 since you bought it. Right now if you sell that’ll pretty much result in a $50,000 tax bill (all numbers are approximate and vary by province). If you wait to sell until after the deduction disappears it’ll be $100,000. That’s a net loss of $50,000 to you, which is a lot of rent money, especially if there is a mortgage.

So the net advice is this: If you have a rental property that is deep in the money, sell it before the capital gains goes to 100% inclusion, or you will lose a lot of money. A potentially life changing amount of money.

The same would hold true for anybody that has stocks, stock options, an ice-cream parlor, or is just holding a piece of farmland as an investment. Or gold.

This response might crash the market by itself if it gets widely read. So get out there and sell those inflated assets before Glamboy messes with the tax treatment. There is a lot of money at stake, and it could happen all in one year. Maybe next year.

I remember when Canada used to be a “financially stable place to do business”. Well it isn’t any more kids so get used to it.

So anyway to repeat the point if you have inflated assets especially real estate sell it now while there is a capital gains deduction and put the money in the remaining tax shelters we have like RRSP’s (hey get another deduction!) or TFSA’s (don’t pay capital gains again!). Chances are selling now could be worth a whole year’s after tax income. More for people that have multiple properties.

#25 the Jaguar on 05.22.17 at 8:13 pm

Garth. You have hit ‘a nerve’ bringing up this issue.
Wilbur Ross, the United States Secretary of Commerce rightly points out that it was not ‘regulation’ that accounted for the collapse of housing in the recent financial crisis, banking being the most heavily regulated industry in the world, but a lack of ‘supervision and oversight’. In other words, regulate to your hearts content, but without oversight, supervision and enforcement what does it really mean? Nothing. The perps will thumb their noses at the law, the CRA, and everyone else who plays by the rules.
In many parts of Canada zoning by-laws do not permit illegal secondary suites ( hello Surrey, B.C. ) but the incidence of illegal rentals is without challenge. The reason given : Surrey does not enforce it’s by-laws. Hate to pick on B.C., (though their larcenous, law evading tendencies are legendary and more or less in their D.N.A. –Yes, I said it and I mean it. )but non conforming (zoning) suites are the NORM. And it appears nothing is done about it from a CRA perspective. It’s appalling that the government of Canada ( CRA) is suddenly so interested in attaching to this issue from a capital gains perspective when FOREVER they have ignored it from a rental income perspective. Given the current age of enlightenment from a digital perspective how can this loss of revenue be tolerated? The most disgusting aspect is that these same people who do not declare their rental income to the CRA quality for mortgage financing by claiming it on their mortage applications.
Documentation easily and readily fabricated.
Provide some insight, Garth. Given your background (CRA) you are well positioned to tell us why ‘cheaters’ get away with it when it would be so easy to make them pay their share. OMG…please don’t tell us it comes down to winning the hearts and minds of certain electoral votes. See no evil, say no evil, hear no evil.

#26 the Jaguar on 05.22.17 at 8:16 pm

Just read the entry above mine, Garth.
‘HARDLY MY ASS’. Where are the statistics to back this up? It is a ‘circle the wagons’ strategy for those who don’t comply with tax rules!

#27 Lulu on 05.22.17 at 8:17 pm

I personally know a few landlords that have properties that only accept cash as payment of their rental and it worked so well for the family, is a bit lower than the market value but it benefit for both of them. Also CRA is not that nip picking back then when the Con was in power. So, everything is changing now, the good ol day is gone!!

RENTERS!!! We should all chant in front of Wynne house for a big TK to her universal rent control policy… lol

#28 MF on 05.22.17 at 8:18 pm

#147 InvestorsFriend on 05.22.17 at 3:12 pm

Exactly. We are talking a cupboard, some smudges/minor indents in the wall, a blinder rack that is unhinged, and a sink stopper that is broken. No joke this “landlord” is asking for $1000 (plus HST) to fix it.

Ah yes, a damaged cupboard door. You might as well buy a house! — Garth

-I wish I could buy a house. Again, just trying to debunk the idea that the landlord is on the hook for “all” expenses. This should be taken into account.

This new “landlord” wants $1000.00 plus HST for what I consider normal wear and tear over three years. I consider that something a renter should consider. Add that to my increase in rent and this is starting to become a waste of money.

#155 Nero on 05.22.17 at 5:16 pm

Awesome advice. Thank you. This is 100% normal wear and tear. I think this person is just banking on me being scared and paying up. What she can plunk 400k on a unit but not 1k for repairs on her “investment”. Ah no.

#160 Julian on 05.22.17 at 6:30 pm

I am in the GTA. This is definitely reasonable and part of normal use (kitchen cupboard, sink stopper etc.)

My boomer mom is prepared to pay for all this. It’s cute, she is from a time when people actually cared about each other (I think), and were more honest (I think).

#166 TurnerNation on 05.22.17 at 7:17 pm

Lol no. Not a fan. Hotboxed with protein powder and chicken breast perhaps :)

MF

#29 Tony on 05.22.17 at 8:23 pm

So, if you leased a space in 2005 equivalent to 30% of your (then) $500,000 house which you just sold for $1,000,000, you probably have a taxable capital gain of $150,000. The good news is half of that is tax-free. The bad news is the other $75,000 must be included in your taxable income.

Garth what if it was used as an inlaws suite or for a boomerang adult child and no rent was collected?

#30 Livin Large on 05.22.17 at 8:28 pm

Having been an amateur landlord 30 years ago and also having worked for the CRA a little later, I know something first hand to a mathematical certainty, if you have undeclared rental income for at least a few years then you’ll see a desk audit issue a revised notice of assessment. The cross referencing capacity at CRA is epic.

I presume that the investigation side of CRA still run like it did 25 years ago and crosses deductions for rent especially for someone claiming self employment deductions with income reporting for the same address. And with soooo many folks running sideline businesses and so many employers classifying sales people as self employed brokers to avoid their own payroll and reporting expenses, this is making the CRA’s job soooo much easier.

Again, presuming the CRA still investigates the same way, they will periodically choose an industry to investigate. So, for example, if you’re a flooring salesperson and classed as an independent broker rather than an employee, your industry is going to be desk audit scrutinized at some point. If you claimed office in the home expense then you’d better have receipts to produce when asked. And if your landlord gave receipts then it’s likely a decent guess that they too report the income or else their too stupid to breath.

Long story short, with today’s tech at CRA you’re not getting away with not reporting rental income for long.

#31 Marcus on 05.22.17 at 8:29 pm

Prayers to the Brits killed by suicide bomber/nail bombs in Manchester during the Ariana Grande concert. Over 20 dead and 50 seriously injured. Aloha Snackbar. The mayor of London says that we just have to get used to terrorism in large cities.

#32 Landlord Math on 05.22.17 at 8:32 pm

OK, so I live in Nanaimo. I was recently talking to someone that told me they owned a rental house in D.T. Nanaimo but they weren’t renting it out right now because the last tenants damaged it. I didn’t ask what kind of damage but I did say, “Gee, doesn’t it cost you a lot of money not to have the house rented out?”

She says no.

I say “Why not?”

She says “Because it’s downtown”

Me: Blank stare

#33 Trumpocalypse2017 on 05.22.17 at 8:34 pm

Terrorist attack in Manchester.

Greece can’t get new bailout funds.

Comey about to testify.

What will Trump come home to?

Will he even make it home?

#34 John on 05.22.17 at 8:36 pm

Should be interesting to see the number of student basement rentals decline with greater oversight. Students are a transient rental sector. Perhaps this subset is flying under the capital gains radar. Maybe not. Likely, secret landlords will be ripping out basement stoves and advertising hobby rooms, exercise rooms and kiddy playrooms when they sell the joint. Instead of flogging granny flats. It should be interesting to see how multi-generation households fit into this story.

#35 Word to the wise. . . on 05.22.17 at 8:41 pm

Garth is right! A guy I was working with had a basement apartment that he was renting out to a woman who decided to stop paying rent. He went through the process of evicting her, but she figured he probably wasn’t claiming her rent as income (which he wasn’t) nor was the basement is to code in his municipality (which it wasn’t). . .so she happily reported him all the way to the poor house. He got a huge fine from the city, the CRA wanted their money, somehow his insurance provider was also notified and his rates got raised – it was a real mess and a nightmare. To add insult to injury, this woman was what, we in the landlord business, call a “career tenant” and believe me, they know the laws better than most landlords and use it to their advantage, to become very hard to evict. This woman lived close to half a year in his basement without paying a dime and took him to the cleaners with all her reporting on him. Be careful – it only take one wild career tenant to bring you down into a place you’d rather not visit.

#36 Chico on 05.22.17 at 8:42 pm

Tatamagouche

The wife and I are going through there on Wednesday Garth, the chowder house will be one of our stops as we meander up the beautiful coastline on a rambling trip that will take us somewhere close to the N.B. border :)

Thanks again for all your advice over the years Garth. We are almost 2 months into our 2nd year of leaving the wetcoast and coming east, and it’s been terrific. My 19 year old is starting college in the fall to become an auto technician and he’s excited that he’ll be able to earn enough money to actually live.

Even teenagers can do basic math when it comes to the cost of living/housing/etc. He is still is contact with friends back in the Fraser valley and he is so glad we saved him from the chaos.

#37 My dog's toots smell on 05.22.17 at 8:47 pm

Talking about things getting smelly, the real estate market appears to be frozen in Toronto. Gorgeous overpriced homes in my area are not moving. Being the long weekend, there were a lot of open houses, but no one in them. The game has changed. I will be interested to see the headlines of market cooling when the May stats come out. People listing now, have missed the boat. The listings are ballooning in my area, with nothing moving.

#38 Chaddywack on 05.22.17 at 8:49 pm

@19 Slurrey

BS. I used to work at CRA years ago and they go after a LOT of undeclared rental income.

You just don’t hear about it in the media because most of the cases don’t meet the criminal threshold. People are usually just reassessed and have to pay the tax, interest, and penalties and are monitored in the future.

They have a lot of ability to track this info down. I won’t give any details, but there are MANY ways that they track people down. People are never as smart about evading taxes as they think they are………at least from my experience.

Plus, on top of their own internal methods a lot of people send leads in. Especially when the hot shot down the street is bragging about owning 4 houses and not declaring any of the income from his basement suites.

#39 Whoopsie on 05.22.17 at 8:55 pm

Milton real estate has fallen off a cliff. Nothing selling here anymore. I have been watching in my area, houses, towns etc are sitting now for weeks. I have noticed many listings no longer say “offers being held off until”. Ha, ha, the Mattamy ghetto will just be another ugly burb with no class, nor style. I feel sorry for those losers that put deposits down on new subdivisions being built near the dump that were on 34 X 80 foot lots priced at a million dollars. What a laught! Man, I thought people were dumb, but those who bought those should have a stronger classification – like morons or something. Happy to rent, with close to a million in a diversified portfolio. I sold, took the money and ran!

#40 Dan on 05.22.17 at 9:16 pm

Can you explain why you count principal payment as an expense? I agree that it’s misleading to call it cashflow (since it’s not cash that can be invested or spent), but it is increasing equity that is realized if/when the property is sold. That doesn’t seem like an expense. No?

Then don’t count the portion of rent received to retire debt as income. Suck, blow. — Garth

#41 Walther on 05.22.17 at 9:20 pm

Great article, reading it made me think of my situation and what I might be in for in the future.

I purchased a condo in 2005 which was my principle residence until 2009 when I moved into another property I purchased with my wife. We kept the condo and moved my mother into it.

We sold our other property in 2016 for a boat load of cash (all currently invested in a balance portfolio) and have been renting a place downtown for the past year.

I’ve never charged or collected rent on the condo and plan to hold onto it for a little while our until my mother wants to sell.

What kind of exposure will I have to claiming capital gains, if any?

What can I do to manage the condo as my principle residence now that it is my only property?

#42 Smoking Man on 05.22.17 at 9:24 pm

#33 Trumpocalypse2017 on 05.22.17 at 8:34 pm
Terrorist attack in Manchester.

Greece can’t get new bailout funds.

Comey about to testify.

What will Trump come home to?

Will he even make it home?
…..

Radical loons strike again. Sad. Waiting for T2 to wiegh in on this. Ah, Um, Ah, diversity, ah, Um.

Trump will come home to a hero’s welcome, lets see what Kim Dotcom shows us tomorrow. The end of the DNC as you know it.

#43 Keith on 05.22.17 at 9:29 pm

Well, in the example it’s 75k but in this day and age two taxpayers on title, so 37,500 apiece. Unlikely both income earners are at the top marginal rate. Likely that both have beaucoup du RRSP room, so unless they’re completely leveraged there are still ways and means if there is a tax issue. If they have no equity in a million dollar property, they have big issues aside from the tax liability.

#44 Ret on 05.22.17 at 9:43 pm

#34 “Students are a transient rental sector. Perhaps this subset is flying under the capital gains radar.”

Every student who gets a Canada Student loan should have to report where they lived and who received the rent money. Failure to do so should result in no further student loans being granted. Provincial student funding also needs to also be withheld if students don’t disclose who they are renting from.

This currently is not happening. Lots of bogus stories that every person is in my house is a family member, usually all cousins from… guess where?

#45 InvestorsFriend on 05.22.17 at 9:44 pm

Cash Flow versus true economic return

Julian at 160 said:

I always thought that cash flow, as least in the sense most people understand it, was black-and-white, i.e., what is net cash after considering all disbursements and receipts, in which case repayment of a debt (portion of mortgage payment against principal) is most certainly a cash outflow.

***************************************
Net income is different than cash flow for a reason. No licensed accountant would consider debt principal repayment to be an expense. Not all cash outflows are expenses. Hence we have different financial statements for cash flow versus net income.

It is net income and not cash flow that is the accountant’s best and legal estimate of true economic return.

People touting cash flow usually have an agenda. Usually cash slow is used to justify a company that is reporting losses.

Or an amateur landlord spending more money monthly than is coming in. — Garth

#46 JSS on 05.22.17 at 9:50 pm

I want to become an amateur landlord. I live in Alberta. When do I dip my toes in? A year from now?

#47 akashic record on 05.22.17 at 10:25 pm

For the record.

Police in Manchester, U.K., say 19 people have died and 50 have been injured by an explosion at an Ariana Grande concert Monday night.

Local authorities say they are treating the incident as a terrorist attack.

MSNBC reports U.K. authorities’ forensic evidence points to possible suicide bomber.

Huffington Post headline: “CONCERT CHAOS”

#48 rental property math on 05.22.17 at 10:26 pm

#45 InvestorsFriend on 05.22.17 at 9:44 pm
thank you for explaining this quite nicely.

and Garth, i’m pretty flattered you made a post about me today.

I’ve been following your blog for years and agree with much of what you say. I sure as hell stayed out of buying RE in the GTA.

But hey, buying property in Hamilton in 2013 will beat out any return you speak of.
I “cash flow” quite nicely and my “landlord math” returns are well into the double digits.
I have no qualms about issuing rent receipts to my tenants ( I actually had to educate them that they should be claiming a rent deduction) and report all my rental income obtained in my “legal” duplex.

However a backbone, tool box & caulking gun are a requirement for the job.

Hamilton rentals and mawer balanced.
sounds pretty balanced and diversified for my millennial arse. I probably could go the ETF route but 7% since inception ain’t bad, I’ll take that.

I’ll sit quitely now and stop pissing you off.

#49 waiting on the westcoast on 05.22.17 at 10:26 pm

#45 InvestorsFriend

“It is net income and not cash flow that is the accountant’s best and legal estimate of true economic return.”

And that is why some accountants make poor entrepreneurs. You can make money on paper, but if you have negative cashflow you can easily be wiped out… especially if the market has a black swan event or you cannot bear the continued cash drain.

#50 Vancouverite on 05.22.17 at 10:34 pm

Cash flow is the “air” in any investment……negative cash flow in the short term may be sustainable, but in the long term, continuous negative cash flow will run of of air and sink any investment.

#51 Fake News on 05.22.17 at 10:46 pm

Looks like Trump was right about the “muslims” again in Manchester, UK. Can’t wait to see what the left says about the religion of peace.

Individuals did this. Not a religion. — Garth

#52 X on 05.22.17 at 10:50 pm

re #45:

‘People touting cash flow usually have an agenda. Usually cash slow is used to justify a company that is reporting losses.’

Or an amateur landlord spending more money monthly than is coming in. — Garth

Yes, the agenda is that RE is the only investment they have. They have all of their eggs in one basket and are trying to reinforce their hopes in RE to save their finances.

#53 IKnow on 05.22.17 at 10:53 pm

#2 Mark on 05.22.17 at 7:14 pm
… But for the most part, an individual identical property will not sell for more today than it did in 2013.

———-

Quite an imbalanced psycho, almost creepy

#54 Mark on 05.22.17 at 10:54 pm

“I want to become an amateur landlord. I live in Alberta. When do I dip my toes in? A year from now?”

When you can buy housing in reasonably major cities, in reasonably decent state of repair for 100X monthly rent or less. The traditional “rule of thumb” of when RE is a good investment.

Until then, stay well away. Its trivial to buy a multitude of other kinds of investments at valuations that imply returns equal to or better than a RE investment at 100X monthly rent.

#55 Always interesting on 05.22.17 at 10:57 pm

Yup,bloody conservatives started this whole RE mess i suppose. Oh well, there is always Rowan Atkinson.
Cheers all.

https://www.youtube.com/watch?v=sg-4ATrE8n0

#56 BailinginBC on 05.22.17 at 11:11 pm

I spent a about an hour on the phone with the tax man trying to get an answer to the following question, to no avail. Perhaps some of these ex CRA blog dogs can weight in.
When someone BUILDS a house and puts a purpose built suite in it does this trigger future capital gains on that portion of the house? Is it considered a structural change? One could argue that there was no existing structure to change but it could also be argued that putting a building on an empty lot is the ultimate structural change.
This structural change rule seems very odd to me in that it seems to discourage people people from adding rental suites. The guy that makes the structural changes to put the suite in triggers capital gains when he sells. The next owner who buys that property with the suite already installed, is not subject to capital gains because they did not make structural changes as they were made by the previous owner.

You are building a commercial use into the real estate. Of course it will not yield a tax-free capital gain. — Garth

#57 Smoking Man on 05.22.17 at 11:14 pm

Quick recap for the events of tomorrow.

Let’s see. Hollywood hates Trump. Kim Dotcom hates Hollywood.

The enemy of my enemy is my friend. Dotcom not working alone on this. #SephRich.

Glorious opportunity to load up on equities tomorrow, Buy the rumour sell the news

Manchester. Little kids mostly girls getting blown up by a crazed ISIS desiple.

Facebookand twitter exploding with xenophobia , I’ve never seen it this open before.

Librals your toast. How can they be so oblivious to Herdonomics.

#58 AB Boxster on 05.22.17 at 11:31 pm

Blah blah blah ‘shocked by the news’, blah blah blah, ‘horrific attack’ blah blah blah blah , ‘keep the victims & their families in your thoughts’ blah blah blah.

-Justin Trudeau – Sunny Dazed PM

Blah blah blah deeply concerned about brutal attacks’ Blh, blah blah, ‘Thoughts+prayers w/ victims+loved ones’ Blah, blah blah,. ‘Canadians stand firm w/ the British people’ blah blah blah.

Ralph Goodale – Liberal Lackey

And the cynics think the Liberal government is useless in the religious war being fought.

With such heartfelt comments no doubt the radical followers of the religion of peace are quaking in their boots.

And the families of the teenage girl who were killed or maimed must feel so comforted by these words of support.

#59 Ponzius Pilatus. on 05.22.17 at 11:32 pm

Of course no sane person wants innocent children being blown up.
But how about the hundreds of innocent Arab kids blown to smithereens by the Brits.
Never underestimate Karma.
Violence begets violence.

#60 renting in WestYVR on 05.22.17 at 11:45 pm

It has been interesting over the last 5 years since I first discovered this blog after selling my house just north of the YVR area and moved the kids close to my workplace in West YVR.

If I would have bought the house across the street where I rented since 2012 (valued then at $900,000) it would now have sold for a minimum of double, but more likely closer to $2,000,000. Instead I invested in a balanced and diversified portfolio which although stable, has not returned 100% over the same term. Although I am dismayed by my choice at the time, I realize it was my choice as I sought out like minded folk which I found on this blog who convinced me not to buy.

My first rental was with a landlord who tried a tactic similar to that described by MF. However, I stuck to my guns and she relented as I left the place better than it was when I received it. We still speak, and I have not turned her in to CRA as yet. She reimbursed me what she attempted to deduct from my damage deposit.

After moving costs of $2500 for a move of 2.5 km’s, we are now in our second rental which has flooded twice in the two years we have lived here (poor drainage tile and a cheap, absentee landlord). We have been living in a dust infested construction zone for the last 2 months, and the only reason we put up with it is the landlord promises to reimburse us for at least 50% of the rent costs, although he still cashes my full rent cheque (I am hoping we can convince him of 100% reimbursement as we are good tenants). Our price to rent ratio is approximately 212. Yes that is correct 212. The kids can still walk to school while I commute only 15 minutes to work. Thank heaven the weather is good lately so we can hang out on the deck. We are hoping the landlord will stop fighting with the insurance company and just get the job finished!

If he doesn’t try to raise our rent when the 1 year contract comes up on July 1st we will stay. Yes, he bought the house with 100% foreign capital and operates a business overseas (he bought the house hoping to retire here this year). I am unaware of his declaration of taxes to CRA but I am thankful to have a home of any sort in this god forsaken lower mainland which unfortunately I am strapped to as a single parent with 32 years dedicated service to my employer, and born and raised in B.C. which puts us at a significant disadvantage to the foreign capital with which we are suppose to be able to compete (laughable). On the north shore west side we are living in an area that is almost 100% funded by foreign capital with a few older “hold outs”.

My daughter worked for Census this year and I drove her house to house where we found so many vacant properties on 3 attempts. When I was looking for our second rental in May 2015 I offered $3000 per month rent for this one vacant home (the realtor representative, turned us down) and the house remained vacant to this day. The neighbours told me who owned the property; a foreign couple who bought more than one home when they moved here in 2013, but they chose to leave it vacant for 4 years rather than rent it out at a reasonable price. I saw today it has been listed for sale for 1.6 million more than they paid. There is no way to compete with foreign capital in West Vancouver. It is a lost section of land to Canadian nationals. I will most certainly report the sale of that home to CRA if they attempt to claim it as a primary residence. I am mad as hell and it is about time we started standing up for our homeland, and for the questionable future of our children.

#61 guru on 05.22.17 at 11:45 pm

In the end, no one knows what will happen, not even the so-called experts. The only thing for certain is that past history tells us that the suburbs will get slaughtered in a downturn. Milton, Guelph, Hamilton, Oshawa, Barrie, Stoufville etc, will double the drops in Toronto. I see at least a drop of 40%-50% in these areas within the next 2 years.

#62 Rexx Rock on 05.23.17 at 12:03 am

Yes,the sale of houses on the market is non existant.Nobody wants to sell in a 0.5% vancany enviroment.Its called crazy town because of the boom times and all the minimum wage jobs available.Why sell today when next year you’ll be a $100,000 richer.
Victoria is very competive city to live in.For one full time job paying over $40,000 you’ll have maybe over 1000 people apply for it.Langford is crazy,condos being built everywhere and the traffic is horrible.Comox is the place to retire.

#63 Frank on 05.23.17 at 12:06 am

But for the most part, an individual identical property will not sell for more today than it did in 2013.

This is a lie. You should be banned for you smugness Mark.

#64 Tiggertoo on 05.23.17 at 12:14 am

So renting a part of ones home invites a capital gains upon sale in a rising market. Will this same portion of the house be deductible if the house is sold at a loss?

#65 Smoking Man on 05.23.17 at 12:18 am

Individuals did this. Not a religion. — Garth
……

Exactly.

Muslims will integrate into canada and contribute, provided we bring in family’s. Let’s not let in millions of post pubotic males who have never seen a set of naked check bones.

That’s were Europe screwed up.

#66 paulo on 05.23.17 at 12:28 am

well in Barrie Ontario with a large college with thousands of students the basement apartment game is a local sport excluding dedicated student rentals it would not be outside the envelope to figure that at least 50% of single residential dwellings in town and also in some surprising outlying high rent hoods.
i have heard of a couple interesting stories concerning owner’s being busted by the CRA for being tax evaders
the most recent from some foreign students a couple of whom had to find new digs fast after the CRA seized there landlords house for you guessed it tax evasion – failing to report rent receipts. also in Ontario there is the trillium benefit claim that taxpayers file with there annual federal tax return,included is a rebate for renters and property tax credit for lower income owners i am reliably informed that the tax dude is very closely cross referencing these claims against the address the taxpayer is claiming rent paid and more recently mining the data base of Ontario works the division that doles out welfare and odsp payments cross referencing recipients address of record with the owners tax return!
so if you are doing really dumb shit – evading taxes- not reporting rental income look out.

#67 Mark on 05.23.17 at 12:38 am

“Yes,the sale of houses on the market is non existant.Nobody wants to sell in a 0.5% vancany enviroment.”

No, the reason for falling sales is a disbelief in how much prices have actually dropped. That the gains claimed by Realtors since 2013 are non-existent and not supported by comparable property transactions in the marketplace. That the gains alleged by the Realtors are mostly sales-mix-change related (due to the onslaught of brand new supply and the relative scarcity of low-end buyers). There is no shortage of physical supply. Just a bunch of shocked property owners who have yet to come to grips with the fact that property prices have spent the past few years stagnant and are now poised to fall quite significantly.

A 0.5% vacancy environment implies a lot of homelessness, yet there is almost no homelessness in Canada these days, especially in the major cities. Other than, of course, the usual crowd of mentally ill people for whom they literally could be handed a paid-up luxury condo of their own and they’d still find themselves homeless on account of their mental illness.

Why sell today when next year you’ll be a $100,000 richer.

Why not sell today when next year you’ll probably be $100,000 poorer?

This is a lie. You should be banned for you smugness Mark.

Hi (most likely underemployed) Realtor. Nice to meet you. Would you like a cookie?

#68 waiting on the westcoast on 05.23.17 at 12:38 am

#33 Trumpocalypse2017 on 05.22.17 at 8:34 pm says… “Terrorist attack in Manchester. Greece can’t get new bailout funds. Comey about to testify. What will Trump come home to? Will he even make it home?”

Hey – I thought you said the apocalypse was supposed to happen over the weekend? Maybe give it a rest until you are more certain of the date?

#69 Smartalox on 05.23.17 at 1:09 am

So here’s a not so hypothetical situation:

Married couple own a property. He bought the property, but makes a top tax bracket salary, so he transferred the property to his wife (shared property) who doesn’t work, so that she ‘collects the rent, reporting it as her income, and not his, where the taxes paid would be a lot higher.

Legal? Or a target for CRA?

#70 BailinginBC on 05.23.17 at 1:21 am

#56 BailinginBC on 05.22.17 at 11:11 pm

You are building a commercial use into the real estate. Of course it will not yield a tax-free capital gain. — Garth

This was my thoughts on the matter and I was very surprised that the person on the other end of the line could not give me this as a definitive answer. My clients accountant told them that their suite was small and would not be subject to capital gains – which I thought was wishful thinking so I called the CRA to see if I could confirm my suspicion. After being transferred to someone who apparently specialized in the principle residence exemption and speaking with him for around 45 minutes I was told that my clients would have to write into the CRA for a ruling.

#71 Freedom First on 05.23.17 at 1:54 am

#65 Smoking Man

You and Trump both got steel balls.

MSM in the world have lost all credibility.

Have to find out the truth from the source today.

Sad.

#72 Leo Trollstoy on 05.23.17 at 2:04 am

#63 Frank on 05.23.17 at 12:06 am
This is a lie. You should be banned for you smugness Mark.

of course. he’s been lying since he started posting here shortly after being banned from red flag deals

just ask to cite a source. the response will be either no response or deflection. either way, proves the point.

2014A year from now, I doubt we will have any issues with the ‘sales mix’ as such shifts are effectively self-limiting in a down market.
http://forums.redflagdeals.com/housing-market-hot-1471648/75/#p18717170

2013Actually plenty of sources been shown, to show that RE prices are now falling in Canada and have been for much of 2013. Pretty much have to be living under a rock or otherwise have some sort of thought disorder to think differently.
http://forums.redflagdeals.com/eric-sprott-getting-crushed-fall-gold-prices-1422647/#p17982571

sadly wrong for most of the decade. unfortunately lack of cited data and trolling was why he was banned there :(

#73 Hey Mark, source? on 05.23.17 at 3:33 am

#2 Mark on 05.22.17 at 7:14 pm

But for the most part, an individual identical property will not sell for more today than it did in 2013.

Did you make this up, or did you read it somewhere?

Source?

#74 Steve French on 05.23.17 at 3:39 am

Garth, what do you think?

http://www.smh.com.au/comment/how-chinas-real-estate-bubble-pushes-up-prices-in-sydney-20170522-gwa9w7.html

#75 mouldyinyvr on 05.23.17 at 5:29 am

I hope everyone reads Garth post twice today, paying close attention to paragraph 8. I am a long time renter in YVR and believe me the number of ‘criminals’ Garth refers to in paragraph 8 are legion. (Gee, does that make me an accessory??)
The YVR housing /real estate scenario is so unbalanced that when things finally collapse (and they will), British Columbians will experience an economic nightmare.
If the federal government seriously attacks tax fraud/mortgage fraud in BC, the whole house of cards will tumble down.
You can bet your life the provincial liberal/socreds won’t be looking to do anything!

#76 A Reply to #56 BailinginBC on 05.23.17 at 6:35 am

Here are the relevant tax rules you requested:

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

http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s1/f3/s1-f3-c2-eng.html#N10B54

#77 traderJim on 05.23.17 at 7:19 am

I guess London’s mayor was right, sounds like nothing can be done to stop certain individuals who decide on their own to blow up children at a concert.

Just ‘part and parcel’ of living in a big city.

Sure hope the authorities are not monitoring individuals who might be a threat, that would be racist and phobic.

#78 Marlene from Victoria on 05.23.17 at 7:41 am

It’s so odd to hear Trump describe the Manchester attacker(s) as “evil losers”.

This sort of attacker, it occurs to me, likely has exactly the same sort of weird mentality as the typical trashy white male Trump supporter. Whether they have different ethnicity is irrelevant.

I guess there’s little appreciation of irony left now with this nut job as president.

#79 Fed-up on 05.23.17 at 7:41 am

58 AB Boxster on 05.22.17 at 11:31 pm
Blah blah blah ‘shocked by the news’, blah blah blah, ‘horrific attack’ blah blah blah blah , ‘keep the victims & their families in your thoughts’ blah blah blah.

-Justin Trudeau – Sunny Dazed PM

Blah blah blah deeply concerned about brutal attacks’ Blh, blah blah, ‘Thoughts+prayers w/ victims+loved ones’ Blah, blah blah,. ‘Canadians stand firm w/ the British people’ blah blah blah.

Ralph Goodale – Liberal Lackey

And the cynics think the Liberal government is useless in the religious war being fought.

With such heartfelt comments no doubt the radical followers of the religion of peace are quaking in their boots.

And the families of the teenage girl who were killed or maimed must feel so comforted by these words of support.

———————-–—————————————————
Yes I have always been very confused and conflicted as to how to feel about a tragic event such as this until one of our idiotic
political leaders chimes in with their useless rhetoric officially confirming condemnation and support. I hope you are all catching my sarcasm. Why our press goes out of their way to report a tweet from these morons stating the blatantly obvious, has always baffled me.

#80 TurnerNation on 05.23.17 at 7:43 am

So you cannot scam the CRA due to their extensive cross checking and network of snitches.
No worries, just score free benefits here.
What a country.

https://www.thestar.com/news/world/2017/05/20/federal-benefits-workers-told-to-stay-off-social-media-when-vetting-applications.html

The briefing note provides a series of detailed examples of online searches that are considered to be over the line.

They include:

Looking up an online obituary notice for an application for CPP survivor benefits
Sending a friend request to a CPP disability claimant on Facebook to see if pictures provide evidence that the applicant can in fact work;
Looking up municipal property information to see if someone has lived in the country long enough to qualify for old age security benefits

#81 Herb on 05.23.17 at 8:02 am

The last posts have seen a bit of hairsplitting and snarking on three items that are pretty clear in law.

1.) Repayment of Principal. This is an “outlay of capital” or “payment on account of capital” that is recovered (or written off) on the sale of the capital object. (Only the interest paid on money borrowed to earn income, in this case rental income, is deductible as a current expense, but it helps.) Yes, it is “cash flow” negative, but hardly a loss. It is just like any investment made for capital gain, and if you can’t afford to make it and keep it up for your intended time frame, don’t make it. That is the “landlord math” that is important.

2.) Ontario Rent Control. Its application to all rental units as of 30 April 2017 will affect only the 20% of Ontario rental units previously exempted, namely those built or occupied after 1 November 1991. Rent control has always applied to the 80% of rental units built or occupied before that date, so its extension hardly means the end of the rental market. It will, however, put a brake on greed and speculation, since landlords won’t be able to charge what they want to pay for whatever they would like to buy or put up. Tenant ability to pay is limited by income anyway.

3.) Ontario Tenant Responsibility to Repair. Only for “undue damage … caused by the willful or negligent conduct” of the tenant or a guest (RTA s. 34). Might as well add what the law says on cleanliness: tenants are responsible only “for ordinary cleanliness of the rental unit.” (RTA s. 33

#82 22 murdered on 05.23.17 at 8:18 am

Individuals did this. Not a religion. — Garth

—-

Individuals or an organized political, ideological movement, using a specific religion to influence individuals to carry out murders?

This thread is over. — Garth

#83 yorel on 05.23.17 at 8:37 am

For what it’s worth:
Landlord in Vancouver to Toronto tenant:
Sign another year’s lease and I won’t raise the rent.

#84 Happy Housing Crash Everyone! on 05.23.17 at 8:41 am

Condo prices set to crash 50-60% easy. http://www.cbc.ca/beta/news/canada/toronto/condo-complaints-toronto-residents-1.4124142 Happy Housing Crash Everyone! :-)

#85 Victor V on 05.23.17 at 8:50 am

More than half of Canadians say they aren’t financially prepared if interest rates jump, expenses rise: survey

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/personal-finance/debt/more-than-half-of-canadians-say-they-arent-financially-prepared-if-interest-rates-jump-expenses-rise-survey&pubdate=2017-05-23

#86 Stewart vs. Canada on 05.23.17 at 8:54 am

Here’s the SCC judgment on the “reasonable expectation of profit” test (as it relates to real estate investing).

https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/1986/index.do

#87 Victor V on 05.23.17 at 9:01 am

Here are your biggest complaints about living in Toronto condos: Noise, flying cigarette butts, owners who don’t pick up after pets are realities for many

http://www.cbc.ca/beta/news/canada/toronto/condo-complaints-toronto-residents-1.4124142

#88 A Reply to #77 traderJim on 05.23.17 at 9:04 am

“Sure hope the authorities are not monitoring individuals who might be a threat, that would be racist and phobic.”

Do you mean individuals like Timothy McVeigh and Terry Nichols? Or have I missed your point once again?

#89 };-) aka Devil's Advocate on 05.23.17 at 9:07 am

If the government actually taps into that previously untapped tax revenue (capital gains on the revenue basement suite portion of a principle residences) I would suggest that the citizens not carrying on such activities general income taxes should drop substantially… “should”. But they won’t. That is a HUGE source of untapped tax revenue… HUGE. (he said with arms outstretched index and thumb of each touching in an, oh so, Trump like way)

#90 unbalanced on 05.23.17 at 9:08 am

Don’t like the truth! Cease and desist. What a country.

#91 };-) aka Devil's Advocate on 05.23.17 at 9:12 am

In addendum to my previous post…

What would they (gov’t) do with all that additional revenue generated from taxable portion of capital gains on previously undeclared revenue suites?

I don’t know about other cities but in Kelowna… I’d estimate that 50% of homes have suites of which maybe only 25%, at most, declare the income they generate and probably none of which have paid cap gain on the revenue portion of the proceeds at sale.

HUGE source of untapped tax revenue!

#92 Leo Trollstoy on 05.23.17 at 9:26 am

#73 Hey Mark, source? on 05.23.17 at 3:33 am

Although this is the correct question, it’s been asked before. His response is always the same: either ignore, false claim it has been provided elsewhere or deflect. Either way you won’t get a source. But good try!

#93 re., Mark on 05.23.17 at 9:29 am

‘But for the most part, an individual identical property will not sell for more today than it did in 2013.’

that has been proven wrong already

#94 Sonny on 05.23.17 at 9:49 am

A 10% mortgage hike would sink almost three quarters of homeowners, Manulife says

http://www.cbc.ca/news/business/manulife-housing-debt-1.4127243

“What these people don’t realize is that we’re at record low interest rates today,” said Rick Lunny, president and CEO of Manulife Bank (TSX:MFC), adding that a 10 per cent increase in mortgage payments could be the result of as little as a one per cent interest hike.

“When you put it into that context, they’re not really prepared for what is inevitable. Sooner or later, interest rates are going to rise.”

#95 When Will They Raise Rates? on 05.23.17 at 10:08 am

#78 Marlene from Victoria on 05.23.17 at 7:41 am

This sort of attacker, it occurs to me, likely has exactly the same sort of weird mentality as the typical trashy white male Trump supporter.
——————

I’m surprised this racist and sexist comment got published on this blog.

I guess sexism and racism is OK as long as it’s against white males in lala libtard land.

Gotta love the logic fails and total hypocrisy of Libtards.

#96 Stan Broock on 05.23.17 at 10:14 am

Measuring subprime mortgage market in Canada.

Much worse than in US. While the BC media is very quick to point out that we don’t have subprime problem, apparently the facts speak otherwise.

https://ca.finance.yahoo.com/news/most-homeowners-mortgage-trouble-payments-080004270.html

Most homeowners would have mortgage trouble if payments rose by more than 10%: poll

TORONTO — Nearly three quarters of Canadian homeowners say they would have difficulty paying their mortgage if their payments were to increase by more than 10 per cent, says a new survey by Manulife Bank.

#97 bdwy sktrn on 05.23.17 at 10:20 am

#78 Marlene from Victoria on 05.23.17 at 7:41 am
It’s so odd to hear Trump describe the Manchester attacker(s) as “evil losers”.

This sort of attacker, it occurs to me, likely has exactly the same sort of weird mentality as the typical trashy white male Trump supporter.
———————————–
yeah right, you are very sick in the head. get help.

disgusting.

#98 FortDB on 05.23.17 at 10:22 am

I’m Not Poloz’ recent posts:

“What next? Will female teachers ….”

I’m not sure why his lame, childish, sad, lonely, unloved, misogynistic ravings are fair comment on this blog.

Published in error. Now deleted. — Garth

#99 Paul on 05.23.17 at 10:27 am

#91 };-) aka Devil’s Advocate on 05.23.17 at 9:12 am

In addendum to my previous post…

What would they (gov’t) do with all that additional revenue generated from taxable portion of capital gains on previously undeclared revenue suites?

I don’t know about other cities but in Kelowna… I’d estimate that 50% of homes have suites of which maybe only 25%, at most, declare the income they generate and probably none of which have paid cap gain on the revenue portion of the proceeds at sale.

HUGE source of untapped tax revenue!
—————————————————————–
It would be interesting to see how many home owners would just not bother to to keep renting out basement suites, if the rent was taxed and the property value increase was subject to capital gain tax. Years ago the suites were not ‘legal’ the by-law officer would come around and drop off a letter ya da yada but never try and put the tenant out. I think the Government looks at them like low rental housing that they do not need to build or administrate.

#100 Mark on 05.23.17 at 10:27 am

“Much worse than in US. While the BC media is very quick to point out that we don’t have subprime problem, apparently the facts speak otherwise.”

Just as funny is CMHC’s efforts to try and convince people that they’re not a subprime mortgage insurer. Type in “CMHC subprime”, and the first result that pops up is a web page at the CMHC claiming that they’re not subprime. They call it “just the facts”. Really, they should call it “just the lies”, because there is very little truth to the CMHC’s claims, especially when they were well known to insure subprime mortgages, namely those with only 5% down, and even 0 down/40-year amortizations at one point in time or another. I haven’t seen such blatent misinformation well, since the Saddam-era Iraq Minister of Information was most famously on TV with his claims.

adding that a 10 per cent increase in mortgage payments could be the result of as little as a one per cent interest hike.

True, and ‘interest hikes’ may not even be BoC policy rate changes. ‘interest hikes’ could very well be (and probably will be) related to lenders demanding higher risk premia for loans they write. In case borrowers don’t already realize, the effective downsizing of Canada’s mortgage lender sector with the decimation of HCG and EQB’s lending capacity through funding constraints will likely reduce competition and lead to higher systemic spreads. Meaning that retail mortgage rates can rise quite independent of the BoC or even action in the overall bond market.

Either way you won’t get a source. But good try!

I’ve given you sources in the past, but if you don’t want to believe me, Ross Kay has come to nearly the same conclusions using independent sources of data. If you have access to the proprietary reporting of the RE boards, it is quite apparent that the sales mix has been “the” driver of alleged price increases over the past few years. Perhaps you need to get out more instead of just being holed up in the bunker and relying upon RE-industry-supported “fake news” publications.

#101 bdwy sktrn on 05.23.17 at 10:27 am

Re :mark and 2013 prices .

mark is the special needs poster here in the greater fool community. like the kid in the corner eating glue, drooling and making loud random outbursts of unintelligible nonsense.

we tolerate him as he has nowhere else to go.

EVERYONE here gets a good laugh from his silly spewing.

The only nugget of truth in his droppings is the obvious bitterness and rage he feels toward owners as he wishes he had bought back in 2013 for an avg cap gain of over 1m in van west RE on every single property

#102 fancy_pants on 05.23.17 at 10:34 am

as a landlord, pretty soon you won’t be able to use common sense discretion in selecting your tenant anymore either without it potentially being labelled a hate crime of some sort.

turned down someone on welfare? someone who trashed the last 4 units they rented? someone into alarming hobbies?

wouldn’t want to be a landlord going forward, way too many ways to lose now

#103 Paul on 05.23.17 at 10:35 am

5 When Will They Raise Rates? on 05.23.17 at 10:08 am

#78 Marlene from Victoria on 05.23.17 at 7:41 am

This sort of attacker, it occurs to me, likely has exactly the same sort of weird mentality as the typical trashy white male Trump supporter.
——————

I’m surprised this racist and sexist comment got published on this blog.

I guess sexism and racism is OK as long as it’s against white males in lala libtard land.

Gotta love the logic fails and total hypocrisy of Libtards.
—————————————————————–She sounds like the weird mentality as the typical trashy white female Hilary supporter.

#104 traderJim on 05.23.17 at 10:37 am

#88 Always misses the point

I sure hope extremists ‘like’ McVeigh (isn’t he dead?) are being monitored, and I assume they are. I would also hope that people with violent and/or racist ideologies that we know of be denied immigration visas. (We can’t do much about the ones born here, except monitor).

I hope (but am not at all sure) that places teaching that violent acts are justified have some form of law enforcement attending and keeping track of those who seem particularly extreme or prone to violence. That would apply to the KKK, white supremacists, militias and radical mosques.

As a believer in free speech I don’t think you can shut these extremists down, nor put them in jail for even their most hateful ideas, but I am ok with monitoring to try and prevent a violent attack. Won’t always be possible, but it seems many attacks are being prevented if you follow the news.

A ‘phobia’ is an irrational fear of something. I find it difficult to say, in this day and age, that fear of a terrorist attack is irrational.

I know that of course I won’t be the victim of a terrorist attack, but SOMEONE will be.

Shouldn’t we all be concerned about harm coming to innocents, even if they are not us?

BTW: By all accounts, KKK members number in the hundreds. Now, fear of a KKK attack does seem irrational, if you ask me.

#105 TnT on 05.23.17 at 11:06 am

#78 Marlene from Victoria on 05.23.17 at 7:41 am

It’s so odd to hear Trump describe the Manchester attacker(s) as “evil losers”.
It is odd because Trump is not a politician. Calling these terrorists “losers” is better than calling them a “lone wolf” which glorifies them. I prefer Trumps words over our politicians and I would have never voted for Trump.

This sort of attacker, it occurs to me, likely has exactly the same sort of weird mentality as the typical trashy white male Trump supporter. Whether they have different ethnicity is irrelevant.
Very sad comment. Comparing disenfranchised white males who have been left out of the new economy to actual terrorists killing little girls at a concert. Give your head a shake!

I guess there’s little appreciation of irony left now with this nut job as president.
Nut job best describes you with your flippant remarks.

/Rant On

It is time to get off your pedestal and start contributing to a better society and STOP tearing down what was built. Western civilization is under attack from within by this new form of communism that is taking hold. Our society is the best humans ever had in all of existence and with each new generation it is only getting better. Attacking Cis White Males is sexist and racist and should never be tolerated.

/Rant Off

#106 rainclouds on 05.23.17 at 11:15 am

Out here in VanDelusional the Dippers are proposing a tax credit of $400 for renters. Not sure if the intention was a sop to renters or something more in depth.(likely the former)

If implemented and coordinated with CRA it would seem this is a great way to kill 2 birds with one stone:

Renters clearly identify their rent paid and where. A nominal cost to government but huge disclosure bonanza. Landlords who dont claim rent AS INCOME are screwed……..

#107 Smoking Man on 05.23.17 at 11:20 am

#78 Marlene from Victoria on 05.23.17 at 7:41 am
It’s so odd to hear Trump describe the Manchester attacker(s) as “evil losers”.

This sort of attacker, it occurs to me, likely has exactly the same sort of weird mentality as the typical trashy white male Trump supporter. Whether they have different ethnicity is irrelevant.

I guess there’s little appreciation of irony left now with this nut job as president.
….

You got to be kidding. Trump is brilliant. Calling them losers is a huge insult In the nut jobs. Calling them monsters elevates there status amongst the deranged

For the record I’m a white trashy Trump Supporter and not ashamed. I learn this little song in the school yard when I was a kid.

Sticks and stones may break my bones but names will never hurt me.

Let that sink in snowflake.

#108 45north on 05.23.17 at 11:21 am

Victoria Real Estate Update: That sales actually fell from March to April this year really stands out

as it does in the GTA

I don’t see anywhere that the price can only drop by 50%. I think it will be more in the GTA.

OttawaMike: Rent controls increased in Ontario. Great that will give landlords even more incentives to ensure your their tenants live in a rat hole.

The province ( I mean the Ontario Liberals ) is undermining the economic and political framework that encourages rental property. I mean rental property in the sense of the Residential Tenancies Act. In order to have tenants you have to have landlords.

Here’s my story:
we rented out the upstairs to a young girl with a baby, my wife and I cleaned up a stroller and gave it to them. A few days later, the boyfriends moved in. According to the Ontario Landlord Tenant Act I couldn’t kick them out. One dark night, two of Toronto’s finest stood behind me while I told the boyfriends to leave. The next day the girl and her friends moved out. Thank God for the Toronto police.

http://www.greaterfool.ca/2013/04/26/all-in-this-together/#comment-238876

#109 NoName on 05.23.17 at 11:35 am

@FF

First Lady and president child…

http://www.independent.co.uk/life-style/melania-trump-donald-slap-hand-israel-visit-us-first-lady-president-child-treated-body-language-a7750871.html

Don’t look good for Flint and his 5th

https://www.c-span.org/video/?c4670827/trump-5th-amendment

#110 Simplyput7 on 05.23.17 at 11:54 am

#94 Sonny on 05.23.17 at 9:49 am

I love how they said, 14% could not afford any increase. And 38% can’t afford 1% – 5% increase in payments. Maintenance fees for condos rise at a faster rate than that.

I’m so glad I don’t own a home, I would hate to see the equity in my home evaporate because of these homeowners.

http://thecanadianpress-a.akamaihd.net/graphics/2017/static/cp-mortgage-debt-survey.png

#111 BailinginBC on 05.23.17 at 12:00 pm

#76 A Reply to #56 BailinginBC on 05.23.17 at 6:35 am
Here are the relevant tax rules you requested:

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

http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s1/f3/s1-f3-c2-eng.html#N10B54

Thanks for these. I actually went through these before I called the tax man. Everything I could find regarding using part of your principle residence as a income property involve a CHANGE in use – my question is in regard to houses that have revenue suite built in at construction. No change in use, no change in structure but built right from the outset with a portion that is income producing.

Taxable, of course. — Garth

#112 Ogopogo on 05.23.17 at 12:14 pm

“Gee. Renters win again.”

I, for one, never get tired of winning as a renter. Counting my blessings for having boycotted the Kelowna bubble. Many homes in our neighbourhood were underwater in the recent flooding. My guess is that they’re still underwater, if you catch my drift (pun overload!).

#113 renter on 05.23.17 at 12:19 pm

DELETED – thread over.

#114 Ole Doberman on 05.23.17 at 12:23 pm

Sounds like the Trumpinator does it again, planning on drilling like there is no tomorrow, more supply to the market:

http://www.bnn.ca/how-donald-trump-just-burned-canada-and-the-saudis-with-one-line-in-his-budget-1.759058

#115 traderJim on 05.23.17 at 12:38 pm

I’m very interested to see how Trump’s latest ‘persuasion’ techniques work on ISIS.

The vast majority of people thought Trump labelling Hillary as ‘crooked’ and Jeb Bush as ‘low energy’ was an indication of how childish he is.

Anyone following Scott Adams knows that each label was carefully chosen and used relentlessly until it became hard to think of Hillary as anything but crooked and Jeb as a lazy, slow talking blob.

Trump is now trying to label terorrists as ‘evil losers’. As soon as I heard that phrase I recognized it as his latest persuasion attempt.

Some people think this is trivial, but they are the people who thought Trump would never win and that his tweets were hurting him.

Trump is aiming his comments at potential ISIS recruits. Nobody likes to be joining a group of ‘evil losers at life’. Every time ISIS loses a battle (a regular occurence now) the confirmation bias that ISIS is a ‘loser’ group will be reinforced.

I have no idea how effective this will be, but it sure can’t hurt, doesn’t cost anything, and does not involve bombing the crap out of anyone.

Considering his success to date, I’d say this will have a noticeable effect.

Watch for Trump to repeat ‘loser terrorists’ non-stop.

And some people still think he doesn’t know what he’s doing. I guess they don’t want to admit he’s a lot smarter than he is given credit for.

#116 BubbleBoy on 05.23.17 at 1:00 pm

Great Website

political comments better saved for political forums

#117 I'm Not Poloz on 05.23.17 at 1:22 pm

DELETED

#118 I'm Not Poloz on 05.23.17 at 1:24 pm

DELETED

#119 I'm Not Poloz on 05.23.17 at 1:25 pm

Canada really have some sick people, way sicker than the fiscal Management of the Bank of Canada.

#120 Stan Broock on 05.23.17 at 1:43 pm

#78 Marlene from Victoria on 05.23.17 at 7:41 am
It’s so odd to hear Trump describe the Manchester attacker(s) as “evil losers”.

This sort of attacker, it occurs to me, likely has exactly the same sort of weird mentality as the typical trashy white male Trump supporter. Whether they have different ethnicity is irrelevant.

I guess there’s little appreciation of irony left now with this nut job as president.

——————————–

The guy in Manchester was not white. Your post is racist, sexist and unacceptable.

If you can not find decent (no matter the color, religion) male despite your best efforts you always can switch gender or at least fall back to a decent sex toy.

The world is full of sexually unsatisfied individuals and we are not obligated to listen to your lamenting. Such it up and move on.

#121 fishman on 05.23.17 at 1:43 pm

They are counting the absentee votes right now. Wow!
Nobody knows how this will turn out. Like Russian Roulette; thrilling.

#122 Smoking Man on 05.23.17 at 2:00 pm

Kim Dotcom dissapoints. No physical proof saving it for Congress via his lawyers.

But he openly states that Seth Rich was the DNC email source for wikileaks. And he Helped Seth with getting the emails to wikileaks.

Let’s see if the dem’s double down on the Russian did it or they quietly walk away from the issue.

#123 jess on 05.23.17 at 2:00 pm

35 Word to the wise. . . on 05.22.17 at 8:41 pm
insult to injury? two wrongs seem to make it right
one injures the whole while the other a part

=========================
lawyering up
equador vs chevron

Chevron has used at least 60 law firms and more than 2,000 lawyers in the case since its inception in 1993.(~2billion)

http://www.csrwire.com/members/17437-Amazon-Defense-Coalition-FDA
http://oldarchives.courthousenews.com/2015/02/27/amazon-judges-data-secretly-scanned-in-9-8b-chevron-fight.htm
http://thechevronpit.blogspot.ca/2015/01/in-letter-to-president-obama-us.html
equador vs chevron

patent trolls venue shopping and the word, “reside”
https://www.foley.com/the-supreme-court-reverses-decades-old-venue-precedent-and-re-affirms-fourco-05-22-20171/

Supreme Court’s ruling on North Carolina redistricting strikes down a Texas line of defense

A U.S. Supreme Court ruling Monday in a North Carolina gerrymandering case could have major implications for the drawing of political maps in Texas and nationwide. ”

https://www.texastribune.org/2017/05/22/north-carolina-redistricting-ruling-strikes-down-texas-line-defense/

=====

#124 fishman on 05.23.17 at 2:08 pm

Some old political bloggy dogs will have remembered the tingle you got reading Peter Brimelows book “The Patriot Game”. Published in 1986, Predicting the formation & rise of western based right wing & Quebec sovereign federal parties.

I never forgot his sentence,”Every Canadian election is like a game of Russian Roulette;if the right combination comes up?

All the fishermen down at Comox Wharf know me. You in the hot bite now , party on!

#125 Tired Victorian on 05.23.17 at 2:59 pm

#1 VREU
Oh goody, VREU dropped in with dated diatribe about collapsing sales.

She must have some cognitive dissonance since prices have gone up 20+% in Victoria and surrounding communities since she started with her ‘the correction is around the corner’ speech last year arising from the collapse in sales.

So why the increase in prices VREU?

Its not like people in Victoria just discovered low interest rates after they have been low for 9 years; its not like the economy is booming in a stagnant government town; its not like average incomes have increased as Victoria’s is still below many other major cities.

So why the increase VREU?

Try answering the question for once instead of misleading people and giving them false hope that the ‘correction is around the corner.’

Let me spell it out for your very simply why sales may be off – supply is incredibly low so sales are low and prices go higher…

I bet you are like Mark and cannot even admit that prices are up…it must be a sales mix thing right? lol

#126 Bert on 05.23.17 at 3:10 pm

#115 traderJim

As a trader you’re no doubt up on confirmation bias, recency bias, normalcy bias. I’m guessing you’ve spent time developing an ability to discern signal from noise.

That confirmation bias leads most Trump-haters to ignore all facts that don’t support their CNN/CBC/Facebook view of the world.
To them nothing he is doing could possibly be useful, not even fundamentally re-aligned alliances across the Middle East, not deregulation, not the unleashing of optimism in business. Just !!Russia!!

The very same cognitive biases that kill traders’ accounts will play havoc with the overextended in the housing market. They just don’t know it. Yet.

Financial markets squeeze out the weak hands across all timeframes by forcing them to liquidate. Daytraders on 4x margin get squeezed by unleveraged funds and less geared swing traders. The 2x geared retail swing traders get squeezed by the longer term players. Many don’t liquidate when they want to, they close out when they have to, because the day is done, and they’re tapping margin limits.

I’m looking at housing the same way.

When the squeeze starts, there are signs all over. The used car market starts to get oversupply, then it accelerates as auto repos increase and the auto loans go further underwater, and credit cards and helocs swell and accelerate interest burdens, and then house prices jolt as the first waves of homeowners (well, potential future homeowners) get scared and squeezed. Their ‘equity’ melts, their 5% downpayments evaporate, they’re out the money, then the next wave see their 10% downpayments evaporate, then the margin calls start. And then things really get going as sentiment affects their hormones and fear digs in.

Discretionary selling gives way to forced selling. The objective investors wait it out.

But the same recency bias, normalcy bias, confirmation bias keeps them looking for proof that the market is wrong, that their bet is still right. Until it’s way too late.

On current trajectory, a big chunk of Canada is in for a rough ride. Prices always move further than a ‘rational’ mind expects.

#127 jess on 05.23.17 at 3:19 pm

just curious …re hacked registration databases …. BUT could these hackers change names etc and make it appear like fraud? e.g. indiana for example? anyone?

Voter Registration Systems of More than 20 States Attacked | Digital …
https://www.digitaltrends.com › Computing
Oct 1, 2016 – Over 20 states’ voter registration systems have been hacked, officials say … attempted intrusions at voter registration databases” since August, …
191 Million US Voter Registration Records Leaked In Mystery Database
https://www.forbes.com/sites/thomasbrewster/2015/12/28/us-voter-database-leak/
Dec 28, 2015 – A huge database of 191 million US citizens is uncovered. But no one knows who carelessly left it open, whilst the FBI have been contacted

#128 A Reply to #115 traderJim on 05.23.17 at 4:02 pm

“The vast majority of people thought Trump labeling Hillary as ‘crooked’ and Jeb Bush as ‘low energy’ was an indication of how childish he is.”

Here’s a complete list of all the Donald Trump labels that Samantha Bee unleashed before the election:

http://www.rollingstone.com/tv/news/see-every-trump-burn-samantha-bee-unleashed-this-election-w448797

“Trump is now trying to label terrorists as ‘evil losers’. As soon as I heard that phrase I recognized it as his latest persuasion attempt.”

Trump just signed a $110 billion arms deal with Saudi Arabia, a known state sponsor of terrorism.

http://time.com/4787238/us-saudi-arabia-arms-deal/

“I guess they don’t want to admit [Trump’s] a lot smarter than he is given credit for.”

Here’s a sampling of Trump’s misspellings on Twitter:
honer (for honor), dummer, hearby, councel, loose (for lose), leightweight chocker, etc.

http://thehill.com/blogs/in-the-know/in-the-know/322283-social-media-users-mock-trump-for-misspelling-hereby-in

http://www.dailywire.com/news/5969/trumps-top-11-tweets-misspellings-aaron-bandler#

Trump thinks Belgium is a city.

http://www.politico.eu/article/donald-trump-belgium-is-a-beautiful-city-hellhole-us-presidential-election-2016-america/

Trump didn’t know Russia had invaded the Ukraine.

http://www.independent.co.uk/news/world/americas/donald-trump-vladimir-putin-russia-ukraine-crimea-invasion-abc-interview-video-watch-a7166111.html

I can keep going, Jimbo. Tell me when to stop.

#129 Chaddywack on 05.23.17 at 4:03 pm

May be a bit off topic, but as of noon today the BC Liberals are ahead in the Courtenay-Comox riding by 3 votes.

The final count is happening today and some of you may recall that the incumbent Liberals are 1 seat away from a majority. The NDP lead this riding on election night by 9 votes.

If this one flips Christy Clark has her majority by one seat. However, there is over 2,000 absentee votes to count and they’re apparently only 30-40% done (when I called Elections BC today to find out).

Should be an interesting finish. If the difference is less than 1/500th of the total votes cast (usually between 40 and 60 votes) it is an automatic judicial recount and that looks like where we are going at this point at least.

The saga continues

#130 Fake News on 05.23.17 at 4:13 pm

DELETED

#131 jess on 05.23.17 at 4:28 pm

https://www.aclu.org/news/aclu-launches-multi-state-legal-action-voting-rights

#132 april on 05.23.17 at 4:44 pm

#126 Bert. Yes those who believe MSN are not using critical thinking. They are being manipulated and deluded. CNN from morning till night are in DT attack mode. Trump has his problems, some brought on by himself, but the opposition will not stop until they get rid of him. They do not want to reform and want to maintain the “status quo”. For all that they find wrong with DT they are much worse.

Trump is a walking, talking news story. How could such an egocentric, gaffe-prone and unpredictable person not be? There is no news agenda other than covering the most comedic leader in living memory. — Garth

#133 meslippery on 05.23.17 at 4:50 pm

It should be interesting to see how multi-generation households fit into this story.
—————
That and what about barter? You pay hydro,gas and rogers.
I’ll pay mortgage, property tax and insurance.
No rent paid or received.

#134 Natrx on 05.23.17 at 4:51 pm

Whew. Only 25% is rented out of our house and it’s been our principal residence the whole time. No taxes there.

Sounds like the opposite. — Garth

#135 Gratitude on 05.23.17 at 4:52 pm

#60 Renting in Westvan

Thanks for sharing your experience – and that of many renters in BC. One can try to obfuscate the impact of foreign capital but everyone on the actual ground in BC knows what is going on.

It took 5 years of people pushing back against the development community’s narrative about ‘5%’ ownership. Then we saw the provincial government do their own due diligence and the impact from overseas purchases was much much bigger than 5%.

For those trying to deny or obfuscate a key driver of the market, you need to start asking why they would do it? Do they benefit from such obfuscation…

No one gets push back when people level claims that low rates, or CMHC, or loose lending practices, or mortgage fraud, or local speculators are the reasons for high prices…

#136 Leo Trollstoy's landlord math on 05.23.17 at 4:57 pm

Leo is supposedly a long-time landlord.

Leo, what’s your landlord math, when it comes to investing in real estate to rent?

#137 Bert on 05.23.17 at 4:59 pm

#128
Seems you have a strong bias that precludes you from considering anything other than that which confirms your existing beliefs.

Imagine if an intentionally misspelled word made all the shrill opposition retweet and retweet and retweet any such message.

Would that result in the message being seen by more or fewer people? Where did everyone’s attention get directed? Who got played? Not a bad strategy after all.

Remember, your comments always reveal much more about your thought process than you would acknowledge.

#138 NoName on 05.23.17 at 5:04 pm

#126 Bert on 05.23.17 at 3:10 pm

You started abut donny than drifted away to all this other stuff.

it clear to everyone that there are few psychology and behavior specialist are behind donny, pulling strings from shadows and advising him what when and how. I can’t remember what was it busy you made good point pointing on to something and I went back to internet and re looked some of the picture of him and First Lady that google serch sended back to me. It is not an accident that FL was dresses way she was and behaved way she did.
Maybe you should aks your self what donny talks retoric most of the time. He basically say nothing and “people” let Call them.deplorables fill his sentences the way they they like to be, and he does exactly opposite.
My old.man always say you tie man for his word-processing, and ram.for his horns. Not far ago he talked about how what he says in presidential campaign doesn’t matter and it should be taken seriously. Tell me does that mean that he lied just to get elected?

You should read about JFK speach and political retoric, and maybe you’ll see lots of sililaritis.

Watch this if you want to skip reaching jfk speeches.

https://youtu.be/DS4xVcko9qw

When you er done resirching one more thing why our pm gets few “candid spontaneous” photo ops every time when economy is going down to ….

https://www.google.ca/amp/s/www.usnews.com/news/articles/2016-08-15/gym-selfies-a-sign-of-tough-times-for-the-economy%3Fcontext%3Damp

#139 Keith in Calgary on 05.23.17 at 5:13 pm

Everyone needs a place to sleep…….and you need to pay for the roof over your head. So, you rent or buy.

If I pay cash for a dwelling @ $200K and am mortgage free I need to calculate the lost opportunity cost on my $200K acquisition.

Ergo, as I do not have to pay rent either, I can then consider monthly market rent as a night non-taxable yield on my $200K investment as I do not have to pay it out every month.

You always lose being a debt slave.

#140 David on 05.23.17 at 5:18 pm

The housing market is aiming for capital gains, no different than a non-dividend paying stock, so this blog should look at it as part of a portfolio only for the portion that exceeds equivalent rent, increasing at 4% per year. It would be more helpful to compare with equivalent balanced portfolio of $120k invested out of pocket, $480 borrowed to invest, and factor in rental costs for the square footage and location desired if you are looking at the real estate as 100% investment.

#141 Tony on 05.23.17 at 7:03 pm

Re: #46 JSS on 05.22.17 at 9:50 pm

Maybe you can rent to ghosts but they don’t carry money. Good like trying to find renters when there are none. Wait until you see keys left in the keyholes of every second house on every street. That will be the time to buy.

#142 Nonplused on 05.23.17 at 7:10 pm

#140 David

What you are suggesting seems to me is that all households should be incorporated with the corporation owning the house and charging the tenants rent, even if the tenant and the owner of the corporation is the same.

Look, people, the government already takes your house away from you every 25 years or so through property taxes. That’s quite enough.

Also if they are going to assess capital gains on privately owned residences they need to allow capital losses, mortgage deductions, and realty fees need to be included as an expense, and they need to allow depreciation and deductions for repairs. It would be complicated beyond belief for most home owners.

To add insult to injury a house you live in is already paid for entirely with after-tax dollars, so they’ve already got their share of the grift. The amount of income taxes you have to pay to pay off a $500,000 house and the mortgage interest and the property taxes is mind boggling. The idea they need more taxes is incomprehensible. For someone in the top rate, they already need to pay $1 in tax for every $1 they put towards paying down their mortgage. And you want to tax them even more?

#143 Bengals on 05.23.17 at 7:19 pm

Put our house (Burlington) on the market 19 days ago. No bites yet. Walk throughs and that’s it. Reduced yesterday so we’ll see where we go from here.

#144 Tony on 05.23.17 at 7:19 pm

Re: #94 Sonny on 05.23.17 at 9:49 am

What they don’t understand is if there’s a huge run on the Canadian dollar then interest rates will rise permanently higher here in Canada.

#145 maxx on 05.23.17 at 7:56 pm

#20 Ace Goodheart on 05.22.17 at 8:03 pm

Excellent post……the little iguana replaced the pet alligator. :-)

“The future is friendly” for those who have no debt and mucho dinero.

#146 };-) aka Devil's Advocate on 05.23.17 at 8:20 pm

#99 Paul on 05.23.17 at 10:27 am

Interesting perspective.

Given the lack of rentals available in our city what you suggest would only exacerbate the situation and, due to a lack of supply, drive rentals rates higher and higher. Rental rates would be driven so high that buying a revenue property would be an investment worthy of consideration once again.

#112 Ogopogo on 05.23.17 at 12:14 pm
“Gee. Renters win again.”

I, for one, never get tired of winning as a renter. Counting my blessings for having boycotted the Kelowna bubble. Many homes in our neighbourhood were underwater in the recent flooding. My guess is that they’re still underwater, if you catch my drift (pun overload!).

Seriously? How can you spout such sensationalist B.S.?!

This high water is not as bad as it’s been before. And with the City’s current drainage systems and respect for natural waterways, run off is being adequately dealt with.

Is there flooding in Kelowna? Sure. Playing golf the other day at Mission Creek Golf was like being a kid again playing in puddles. Oh the horror of it, living in lotus land when a little excess water gets our tits in a knot.

#147 };-) aka Devil's Advocate on 05.23.17 at 8:24 pm

#112 Ogopogo on 05.23.17 at 12:14 pm

Oh and on your real estate B.S. ; It’s just that… B.S.

No one is under water… yet.

When it’s time to cry the sky is falling you’ll know it. In the meantime quit the B.S.

#148 Sir James on 05.24.17 at 1:36 am

Looking at North Hamilton listings today, 3 new listings as I recall are all flips from over the last year, up from $400’s to $600K after basic fixups. Anyone know how to check Hamilton sales histories?

#149 Ace Goodheart on 05.24.17 at 3:14 pm

#97: “This sort of attacker, it occurs to me, likely has exactly the same sort of weird mentality as the typical trashy white male Trump supporter.”

The persons responsible for the Manchester bombing are not sane. They are not religious, not a group, not comparable to anything or anyone. We are dealing with a mentally ill person, who should be involuntarily admitted for his own good and for the safety of others. These people are not well and need psychiatric care.