Gaming it

“So,” Geoff said, “I see you sold a house last year. Now you need to disclose all of the details to me.” Yes, he’s my accountant, and in this cruelest month of the year, his task is to do my taxes then deliver the bad news. I am blessed with a big income. And cursed at what it costs. More than half of what comes in goes back out to government. With the rest I buy bulk ice cream and drywall.

This is the first year ever that Canadians will have to disclose the intimate details of their residential real estate. Geoff waterboarded me until I revealed the date I bought the last house, how much I paid, when it was sold, the selling price and related costs, like land transfer taxes, commissions and legal fees.

The point of the Principal Residence Exemption (you must fill out the Schedule 3, Capital Gains section of the T1 tax return) when it was first unveiled six months ago was to crack down on foreigners who dump houses and pocket the gains, evading tax. But there is scant evidence of that happening, as much as the deplorables in the steerage section wish it were so. More to the point, the CRA is developing a mother of a data base so it can nuke flippers or anyone else in the business of profiting from residential real estate.

There are three ways houses and taxes mingle. First, you’re allowed to make gains on your home and pay no tax. In order to do so, you must now fill in Schedule 3, disclosing purchase and sale values associated with a specific address. If you do not qualify for the exemption, your profits will be subject to capital gains – such as with a rental condo, tenanted duplex or the old home you hung onto and rented out when you bought a new one. In that case 50% of the profit will be taxed at your personal marginal tax rate.

However, if the CRA thinks you’re in the business of making money from houses, it’s possible you’ll have to include 100% of any profits in your annual taxable income. Ouch. That could happen if you bought a pre-construction condo and sold it upon closing, or a few months later – even if you moved in. It might apply (at the CRA’s discretion) if you bought a house, occupied it during a renovation, then put it on the market. Or if you owned a rented house, kicked the tenant out, stayed there for a while, and sold. Part of your gains might be classified as a capital gain in that instance, and part as income.

The law’s fuzzy, elastic and pliable. There’s no legislated period of time that qualifies a house as a principal residence, and the establishment of this registry is an obvious and clear first step in the war on speculation. Always remember that Ottawa has a giant weapon called GAAR – the General Anti-Avoidance Rule. This gives the CRA the authority to tax in any circumstance where it considers a taxpayer has taken action simply to avoid taxation.

The definition: where a transaction or a series of transactions achieves a reduction, avoidance or deferral of tax, and those transactions or series of transactions are not conducted for any primary purpose other than to obtain a tax benefit, the tax consequences of such may be invalidated.

So, combine the PR exemption registry with the CRA’s taxing of house profits as income and the unlimited power of GAAR, and you have the basis of a serious war on flipping, speculation and anyone who thinks they can game the market. It’s a complete myth that by simply living in a property for a short while it can become a principal residence. Already scores of taxpayers are losing tax court battles in which profits from condos bought in pre-construction are being included in regular taxable income – and the costs associated with them are not even deductible.

This is why governments at other levels are going too far, creating a Big Brother orgy of tax overkill. BC has its foreign buyer tax in Vancouver. That city has imposed an empty houses tax, while Victoria is considering the same. Toronto’s mayor thinks that’s a swell idea to impose on six million people, and Ontario is now contemplating both a foreigner’s tax plus some kind of speculation levy or additional capital gain.

All of this seeks to regulate assets people buy with dollars already taxed as never before. And none of it addresses the root cause of why houses in bubble markets cost so damn much.

Debt’s too cheap and too accessible. Because Canadians have house lust, no discipline and inbred financial illiteracy, they’re seriously at risk. If you think government is overreaching now, just wait.

122 comments ↓

#1 turn of the tide on 03.31.17 at 6:32 pm

What % of “wealthy” buyers does it take to create a buble??

I keep hearing this argument of ONLY 5%… that I would have no impact, etc, etc..

Well, Scotch is great, everyone loves it. Keeps you warm and fuzzy on a cold night.

Let’s say you invite 100 people to a sale of “Liquid Pleasures Scotch”, where 20 bottles are available and you invite only 5% “wealthy buyers”, that makes it only 5 “high roller” buyers out of 100.

Not bad, right? It’s just 5 people.

Well, what if these 5 people are very well off and are willing to spend 10-20 times the locals for the same item? Who do you think will snatch the first 5 bottles of Liquid Pleasures Scotch?

Once the 1st of these 20 bottles sells for 3 times what it’s worth, the seller is like “holy sheets! That was weird, but hey I’ll take it!”. Then another of one these wealthy folks buys the next bottle for 4 times what it’s worth. Now the seller is thinking “this is brilliant! These are worth way more than I thought!”. Seller doubles the asking price. Third wealthy high roller again bids 3 times the new higher price. What do you think that will do for the prices of the remaining bottles?

Do you think the seller will go back to the original asking price? Do you think the seller will want to sell to anyone else other than these rich folks?

Maybe the seller can only sell 5 bottles at these prices today but hey, if he holds on to the other 15 bottles, next week there’s another load of these healthy buyers. Why sell it for a fraction?

Then the local (*average in every sense of the word) folks seeing this happen a few times, borrow up the wazoo from their mom, dad, uncle, dog and cat because they now believe the Liquid Pleasures Scotch is actually “Liquid Gold” and they want to resell it to high rollers too, the seller makes a bunch once again.

Sure, if there’s 5,000 bottles of Scotch this is unlikely to happen. But like housing, when the inventory is low in comparison to the demand and a few players have huge purchasing power, it’s what pretty fat bubbles are made of.

This may be a crude and hypothetical example but hopefully it illustrates that “ONLY” as little as 5% of “wealthy” buyers can make a dramatic impact on the perceived value. The moral of the story is that the percentage of “wealthy” (or foreign) buyers does not even matter, what matters is how much do these 5 out of 100 buyers *have_to_spend and how much are they *willing_to_spend for the short supply of Liquid Pleasure.

Now, whether or not we should allow wealthy or foreign people to buy Liquid Pleasures Scotchs is not up for me to decide but to dismiss that as little as 5% of wealthy buyers can make a huge difference, I think is naive. Yes, a small group of people, with a lot of money can make a gigantic difference in price.

Have a great weekend everyone.

#2 TurnerNation on 03.31.17 at 6:33 pm

Vacant home tax could be an “Agenda 21” economic weapon.  Force homeowners to rent at any cost to anybody…such as displaced refugees of countries which elites have smashed into submission.
What’s yours is mine.

#3 Alice on 03.31.17 at 6:35 pm

Overbuilding or a lot of speculation in Toronto. This is going to be worse than Vancouver.

https://betterdwelling.com/city/toronto/toronto-real-estate-doesnt-speculation-problem-overbuilding-40/

#4 What the on 03.31.17 at 6:39 pm

“All of this seeks to regulate assets people buy with dollars already taxed as never before. And none of it addresses the root cause of why houses in bubble markets cost so damn much.”

I have seen you make this argument many time before, it is total nonsense. This is like saying it is unfair that stock price gains are taxable when selling stock “because the stock was bought with money that was already taxed”.

#5 Gasbag Boomer on 03.31.17 at 6:42 pm

Garth, what about houses with a rental suite? Will the CRA be looking at multiple returns being filed from a common address?

#6 prairie person on 03.31.17 at 6:51 pm

The rumour mill. Latest rumour is that wealthy mainland Chinese have discovered the Gulf Islands and are buying all the waterfront property they can. The Gulf Island property has been really depressed. The rumour, whether true or not, may help to get prices up. People with money buy luxury property. People without money don’t. At one time it was Americans grabbing up island property. Then the crash came and they disappeared. Doesn’t seem like we have enough retired Sask farmers, oil millionaires from Alberta who want to spend their time golfing and sports fishing. The cry always has been someone come with bags of money and rescue us.

#7 SoggyShorts on 03.31.17 at 6:51 pm

#1 turn of the tide on 03.31.17 at 6:32 pm

I can see an argument for foreign buyers (not one I agree with, but still)
I can’t see any logic behind complaining about wealthy buyers.
How would you even stop that?
“If you make more than $x or have a net worth over $y then you aren’t allowed to buy a house”?
A tax on flipping might make a little difference on demand, but taxes don’t stop people from buying things.

#8 down and out on 03.31.17 at 7:07 pm

So in the future has a retiree I sell the homestead of 40 years make a million, pay taxes on 50% of gain ,now if this is considered income I lose a portion of or all of the old age pension (claw-back)the next year. I sure hope the powers that be think this through or seniors become collateral damage of this plan to stop speculation.

#9 GFC v2.0 on 03.31.17 at 7:09 pm

Sounds like a lot of unnecessary work, when disbanding the market-skewing CMHC would be a start at achieving the same result.

Of course, the Gap and Starbucks crowd would never want that to happen.

#10 Nik on 03.31.17 at 7:11 pm

ofcourse this is all madness. I have cashed out this month (purchased a condo in New West in 2015 – 42% appreciation in condo value and 200%+ returns on my downpayment). I imagined that this would be a good decision but I am not sure anymore. The rental market sucks big time for houses and larger condos/townhouses-either its priced at stratospheric levels or its an unlivable dump. I welcome any move that will cool down the market. its about time CRA started looking into source of income for all properties. why isn’t this a norm?

#11 Just saying it again on 03.31.17 at 7:13 pm

Everyone I talk too thinks the stock market is going to ” crash” for various reasons and that house prices are going to keep rising .

I am starting to think like smoking man that following the ” herd” is best strategy to success.

#12 Pete from St. cesaire on 03.31.17 at 7:16 pm

General Anti-Avoidance Rule
——————————————
Now I suppose they will have agents staking out all of the Salvation Army Thrift Stores to see who shops there almost exclusively to avoid paying sales taxes. Many people do just that and for that very reason.

#13 turn of the tide on 03.31.17 at 7:17 pm

#7 SoggyShorts on 03.31.17 at 6:51 pm

You missed the point completely. It’s not at all a “complaint” about wealthy buyers.

The only point of the post is that the argument that ONLY 5% of “foreign buyers” cannot make a big difference in prices is flawed. That is it.

#14 Figure it out on 03.31.17 at 7:18 pm

The Estates General and the peasants will come to an amicable agreement, or it’s tumbrils and the National Razor. Believe it. The correct answer to “the peasants have no houses, sir” is not “well let them then live in chateaux.”

And immovables will be taxed extra to make up for the lost revenues on all that’s been spirited offshore. Extra for the lice. Extra for the mice. 2% for looking out the window twice.

#15 Debtslavecreator on 03.31.17 at 7:21 pm

Simple Garth. As the greatest debt bubble in history comes to an end the corrupt governments are putting in place “laws” to provide any excuse to confiscate the largest asset in the economy as their tax revenues will collapse and the pending sovereign debt crisis rears its ugly head in Canada by q1 2020
Politicians and the elites at the top of the FIRE sector will try to divert attention to mid and low level authorities and unpopular sectors to cover up the economic misery that will leave the majority of the population with nothing to show for decades of work and payments

The government big enough to give you everything you want is strong enough to take everything you have

#16 Bank of Millenial on 03.31.17 at 7:23 pm

“Tax on tax on tax man… Even my taxes got taxes bro.” – Canada

#17 acdel on 03.31.17 at 7:23 pm

#1 turn of the tide

——————————————————-

Yours is probably the best post I have read in a very long time, you nailed it…..

#18 AK on 03.31.17 at 7:32 pm

“So, combine the PR exemption registry with the CRA’s taxing of house profits as income and the unlimited power of GAAR, and you have the basis of a serious war on flipping, speculation and anyone who thinks they can game the market.”
——————————————————————–
I have been trading stocks since 1990 and have paid tax on 50% of my capital gains. It’s about time house flippers did the same thing.

#19 Pete from St. cesaire on 03.31.17 at 7:34 pm

#15 Debtslavecreator “nothing to show for decades of work and payments”
————————————–
You got that right. That’s why I tell every one to ‘spend it now’ or forever lose your chance to enjoy the fruits of your labours.
P.S. Scapegoats for this collapse have been being groomed for the last 20 years. They are in your headlines every day.

#20 Nonplused on 03.31.17 at 7:35 pm

#4 What the

“I have seen you make this argument many time before, it is total nonsense. This is like saying it is unfair that stock price gains are taxable when selling stock “because the stock was bought with money that was already taxed”.”

Well, there are some good arguments to made that taxing capital gains on stocks is bad too. (Dividends are another question.) If you sell one stock and buy another because you are re balancing your portfolio, I don’t see how there is a taxable event there. You had so much in stocks, you have so much in stocks. Only if you have to pay capital gains you end up with less stocks than you had.

The whole idea of capital gains is a strange one. If a gold coin goes up in value supposedly you have to pay capital gains on that. But it is still just one gold coin, you didn’t end up with 2 of them. They don’t multiply like cattle.

In an inflationary environment, at least part of what is called a capital gains tax is really just an outright capital tax. If you sell one investment property, pay capital gains taxes, and then buy a different investment property some time later, you are behind the 8 ball. One house is no longer equal to another house.

So the way Garth phrases it is exactly right. It’s a tax on a tax on a tax and a tax on inflation.

#21 dontcallmeshirley on 03.31.17 at 7:38 pm

“… Already scores of taxpayers are losing tax court battles in which profits from condos bought in pre-construction are being included in regular taxable income”

No they’re not.

Link?

#22 KK on 03.31.17 at 7:39 pm

Mr. Poloz disagrees with the low interest rate comment

http://www.macleans.ca/economy/economicanalysis/stephen-poloz-no-one-wins-a-trade-war-everybody-loses/

Q: Does the Bank of Canada shoulder responsibility for the speculation we’re seeing in the market?

A: No. When you’re borrowing money to buy a house and you think you’re going to make 20 per cent over the next year, I don’t think it’s going to make a difference if the interest rate you’re paying is 2 per cent, 4 per cent or 6 per cent. It’s still an important capital gain. I would pretty well reject that. It’s not low interest rates that are fuelling speculation.

#23 kabloona on 03.31.17 at 7:39 pm

“The point of the Principal Residence Exemption (you must fill out the Schedule 3, Capital Gains section of the T1 tax return) when it was first unveiled six months ago was to crack down on foreigners who dump houses and pocket the gains, evading tax. But there is scant evidence of that happening, as much as the deplorables in the steerage section wish it were so….”

Uh, what about Kenny Gu….?

http://www.theglobeandmail.com/news/national/vancouver-real-estate-developer-seeks-to-set-record-straight/article31980747/

#24 Paulo on 03.31.17 at 7:43 pm

#5 gasbag boomer
You bet they are, they are cross referencing records from the taranet database, Ontario trillium tax credits base and
social service clients, Ontario Works,ODSP Etc
in addition to hiring a army of new auditors So if you are not claiming rental income in Ontario you stand a better than ever chance of getting caught and burned: see garths notes on the GARR

#25 Jimbo on 03.31.17 at 7:47 pm

Funny, I think the guy in the pic is reading “The passage to Europe:How a continent became a union”. Didn’t like that book one bit. Instead of giving an impartial view, Middelaar comes through as an apologist for the EU’s many shortcomings. He needs to come out with a new book titled.

“The passage to Europe:How a continent became a union: How a union became one big dysfunctional family.”

On another note, a buddy of mine (owner of one of the big brokerages in Hogtown) told me today. “It feels like a bubble now”.

Sell sell sell!!!!

#26 I like cookies on 03.31.17 at 7:50 pm

Should there be a mandatory cooling-off period for house sales? https://www.canadianmortgagetrends.com/canadian_mortgage_trends/2017/03/the-case-against-subject-free-offers.html

#27 TRT on 03.31.17 at 7:51 pm

I often don’t agree with the author here so here goes again;

With demographics changing and the over 70 age cohort grows, the need for care homes/in home care will grow.

There is no way that younger working age people can fund this coming tsunami. The ratios of working people to retirees coupled won’t allow that.

So where will the only be found?

1) Reform the ‘universal’ healthcare system to become a barebones healthcare system. Use the money saved to expand care homes/in home care. Private pay for non-urgent services.

OR

2) Government funded system. Use a means tested system where real estate equity is first drawn to pay for income care/care home before taxpayers money is used. The coming national database on housing will be a step in that direction.

Take your pick.

It’s really going to get ugly when one person of an elderly couple gets incapacitated. Thats when the real issues start. All elected officials in the past 30 years should be held accountable as they knew these tsunami was coming.

#28 Smoking Man on 03.31.17 at 7:52 pm

#2 TurnerNation on 03.31.17 at 6:33 pm
Vacant home tax could be an “Agenda 21” economic weapon. Force homeowners to rent at any cost to anybody…such as displaced refugees of countries which elites have smashed into submission.
What’s yours is mine.

Second last chapter of my book. Titled Shlong Zumanga. Says it all.

I can’t get over how stupid bank CEO’S are, they don’t see the revolution comming. Deplorables on the rise everywhere. They cling to their Davos notes with out looking out the window.

Dave M From RBC, he’s pushing agenda 21 like there is no tomorrow. No idea the momentum Canadian Deplorables have at the moment.

Two years ago on the trade floor he was staring at me knowing full well who Smoking Man is and the living legend.. to frightend to say hi to me.

He let his best buddy from school days get bounced out the building because this Asian old friend had reservation about radical Islam. And the werdo raptor.

RBC Loaded with TFW and growing like mad..

Dave is hallarious on linked in. Preaching to the young , divercity, inclusion, while making sure they never make more than poverty line filling up as many TFW as posable.

No loyalty. No for sight. And setting a drift a 57 year old straight white dyslexic that has harnest the power of one thumb drunken writing who has a vault of notes.

I Give him two years. And that’s without me chirping him.

There you have it dogs. No posability for me ever to work on bay street again. Well I could always pretended to be a transgender. That would work.

But I’m a stupid masculine male. Globalists hate us.

I’m a full time gonzo writer now.

Wish me luck.

#29 The Wet Coast on 03.31.17 at 7:52 pm

In about 10 weeks we’ll have a new NDP government is BC. Their platform includes a retroactive 2% tax on non citizens, which can go back near as I can tell to Captain Vancouver. They also plan to eliminate the use of corporate entities to mask who really bought the house, and stop the assigning of presale condos. Now, I know they won’t be able to do everything they say, but I suspect they’ll do more.

I am a conservative, but I don’t live in the fantasy world where Peter the postman is buying $1.5 million dollar tear downs. This year for the first, and hopefully last time I will vote NDP. I’m doing it for my kids!

#30 Reasonfirst on 03.31.17 at 7:55 pm

What do you think of this:

Poloz: “It’s not low interest rates that are fuelling speculation.”

http://ca.reuters.com/article/businessNews/idCAKBN1722KM-OCABS

#31 Nonplused on 03.31.17 at 7:58 pm

#4 What the

A follow on comment I have is the tax treatment of lottery winnings in Canada. There is no tax. If ever there was something you might think should be taxed it’s lottery winnings. But they aren’t. Why not? Well some would argue that the lottery is a “stupid tax” to begin with, but the real reason given is because they are purchased with after tax dollars. All the people playing the lottery supposedly already paid taxes on the money they used to buy the tickets. But I don’t see how that’s ever stopped the government before, the same could be said about the GST and carbon taxes. It’s after tax money, thus a tax on a tax on a tax. In fact the only reason I can see not to tax lottery winnings is the perception that fewer people will play. I think they misunderstand the foolhardiness of the average lottery player. They are already going up against a guaranteed 70% loss each time they play in the long run, and all the smaller amounts they win go right back into more lottery tickets so the capture rate is closer to 100%. The only money they don’t get back on lotteries are the million dollar plus jack pots. And on VLT’s it’s even more brilliant, because the jackpots aren’t very big they eventually get all the money.

Now that I think about it, that’s probably the reason they don’t tax lottery winnings and VLT’s. The capture rate is close to 100% already, and taxing VLT and scratch card payouts or “Sports Select” or all the $10 payouts would be too much of a bother. Easier to just wait for them to beat it all again anyway. Still, the whole idea of “capital gains” suggests any lottery or VLT winning over a certain threshold, say $5000 or so to make the paperwork worth while, should be taxed as income. Why not?

#32 Doghouse Dweller on 03.31.17 at 7:59 pm

So they created the problems with ZIRP, 0 down 35 year amortizations and subprime slime, then create a Big Brother orgy of tax overkill to hover up anything left of the economy for the sunshine list.

Am I missing something?

“We are faced with tax revolts throughout Western Culture. Governments are all broke. Of course, they will never consider reform. The answer is always just grab more and more money from the people. This is why they are moving to eliminate cash to prevent people from evading taxes. This is not going to end nicely. The American Revolution was “No taxation without representation” and the French Revolution was also over excessive taxes – Let them eat cake. This is why we must crash and burn. You simply cannot reason with those in government to recognize that they are the problem. Thus, history constantly repeats and taxation is the driving force behind revolution historically in all cultures.” ~ Martin Armstrong

#33 TRT on 03.31.17 at 8:00 pm

“Debt’s too cheap and too accessible.”

CMHC doesn’t apply to most Vancouver properties. $999,999 limit. So debt is not accessible.

CHMC does not loan money. — Garth

#34 TrumpForTheAges on 03.31.17 at 8:02 pm

Seems like fear mongering Garth…for there is a strong argument to be made that flippers should pay tax on appreciation as they can also write off the expenses with the reno’s. I also think most would agree that most flippers do not move in and use the house to be flipped as their primary residence. So where’s the beef?

#35 cd on 03.31.17 at 8:14 pm

Recently the sunshine list was published and we can see why we need to pay so much tax…

http://news.nationalpost.com/news/canada/ontarios-sunshine-list-2017-all-the-ways-you-never-thought-you-could-make-100000-a-year

there are a couple of questions…
1) would our taxes go down if janitors, librarians, lunch room attendants… didn’t make 6 figs ?

2) for those on the list that are overpaid in protected union jobs, are they partially responsible for creating the RE bubble? They are the ones who can overpay for a place, sine their salaries always go up, are protected from being fired, and have pensions.

#36 Tdot on 03.31.17 at 8:16 pm

All I can say is its a great time to be a landlord in the lower mainland Garth. Pick of the litter for tenants and rents are out of control.

#37 Economystical on 03.31.17 at 8:17 pm

“All of this seeks to regulate assets people buy with dollars already taxed as never before. And none of it addresses the root cause of why houses in bubble markets cost so damn much.”

Garth, free your mind and study economystics!

In bubble markets, great windfalls are made by sellers, but the buyers need to take on bigger loans. So with a capital gains tax, what we a really doing converting the borrowing power of the public directly into taxes, which can be used by our wise governments to increase the wealth of all! Why have the government borrow all the money directly when we can have the population, who is already responsible for the government debt anyway, hold a portion of the debt in their own names?

Eventually we will raise taxes to the point where all income and property comes to the government, so the government doesn’t have to borrow, and place the debt directly on the population because they need to use Visa even to buy bread. Now, some may think this is disingenuous, but it’s not it’s glorious. The more debt you have the freer you are! You aren’t going to pay it back anyway, so as long as you can keep borrowing the interest.

We have run so many successful programs proving the validity of our plans that it is no longer up for discussion any more so than climate change. Look at what we did with Home Equity Lines Of Credit (HELOC’s)! People in Vancouver and Toronto are practically living on them now! Or Reverse Mortgages? They aren’t for people who hate their children as you have often said, they are for people who love their country!

It is a mistake to look at your income and make long term plans. In the long term we are all dead. Instead take the economystical approach, and look only at your debt servicing cost. In the short to medium range (0-5 years), things look much better using the economystical approach. I mean we even converted a depreciating asset the automobile into something where almost nobody doesn’t have a payment for life.

It even saves marriages! Yup, using economystics, gone are the days where your spouse could divorce you and take half your assets. Now they get half your debt. It’s brilliant on so many levels I am beside myself with the success of it all.

#38 Smoking Man on 03.31.17 at 8:22 pm

These CEOs talk about disruption, a word that tickel’s millenials armpits.

Get the evil man against the wall, these kids don’t realize they have been programed by the evil man.
The think tanks, Global agenda, Bilderberg, Davos.

They respond posativly to words like.

LGBT
Climate Change
Feminists
Diversity
Inclusion
Accountablity
Equall pay for woman.

Every one gets a trophy = communism it never ever works.

Just wait till Smokey is clear of the honey drenched fingers of the communist here in Canada.

Stay tuned to the most widely visted comments section in Canada.

I’ll show disruption. They way it was ment to be dilivered.

I go crazy every time I run out of loot to keep hearter mindlessly pushing the slot machine button. It makes her happy and none vilont.

It’s in the book.

So canadian, banks when I take you down her, it was nothing personal.

Just can’t endure another beating from my phyco Scottish wife. Who’s slot addicited can’t be taken care of.

By the way, I live her dearly.

#39 Doghouse Dweller on 03.31.17 at 8:23 pm

#8 down and out
seniors become collateral damage
=============================
Pension plans going bust, savings evaporating !
They have been engineering the demise of seniors since the early nineties.

http://cdn.tradingeconomics.com/charts/canada-interest-rate.png?s=cclr&v=201703071822t&d1=19170101&d2=20171231

#40 DR HO on 03.31.17 at 8:23 pm

If a foreign investors aren’t a big deal then impose a foreign buyers tax anyway as a secondary measure … it won’t do anything right???

The truth is the housing bubble is a multifaceted problem that requires a multifaceted answer such as:
Foreign buyers tax, speculators tax, higher interest rates etc.

4 houses on my street were recently bought up and they are sitting empty! One guy here in oakville was making $1000 a day from appreciation alone!

#41 Case-Shiller Home Price Indices on 03.31.17 at 8:29 pm

Is there a Case-Shiller Home Price Index for Canada? If not, is the Teranet—National Bank House Price Index a close substitute (based on the same or a similar methodology)?

#42 just a dude on 03.31.17 at 8:32 pm

“Debt’s too cheap and too accessible.”

Bingo. Full stop.

IMHO the Bank of Canada’s methodology for calculating core inflation is seriously flawed for it to show a current core value of about 2%, even in light of the crazy run-up in housing costs (including property taxes, utilities, repairs & maintenance, etc.). The calculation’s housing cost weighting should have been adjusted higher years ago. In doing so I bet mortgage rates wouldn’t be anywhere near where they are now thus keeping access to debt under tighter control.

Then again, I’m no economist . . . everything just seems messed up to me, especially now that I’m seeing bidding wars in my neck of the woods too (KW).

And don’t get me started on the CMHC nonsense of insuring mortgage values of up to $1M. That’s lunacy IMHO and I suspect this has had a direct impact on the crazy run up in house prices.

Frustrating.

#43 AK on 03.31.17 at 8:33 pm

“There are individuals that are going into subdivisions that are buying 10, 40, 50 homes – holding paper – and flipping it … and they’re crowding out families who are trying to buy.”
“Yeah, we know where that’s headed. Even if it’s true.”
——————————————————————-
Well, It was true in the U.S. during 2006 and 2007.

#44 Mortgages in Arrears on 03.31.17 at 8:41 pm

The Canadian Bankers Association last posted on Jan. 16, 2017 the number of residential mortgages in arrears as of Oct. 2016.

http://www.cba.ca/mortgages-in-arrears

Is this report normally posted 5 months late?

#45 Smoking Man on 03.31.17 at 8:41 pm

You know where the edge is when you post something that you know will never get you a gig at a bank ever again.

You’re if a room full of gogo dancers, and hot chicks that you have no interest in.

You’re too busy making love to this song on the buds and thinking of something cool to write about.

Minds blank. Enjoying the rush.

#46 doomerbloomer on 03.31.17 at 8:41 pm

So blog dogs with Flynn ready to talk is the Trump presidency almost over?

#47 When the whip comes down on 03.31.17 at 8:42 pm

There will be loads and loads of non compliance with this rule. Just like the vast majority of people do not report their rental suite income in their tax returns. Personally I get very angry with people who don’t comply full well knowing they are evading taxes on their suite income. The reasons they give to justify are ridiculous….oh after expenses I wouldn’t have much to report they say not having done the math even and some whose mortgages are nearly paid off.

#48 Ex-Cowtown on 03.31.17 at 8:43 pm

The only point of the post is that the argument that ONLY 5% of “foreign buyers” cannot make a big difference in prices is flawed. That is it.

____________________________________________

5% maybe, but only 10% of home buyers in the US got into trouble in the Great Recession and that almost brought the world economy down around everyone’s ears. It’s called the wonder of fractional reserve lending; as a bank you only need to have $1 of “real cash” on reserve to lend out $10. That all works as long as your losses are only a few pennies. When the full $1 of “real cash” is lost, the system starts to implode as there’s nothing underpinning it anymore.

So as to your assertion, no 5% isn’t enough, but it’s halfway to 10% which means serious damage.

#49 Chaddywack on 03.31.17 at 8:45 pm

I actually support the government doing this even though I can’t stand T2 and turn the channel every time he comes on TV with his annoying lispy BS he spouts constantly.

I actually think that CRA should mandate a certain percentage be held back from all real estate sales at source similar to RRSPs whether it’s a principle residence or not and it can be claimed at tax time if everything checks out. I know this is already done for non-residents, but people could easily lie about that too.

It’s kind of like in school when the whole class got detention because a couple of bad kids pushed the envelope. The fabric of Canada is changing and this is unfortunately the new reality with modern times.

#50 dr. talc on 03.31.17 at 8:47 pm

“There are individuals that are going into subdivisions that are buying 10, 40, 50 homes – holding paper – and flipping it … and they’re crowding out families who are trying to buy.”

===

All you Bolsheviks calling for more tax should turn off your televisions. Even the cra moves described in the post will make people hold longer, that’s right- higher prices. the goal of cra is not to cool any markets, its to collect money, that’s it

and the way to stop hogs buying up subdivisions is just abolish pre construction selling:

you cant sell what you dont have
you cant buy what aint there

#51 Smoking Man on 03.31.17 at 8:49 pm

When Hemmingway and Hunter S Thompson set the bar. You’re in the bar and think their not as good as you dispute the Grammer and speeling shit. Small stuff I’m thinking. Only idiots care about that shit.

You put this one one the buds..

https://m.youtube.com/watch?v=tAGnKpE4NCI

#52 the other white meat(pork) on 03.31.17 at 8:54 pm

This reminds me of people caught day trading in their TFSAs and whinging about having to pay taxes on it.

People flip and speculate to make money. Let them deduct reasonable costs of doing business and tax the living garbage out of them. Income is income, investors won’t stop investing when the tax advantages are stripped from them. Why? Because passive income beats the hell out of having to work for a living.

#53 Gasbag Boomer on 03.31.17 at 8:54 pm

#24 Paulo

Thanks, it’s about time the CRA got serious about it!

#54 Trojan House on 03.31.17 at 8:56 pm

I don’t mind paying more than my fair share of taxes.

Excellent news. You can have some of mine. — Garth

#55 Victor V on 03.31.17 at 8:57 pm

Biggest school board draws highest pay, Sunshine List shows

https://www.thestar.com/news/queenspark/2017/03/31/biggest-school-board-draws-highest-pay.html

Donna Quan, the former director of the Toronto public board who is working with York University on a research project, also remains on the public board payroll at $270,958 as a supervisory officer.

The embattled educator resigned from her position in 2015 amid turmoil, earning a payout of almost $600,000 that year, including salary and more than $315,000 in “unused vacation days” during her long tenure at the board.

Teacher union leaders also earned more than Education Minister Mitzie Hunter, whose salary is $153,736. By comparison, Paul Elliott — who heads the Ontario Secondary School Teachers’ Federation — was paid $213,814, and elementary teacher president Sam Hammond was paid $182,668.

#56 Andrewski on 03.31.17 at 9:01 pm

Re: #21 dontcallmeshirley

Too lazy to look? Start here:

http://www.cra-arc.gc.ca/gncy/bdgt/2016/qa11-eng.html

#57 Forget the % look at the $ on 03.31.17 at 9:05 pm

Rough and dirty calcs:

416 $1 MM investment property last year is now, on average, equal to $1.27 MM. $270 K at 50% equals to $135 K at your MTR (yes, I know calc. is more complex, but “close enough for Gov’t work”).

Middle income earner at an MTR of 20.5% pays about $28K in taxes (add another few % for the Province):

Round up to $30K in income taxes.

That’s a hell of a hit for amateur speculators and ought to cool 416 RE. For people with a lot of cash, not so much.

Many here posting they have already and just cashed out.

Looks like the early signs of a 416 RE price drop?

#58 Rexx Rock on 03.31.17 at 9:07 pm

I find it quite exciting how the goverment is doing things in the last few years.The BOC is just a branch of our goverment.Lower interest rate to zero to destroy pensioners and savers,devalue the currency and create a huge debt bubble to enrich the big banks and goverment.Take away freedom of speech through new bills and pass pot laws to dumb down society.The power of CRA to destroy peoples lives on what they deem is right.Spend billions and billions of taxpayer money for useless wars and charties while our own people suffer poverty.Allow anyone to come into Canada and declare refuggee staus and live for free and use tax payer money to fight deportation. Lets all sing Oh Canada!The goverment needs to tax people to the breaking point.

#59 pure wackjob on 03.31.17 at 9:08 pm

#49 Chaddywack on 03.31.17 at 8:45 pm
I actually support the government doing this even though I can’t stand T2 and turn the channel every time he comes on TV with his annoying lispy BS he spouts constantly.

I actually think that CRA should mandate a certain percentage be held back from all real estate sales at source similar to RRSPs whether it’s a principle residence or not and it can be claimed at tax time if everything checks out. I know this is already done for non-residents, but people could easily lie about that too


Your proposal will result in less people selling, less supply and higher prices. Count your own money.

Ive got a better idea, why dont You send cra your bank account number, and tell them to help themselves. just in case you missed something or added things wrong on your tax return

#60 Smoking Man on 03.31.17 at 9:09 pm

Old brown leaf woman with heave base and shiney red lipstick, no takers.

I sort of can relate.

Green leafs are always in season but they don’t know shit.

I’m going to talk to brown leaf and learn something.
First question.

How did you get those two sizes to small jeans on?

#61 Tony on 03.31.17 at 9:09 pm

Re: #1 turn of the tide on 03.31.17 at 6:32 pm

Think what percentage of wealthy buyers it would take if houses were auctioned off like in other parts of the world? A very simple answer would be less than one percent. Even if the wealthy buyers were only one percent it could completely sway the market upwards if they kept on paying much more than a house was or is worth.

#62 WUL on 03.31.17 at 9:11 pm

Garth:

Please excuse the length of that which follows. It relates to your thoughts of the other day about how gub’ts can erode property rights. I enjoyed Her Ladyship’s turn of phrase. After the first 7 paragraphs, the judgment descends into the opaque muck of municipal planning law. The fat walleted petitioners lost.

Cummings v. The City of Vancouver
Date: 20161020
Docket: S158899
Registry: Vancouver

The Honourable Madam Justice Fitzpatrick

[1] At first blush, a person might think that this case involves the mundane world of municipal bylaws and their validity. That would be wrong; this case is mostly about money.
[2] It is well-known that, in recent years, real estate prices in the Lower Mainland have skyrocketed, driven by high demand, including from offshore investors looking for desirable places to park their money. In Vancouver, that demand has fueled an incredible increase in the number of home sales and sale prices. These new owners or investors have shown an immense propensity toward tearing down existing homes and replacing them with new homes.

[3] One of Vancouver’s oldest residential neighbourhoods is called “First Shaughnessy”. First Shaughnessy was built up in the early 1900s, and is locally known as the place where Vancouver’s first wealthy families built their large and grand homes, many of which still stand today. The neighbourhood is widely considered a very exclusive place full of lovely, wide streets with mature trees, which wend their way in front of the large lots in the neighbourhood. I would venture to say that it still largely remains an enclave for wealthy people who can afford to purchase homes there.

[4] First Shaughnessy has not escaped the dramatic escalation in Vancouver’s home prices or the drive for newer, larger homes that comes with it. In recent years, as in other neighbourhoods in the Lower Mainland, many older homes in First Shaughnessy have been demolished to make way for new homes on these large lots.

[5] Many people in our communities have increasingly voiced concerns about the impact of this type of investment on the Lower Mainland real estate market as it relates to local citizens and our communities generally. It is no secret that all three levels of government have been asked to, and appear to be considering, the issues. One of the major concerns voiced by many in our communities has been the large scale destruction of homes in our neighbourhoods without regard to their heritage value. That is an acute concern in First Shaughnessy where, given its history, many of such homes exist.

[6] One governmental response to date has been taken by the respondent, City of Vancouver (the “City”). City Council recently passed of a number of bylaws in relation to First Shaughnessy, pursuant to the Vancouver Charter, S.B.C. 1953, c. 55 (the “Charter”). These bylaws, called the “HCA Bylaws” in these reasons, are the subject of this proceeding.

[7] The owners of residential lots in First Shaughnessy, including the petitioners, have no doubt seen recent, large gains in their property values to date. At least some of the petitioners see the HCA Bylaws as impinging on their ability to maximize that value in the future. They seek to overturn all or at least one aspect of the HCA Bylaws.

#63 wallflower on 03.31.17 at 9:11 pm

I don’t understand it. In what circumstances would a foreigner remit a Canadian tax return? Why? How? What makes a foreigner do this?

Withholding tax. — Garth

#64 Tony on 03.31.17 at 9:17 pm

Re: #52 the other white meat(pork) on 03.31.17 at 8:54 pm

Let me enlighten you, just about all that’s left is day traders. It’s been like this for at least the past five years and as the market goes beyond unimaginable overvaluations the percentage of day traders can only increase.

#65 Barbo on 03.31.17 at 9:20 pm

#21 dontcallmeshirley

As per this CRA page, 18,500 case were audited between Ontario and BC. So far $280 millions were recovered in 2016. Someone can expect the next few years (before the bust) will be even greater.

http://www.cra-arc.gc.ca/gncy/cmplnc/rlstt/menu-eng.html

#66 gut check on 03.31.17 at 9:24 pm

Smoking Man providing all the best posts. :)
.
.
joie de vivre!

#67 AK on 03.31.17 at 9:27 pm

#46 doomerbloomer on 03.31.17 at 8:41 pm

“So blog dogs with Flynn ready to talk is the Trump presidency almost over?”
——————————————————————-

Right. Quite the opposite…

#68 Jetfixer on 03.31.17 at 9:42 pm

#44 Mortgages in Arrears

I read an interesting article at Better Dwelling talking about record low default rates in BC and how that could be a bad sign.

They mention that you usually see the insolvency uptick after the initial correction. Looking at those stats in your link, the last low was in 2008 when things started to correct. You can see after that, there is a noticeable uptick in delinquencies until 2010 and the downward trend resumed once the emergency measures were under way. Well, fast forward to October 2016 and delinquencies are at a low again but now the measures are being put in to reverse the craziness. Will it have an effect?

https://betterdwelling.com/city/vancouver/bc-mortgage-defaults-approach-lows-heres-thats-bad-thing/

#69 acdel on 03.31.17 at 9:42 pm

#38 Smoking Man
—————————————

Too funny, I am still laughing trying to type this response, heh, at least the two of you love each other, I do not dare to speculate or comment on the rest, have fun, life is short!

#70 Tony on 03.31.17 at 9:43 pm

Re: #30 Reasonfirst on 03.31.17 at 7:55 pm

In guess Poloz forgot the year 1981 where everyone bought blocks of 15,000 dollar Canada Savings Bonds and they couldn’t give away houses. I wonder if interest rates made a difference that year?

#71 Nonplused on 03.31.17 at 9:45 pm

#55 Victor V

Well, this is a good chunk of the reason your property taxes are so high.

In fact, the only reason I can see as a good argument in favor of higher taxes is because overpaid civil servants pay them too. Now if only there was a way to do it without killing private enterprise.

#72 X on 03.31.17 at 9:52 pm

If there are 65,000 vacant properties in the GTA…and if they apply a 1% vacancy tax…..average property price of $750,000, even if half of the vacant properties get taxed that’s almost $250 million…wow.

Sounds like the average homeowner in Vancouver has 6 months to tear down their home to rebuild (while living elsewhere), or 6 months to complete reno’s before moving in…otherwise a 1% tax….crazy.

#73 NS Guy on 03.31.17 at 9:53 pm

“…This is why governments at other levels are going too far, creating a Big Brother orgy of tax overkill.”

Nope. When the national, provincial and municipal deficits and debts are reduced to zero, then society will have achieved something closer to a balanced tax system.

Until then, taxes are too low. Someone earning under $100k/year is in no position to pay more taxes. Therefore, the wealthiest 1% must pay more taxes:

Higher corporate taxes, higher capital gains taxes, higher stock option taxes, higher income taxes on people earning more than $100k/year, higher land taxes on large acreages, higher taxes on 2nd, 3rd, 4th properties. Tax the wealth until all budgets are balanced.

If the wealthy don’t like it, they can sell their assets and move out of Canada. Ultimately, it will make houses and property more affordable and start paying off the massive debts that governments carry.

There are 36 million Canadians and 286,000 wealthy. Do the math, Einstein. — Garth

#74 Wack on 03.31.17 at 10:03 pm

Want lower RE?
Gov needs to disband CMHC
(Banks wouldn’t grant half the mortgages without it)
Never happen though, cause Gov is in too deep now to crash RE
All levels of Gov are dependent on RE to keep cranking out
-property purchase taxes
-development cost charges
-gst, hst, pst
All paid for by mortgages

#75 NS Guy on 03.31.17 at 10:05 pm

The Boy Wonder and his Liberals approve Bombardier execs getting near 50% pay raises while the workers get:

– cuts to benefits, outsourcing to low-cost countries, increased work loads and lack of job security

It just proves how clueless the Boy Wonder is at the wealth disparity in this country as well as how clueless his government is at negotiating any kind of deal.

Anyone who knows how to negotiate would have dictated better terms with Bombardier, such as:

1. The governments of Canada and Quebec will only give financing to Bombardier if they are assigned two permanent seats on the board of directors.

2. The governments of Canada and Quebec will only give financing to Bombardier if all executive salaries and compensation are frozen at 0%. Executive salaries and compensation can only increase if and when Bombardier becomes profitable, all loans to government are paid back with interest, and Bombardier sets up a contigency fund of an amount (say $2 billion dollars) to serve as a financial buffer in the future.

3. The governments of Canada and Quebec will only give financing to Bombardier if all salaried employees are guaranteed by contract to receive the same percentage increase in wages and compensation that any and all executives do.

Those above terms should have been the negotiating terms dictacted by the government of Canada. But no, the Boy Wonder doesn’t have a clue about business, doesn’t know how to negotiate contracts, and favours the 1% over the average, highly skilled employees.

The Boy Wonder and Liberals = the 1% First, everyone else Last.

http://globalnews.ca/news/3348414/bombardier-facing-union-drive-in-montreal/

#76 Casey on 03.31.17 at 10:15 pm

Rex has a gift … this article is so very much worth reading!

http://news.nationalpost.com/full-comment/rex-murphy-actually-witchcraft-is-a-pretty-good-explanation-for-all-thats-happening-in-ontario

#77 Leo Trollstoy on 03.31.17 at 10:19 pm

Canada BOOOOOMING!

https://www.wsj.com/articles/canada-gdp-growth-exceeds-expectations-on-factory-strength-1490964492

Wher r job? BC n ONT! Reel estat to rise! CAD stabil

#78 Contrarian Coyote on 03.31.17 at 10:25 pm

#40 DR HO on 03.31.17 at 8:23 pm
If a foreign investors aren’t a big deal then impose a foreign buyers tax anyway as a secondary measure … it won’t do anything right???

The truth is the housing bubble is a multifaceted problem that requires a multifaceted answer such as:
Foreign buyers tax, speculators tax, higher interest rates etc.

4 houses on my street were recently bought up and they are sitting empty! One guy here in oakville was making $1000 a day from appreciation alone!

===

Wow, that’s incredible. So how did the one guy in Oakville actualize those $1K/day gains? Withdraw from an ATM? [email protected]?

#79 acdel on 03.31.17 at 10:34 pm

#76 Casey

I love Rex, could care less what others think, great article, thanks for the link.

Even though I am an Albertan I fear for all of you in Ontario, it is sickening as to what is happening to all of you, actually now I fear for us here in ALTA, this is just not right, we really need to do something. Writing our MLA’s does nothing, we need a new system. I am at a lost as to what that is, any ideas out there?

#80 steerage steward on 03.31.17 at 10:42 pm

Ahh tax time. Every year my accountant shakes her head when I have the same answer to the same question.

Being in the top 5 percentile income bracket there are multiple “tax strategies” we should implement.

I’ve traveled extensively, and seen what happens when the upper classes aren’t willing to contribute to a better society. There are much worse things then living in Canada and paying more the 50% tax. Please deduct the $100 as usual for my monthly bus pass.

#81 45north on 03.31.17 at 11:11 pm

Debt’s too cheap and too easy to get. Because Canadians have house lust but have no discipline, they’re seriously at risk. If you think government is overreaching now, just wait.

the housing bubble will end when credit is exhausted. The exhaustion of credit is something the government will direct.

The government is going to be conflicted. That’s the limit of my prophesy and poetry.

#82 Stock Picker on 03.31.17 at 11:14 pm

1) Government greed to borrow and pay union backs fat raises keep emergency rates at stupid lows for far longer than sane.

2) Government greases special interests for big campaign donations…..subsidizing bill killing windmills proving useless power at odd hours which must be paid for under idiot contracts between cronies.

3) Foreign corruption money in the hundreds of billions. CHINA SAYS YES, LOCAL GOVERNMENTS IN THE POCKET SAY NO…..who ya gonna believe.

Et voila…….bubble…..and a misdirection campaign to keep the real reasons (above) for the bubble.

#83 Cheap Houses on 03.31.17 at 11:40 pm

The Govt would not need all these “tax extreme” measures if the CRA and RCMP would simply do their JOB and bust money launderers…..but Govt not doing their job is the Canadian way.

#84 toronto1 on 03.31.17 at 11:49 pm

it seems that we have past the bar of reasonable taxation into the realm of absurdity as of late.

I cant put my finger on it yet but the speed and aggression of new taxation is something i have never seen before:

capital gains taxes on RE- those new govt regs where you have to declare if you own property- thats for taxation
all those new auditors at CRA- its about revenue capture through taxation
Carbon tax on business- complete madness
John Tory and his lets tax the Gardiner and DVP (absolute insanity) and now lets tax empty homes etc..

these are huge measures and i cant quite understand why, these are like third world style tax schemes that are a result of financial insolvency.

Are things that bad that the govt has to create all this new methods in such haste?

#85 Poloz a silver spoon puppet on 04.01.17 at 12:00 am

Reasonfirst on 03.31.17 at 7:55 pm
What do you think of this:

Poloz: “It’s not low interest rates that are fuelling speculation.”

http://ca.reuters.com/article/businessNews/idCAKBN1722KM-OCABS

—————————————————————–

Poloz is doing a job ANYONE could do . You don’t need to be educated or smart. All you need to be is part of the good old boy’s club. What does he do besides nothing? He is just another puppet for vested interests. If he really believed what he is saying then he may need mental help. I don’t think that is the case but it’s sickening to think he is so ignorant and clueless to reality. He is just another silver spoon guy that’s in the 100% Canadian club. Guys like him make me so jealous and envious of such a good and easy life they have while telling us serfs to go work for free.

#86 boonerator on 04.01.17 at 12:01 am

It would be nice if the braggarts talking about how much they made flipping houses would then hold court with stories about CRA took them to the cleaners.

Such stories might do something to cool down FOMO but I don’t expect to hear such stories anytime soon.

If governments wanted to cool house lust, a few well publicized stories about how Mr X got a $200K tax bill for that smooth move with a quick profit might give pause to people who think you can never lose money buying real estate.

#87 WUL on 04.01.17 at 12:05 am

Nice. Premier Wall of Sask buys stocks in oil companies and then comes to Alberta and offers them public monies, moving costs, tax breaks and free wheat if they move to Wascana. Haha. Another long hike in the woods for Conservatives. Forming government is hard.

http://www.cbc.ca/news/canada/saskatchewan/premier-wall-invested-in-alberta-energy-companies-he-tried-luring-to-saskatchewan-1.4050982

#88 NEVER GIVE UP on 04.01.17 at 12:10 am

#1 turn of the tide on 03.31.17 at 6:32 pm
What % of “wealthy” buyers does it take to create a buble??
I keep hearing this argument of ONLY 5%… that I would have no impact, etc, etc..
====================================
100% truth.

Although in the Lower Mainland our esteemed host seems to be in denial about the Stats put out about the Dollar Value of purchases last year when our feeble Provincial Government decided it was time to look into the matter for election reasons.

That figure was 40% of the dollar value of all purchases for a period they examined last summer as I recall.

That is an astounding figure that is certain to stir up FOMO in a tight market even if there are few people doing it. (There are many more than 5%)
No one will know the answer because now foreign purchases are hidden in corporations that are owned by Canadians with secondary documents that reveal true ownership that is not registered.

That is how it is done in Hong Kong and that is how it is done here.
I researched it myself and was offered a corporation in Hong Kong without my name on it with secondary docs to put into a safety box. The price in 1983 was USD$1000.00 per year.
I declined to do it as it was impractical for me anyway.
These law offices do this service all day long as a natural and normal way of doing business.
I had a friend from England who used the service to purchase Thai real estate. I don’t exactly know how he did it but he told me about the corporation scheme.

It is hard to understand the sheer size of the market in China. Just one city Greater Shanghai is larger than all of Canada in population. They build enough homes in China in a year to house all Canadians.

There are 13 million Vacant homes in China. That is almost enough to house all Canadians.

That figure alone is proof of a very different mindset towards housing. To the Chinese it is a commodity like a futures stock. It is a leveraged play.

To us it is a home.

In the USA Three quarters of net worth is in Financial assets. 28% is in home wealth.

In China 74.7% of wealth is in homes. And they are overvalued at the rates of 30 to 50 times yearly earnings.

Now some of the Ghost cities are demolishing towers that have deteriorated so much from zero maintenance.
Watch for much more of this.
http://www.zerohedge.com/news/2016-01-18/chinas-housing-recovering-just-ignore-10-billion-square-feet-vacant-housing

https://www.forbes.com/sites/wadeshepard/2016/03/31/what-china-is-doing-about-its-450-million-square-meters-of-unsold-housing/#287a322347b5

#89 Ponzius Pilatus on 04.01.17 at 12:14 am

Stupid Brits.
Looks like they gonna have to give over control of Gibraltar to Spain if they want the a clean Brexit.
EU has them by their balls.
Finally sunset over the mighty British Empire.

#90 Millmech on 04.01.17 at 12:42 am

#29
Bring in the NDP for your kids sake,the economy should have almost recovered by the time they’re old enough to get out on their own.
NDP will probably bring in a plan to train people to put chains on plane propellers so they can fly better through the snow.
Just remember fast ferry and the wonderful ship building industry they envisioned for us and how well that was managed.

#91 WUL on 04.01.17 at 12:43 am

Improved #s from Calgary Real Estate Board for March YOY. Trollstoy, L. is correct. The golden poppies are blooming ’round the banks of Lake Louise.* More maple??

Just slayin’.

* Byrds “Sweetheart of the Rodeo”

#92 Bcincalgary on 04.01.17 at 1:59 am

“Wet coast”. Saying “I’m gonna vote NDP for my kids”. Are you nuts? They will end up with loads of debt!! Look next door and ask any Albertan. If you want them paying more taxes and paying for taxes not on an election campaign, as well as driving out business then by all means go ahead.

#93 Sir James on 04.01.17 at 2:13 am

We need to roll back of PR capital gains exemptions of more than say $500,000 or what ever nation avrage dictates, unless of course you buy another home in same area within 1 year.

The problem is in the big cities(ie Toronto, Vancouver, …), and thats where the actions should be focused.

#94 millenial82 on 04.01.17 at 2:20 am

No hope in hell for these big City taxing machines. The Crony Capitalistic push for self driving cars is a foreshadow of some sort….just not sure what. Only Smoking Man knows I’m thinking…….

#95 Nonplused on 04.01.17 at 2:51 am

#80 steerage steward

The “upper classes” (in other words your doctor, for the most part), all ready are contributing, and much more than you are, lazy bones. Put the Xbox controller down and get a job.

50% tax is serfdom, anything above is slavery.

#96 jane24 on 04.01.17 at 2:57 am

Well here in Britain the govt wants to encourage us to save more so are increasing the yearly limits on our Tax Free Savings Accounts (ISA) These are the same as Canadian TFSA accounts. One can invest in bonds, stocks or gilts with after taxed money but without paying any further tax on gains.

The new yearly limit is an incredible £20,000 or $33,400 per person. So hubby and I can tuck away $66,800 this year in tax free investments. We invest in share unit trusts. No-one here is worrying about how this helps the rich. The ads on TV encourage even the poorest to set up an account and build it up over time.

Yes I do know that this move allows the govt to know what you actually have but hey milk it for now. The Canadian limits are pathetic. Why not protect money that has already been taxed once. Encourage the work ethic.

#97 willworkforpickles on 04.01.17 at 3:26 am

Investors, those willing to buy the public debt are going to be fewer in number from here on out, less willing to finance federal debt unless compensated with higher gains. Debt financing will have to be and is going to be greatly increased in the western world just to keep those countries afloat.
Expect interest rates to return to historical norms before the end of the decade to pay for it all. Expect 5 year mortgages in the 8 percent bracket then.

#98 steerage steward on 04.01.17 at 3:41 am

better society

I just bought a $400k property without doing any research. It’s ok my parents covered it.

When I asked them about debt, they said I had nothing to worry about

#99 steerage steward on 04.01.17 at 4:08 am

https://www.youtube.com/watch?v=WFTP4Xj9Q-s

http://business.financialpost.com/legal-post/supreme-court-of-canada-upholds-use-of-general-anti-avoidance-rule-against-li-familys-copthorne-holdings-unit

#100 steerage steward on 04.01.17 at 4:15 am

Ghettos are are the all over the world, they stink.

#101 A Reply to #68 Jetfixer on 04.01.17 at 6:32 am

#44 Mortgages in Arrears

Thanks for the article. I didn’t realize that mortgage defaults are a lagging (not a leading) indicator of a housing market crash. It makes sense: Defaults should only occur when homeowners have fewer liquidity options in a falling housing market or when interest rates start rising.

#102 dr. talc on 04.01.17 at 7:12 am

wynne has 11% support?
all on payroll
was H better?
there’s only one side, all politicians must salute the false flag of lies

People are waking up:
it’s not Russians, Muslims and Mexicans that are pushing LBGT, green, multi cult and climate agendas

#103 AK on 04.01.17 at 8:16 am

#40 DR HO on 03.31.17 at 8:23 pm
“The truth is the housing bubble is a multifaceted problem that requires a multifaceted answer such as:
Foreign buyers tax, speculators tax, higher interest rates etc. ”
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Or, just let the market sort itself out.

A combination of, lack of buyers and higher Interest rates will do the trick.

#104 Bytor the Snow Dog on 04.01.17 at 9:54 am

NS Guy sez:

“Nope. When the national, provincial and municipal deficits and debts are reduced to zero, then society will have achieved something closer to a balanced tax system.
Until then, taxes are too low. Someone earning under $100k/year is in no position to pay more taxes. Therefore, the wealthiest 1% must pay more taxes…”

Or the government could simply spend less.

#105 X on 04.01.17 at 10:33 am

re post #96 – WOW…how awesome it must be to have that amount of potential for a TFSA….even if you don’t have the money now….(most here in Canada just seem to have jealousy over what they don’t have)….the contribution room would be great to have for life events like downsizing your home, an inheritance etc…..

#106 Curt on 04.01.17 at 10:34 am

It seems these new taxes are a little late to the table?! Look at all the tax-free windfalls that have been made over one of the greatest run-ups in property values ever seen in our country. Now that the bubble is starting to run out of steam, they bring in a new capital gains policy that should give everyone a nice capital loss deduction on the way down. That should do wonders for government coffers…

#107 Armando on 04.01.17 at 10:58 am

“Always remember that Ottawa has a giant weapon called GAAR – the General Anti-Avoidance Rule. This gives the CRA the authority to tax in any circumstance where it considers a taxpayer has taken action simply to avoid taxation.”
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What the hell? That’s loony! I’m just wondering when Garth will come to his senses and move to Florida!

BTW – What causes bubbles in Canada is the same thing that causes bubbles everywhere: Monetary manipulation by Central Banks. One of the most important economic prices in an economy is the price of credit! Manipulate that and you create all kind of imbalances, projects that aren’t viable are suddenly made viable, people that would be saving are suddenly consuming, and the prices of real and financial assets levitate.

#108 crowdedelevatorfartz on 04.01.17 at 11:02 am

@#82 BCincowtown
“They will end up with loads of debt!! Look next door and ask any Albertan. If you want them paying more taxes and paying for taxes not on an election campaign, as well as driving out business then by all means go ahead.”
********************************************

I totally agree with “Wet coast” for voting NDP in BC in the approaching election.
Just as the voters in Alberta’s last provincial election couldnt stand the stench of a lazy, incompetant, corrupt conservative govt that had been in power way way too long and had squandered billions.
BC voters have had enough.
The liberals have been in power for almost 20 years and the provincial debt has ballooned like a rotting whale carcass on a hot summers day at Kits beach.

The myth that the BC NDP are fiscally incompetant cant hold a candle to the gross incompetance of the BC Liberals.
NDP:
Fast Ferries estimated 100 million , Cost $450 million

Liberals:
How have they increased the provincial debt 1335% since coming to power?
Lets take a brief look shall we.

Fast Ferries sold for 19.5 million ( less than their scrap value) to Abu Dhabi where they still run today…

Site C Dam estimated 6? Billion, Cost 10, 20 billion? We dont know because they have an open contract to build a dam locals dont want and industry doesnt need ( electrical consumption rates have dropped over the past 15 years).

Alex Fraser Bridge est. 900 million . Cost 2 billion
BC Place Roof “Upgrade” est $365 million cost $515 million
Vancouver Convention Center est $495 million . Cost $950 million
2010 Olympics est $600 million . Cost $2.5 billion
Port Mann Highway expansion est $600 million. Cost 3.3 billion

We wont bother with other Liberal largesse such as the sale of BC Rail and the Christmas Eve police raid on the legislature resulting in a trial which was stopped immediately before all the people involved were about to testify and a $6 million dollar payout to all the lawyers involved shut everyone up.
Gee, why DID Premier Campbell resign his leadership at at same time as the trial. We’ll never know…….

Or the bloated beaurocracy that ICBC has become . Haveing billions taken from its bottom line to pay for govt debt.

No BCinCowtow. The Liberal myth of fiscal prudence is nothing more than spin.
The NDP in BC couldnt burn garbage bags full of $20 dollar bills for 100 years and waste the mountainous pile of cash the BC Liberals have burned on their way to the bottom.

Hopefully voters have had enough and the BC Liberals will deserve everything thats coming to them on May 9th

#109 Ponzius Pilatus on 04.01.17 at 11:55 am

Driving through Burnaby’s and Vancouver’s south side, I can’t believe the number of new Highrises going up.
Massive construction. Cranes blocking the sun.
Wonder will this ever stop.
Then into Richmond. The same.
Insanity?
Or is there a master plan?
At the point where it just numbs you.

#110 TurnerNation on 04.01.17 at 12:00 pm

Which guest blogger will Blog Dogs be gnawing on today >:-0

#111 Ponzius Pilatus on 04.01.17 at 12:02 pm

Over the border, a different story.
Bellingham is in decay. Bellis Fair has lost it’s luster.
Victim of unfavorable exchange rate.
Most voted for Trump.
Far to way out for him to care.

#112 Lee on 04.01.17 at 12:06 pm

There are way more than 286000 Canadians who are wealthy if you include real estate. By that measure there may be 286000 in the GTA.

The reference was to taxing the wealthy. You tax income, not assets, and there are 286,000 Canadians in the top tax bracket (over $225,000 income). — Garth

#113 jay on 04.01.17 at 12:14 pm

Get out and buy that Prius ,Vancouver average gas price $1.38 L . http://vancouver.gasbuddy.com/

#114 The Wet Coast on 04.01.17 at 12:24 pm

#92 Bcincalgary

No I am not nuts only pragmatic. Once a party has been in power to long it looses focus, and its purpose becomes staying in power. Having grown up in Alberta I see the Alberta NDP as part of that process. The provincial Conservative party in Alberta is a case in point. Really hard to argue that after Klein they believed in anything other than power. So you have to put up with NDP crazies for a few more years, then Jason will take the helm for 10 or so years, and hopefully the next leader will renew the party. So likely better overall. The problem in BC is the Provincial Liberals have been in power too long, and are actually hurting the Province. Leadership is a rare quality in politics, but it becomes rarer the longer a party is in power. Term limits are an obvious solution, and even proportional representation. Until that happy day, our only way to get governments out so they can renew is to take radical and illogical steps. Hence I intend to vote NDP even though I have as much in common with NDP as a fox does with a fish.

#115 Damifino on 04.01.17 at 12:25 pm

#103 AK
#104 Bytor the Snow Dog

You’re both making too much sense.

#116 neo on 04.01.17 at 12:38 pm

https://ca.finance.yahoo.com/news/bocs-poloz-says-rates-not-fueling-housing-speculation-180611222–sector.html

This is the greatest fool. He needs to be fired. He is so detached from reality he is starting to sound like Iraq Information officer.

#117 confused on 04.01.17 at 12:55 pm

I have been trying to get my significant other to read this site – she really wants to buy house! I have no idea why. We have no money invested anywhere (even scary stocks/mutual funds/snake-oil) but putting everything into one illiquid asset makes perfect sense to her!!!!

#118 AK on 04.01.17 at 1:46 pm

#112 Lee on 04.01.17 at 12:06 pm
“There are way more than 286000 Canadians who are wealthy if you include real estate. By that measure there may be 286000 in the GTA.”
——————————————————
The reference was to taxing the wealthy. You tax income, not assets, and there are 286,000 Canadians in the top tax bracket (over $225,000 income). — Garth
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I thought that everyone on this blog made over $400,000.00. :-)

#119 Tower on 04.01.17 at 2:03 pm

I thought that everyone on this blog made over $400,000.00. :-)
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Only 400k? Peasant.

#120 Don P on 04.01.17 at 8:31 pm

#82 bcincowtown
#108 crowdedelevatorfartz

Don’t forget the indebtedness of BC Hydro for Run of River power projects and the like that may not be tied into the grid for decades…because BC Liberals thought oil and gas prices were going to the moon and would support expensive Run of River projects.

Some analyses of the amount of Run of River and related indebtedness arrive at $76bn

$15,000 per man woman and child in BC?

Meanwhile my hydro bill for the same house & level of usage went up 400% in 10yrs.

http://m.marketwired.com/press-release/editorial-exclusive-how-bc-hydro-wound-up-76-billion-in-debt-2104608.htm

#121 crowdedelevatorfartz on 04.01.17 at 8:55 pm

@#119 Tower-ing
“Only 400k? Peasant.”
*********************************************
Ahahahahaha. Good one.

#122 AGuyInVancouver on 04.02.17 at 3:33 am

Garth, what choice does CRA, the Feds and provinces have when the Poloz and the BoC refuse to raise rates despite the fact the Canadian economy, with unemployment just over 6%, is doing quote well?