Just try it

Eighteen months ago the federal government started to track your house. Everybody’s house, actually, whenever it’s bought or sold. Originally the move was clad in language suggesting it was some kind of mechanism to keep tabs on evil foreigners. But now we know better. It’s a step on the path which could lead to the taxation of capital gains on principal residences or, at the least, a levy on speckers and flippers who live in houses for a short period of time.

On Monday more evidence of why. Ottawa published its latest book of ‘tax expenditures’ showing that the government lost $7.1 billion in revenue last year by letting people keep the profits they made selling their homes. That’s huge. Compare it to the $1 billion that TFSAs ‘cost’ the government. Or just $115 million to finance all the registered education savings plans for kids. Or the $8.6 billion in tax not collected because of RRSP contributions made in 2017.

And here’s the government’s justification for not taxing profits on houses the same way it taxes gains in the value of your stocks or ETFs:

This measure recognizes that principal homes are generally purchased to provide basic shelter and not as an investment, and increases flexibility in the housing market by facilitating the movement of families from one principal residence to another in response to their changing circumstances

Well, we all know that’s a crock. In Canada’s largest cities real estate has become not only the opiate of the masses, but the common dude’s one-asset investment, financial and pension strategy. As mentioned here in the past, 14% of all GTA families own more than one property, for example. This underscores the fact that housing is where most people put most of their net worth. They leverage themselves to the gills and ‘play’ the housing market. Half of all the condos sold last year went to ‘investors’ who may decide to move in a for a while so they can game the tax system. Real estate’s an addiction, not basic shelter.

Of course, the man knows that. Hence the October, 2016 change requiring you to report any transaction regarding your home. It’s on Schedule 3 of the tax return. If you don’t fill it out the penalty could amount to $8,000. Worse, if you fail to report that you sold a house and made money, the entire profit could be subject to capital gains tax. Sucks.

Here are a few other points to remember: if you owned a home jointly with your squeeze, then each of you must report 50% of the proceeds on your returns. Also, if you rented your house out for a while, then capital gains tax could be applicable upon selling it. There’s a actually a formula to figure that out:

(# of years home is principal residence + 1)  x capital gain
_______________________________________
# of years home is owned

You can designate a cottage (or a boat, or RV if you’re really weird) as your principal residence. But remember only a single PR can be designated in any one year, so choose the property that has appreciated the most. Gains on any others will be taxable for that year.

Also be aware that not all of the property you inhabit as a PR can escape tax. People in the country on 2- or 5-acre lots, for example, are often shocked to learn the exemption applies to only half a hectare (about 1.2 acres) of land. The rest is fair game for Mr. Fairness to whack.

Husband and wife can have only a single principal residence between them (years ago each could claim one). When selling, in addition to Schedule 3 you also must fill out a form disclosing how long you’ve owned the property and what you received (plus any years you rented it out). This is statistical gold for the feds, allowing a massive database to be built, establishing the foundation for future revenues. If you think they’re going to let $7.1 billion dollars fly out the window every year, think again. The moisters believe everyone with a house is rich.

If you sell and lose money on the deal (lots of that starting to happen), the loss is not tax-deductible. You eat it. If you rent out a portion of your home to earn income, the other portion will result in a tax bill when you sell. But there is an exception – a way to ensure you can have a tenant and still retain full PR status on the property. Here’s what the CRA says:

We will consider the entire property to maintain its nature as a principal residence in spite of the fact that you have used it for income producing purposes when all of the following conditions are met:
* The income producing use is ancillary to the main use of the property as a residence.
* There is no structural change to the property.
* No capital cost allowance is claimed on the property.

So, rent your basement, if you want, but you can’t build a separate outside entrance to the suite, or put in a bathroom in order to lease it. And be careful about what the CRA calls a ‘change in use’ when you decide to take in a tenant. That’s considered a phantom sale of the property and “you are considered to have sold the property at its fair market value and to have immediately reacquired the property for the same amount. You have to report the resulting capital gain or loss (in certain situations) in the year the change of use occurs. If the property was your principal residence for any year you owned it before you changed its use, you do not have to pay tax on any gain that relates to those years. You only have to report the gain that relates to the years your home was not your principal residence.”

Of course you have to report all funds received (taxed fully as income) but you can rent your house out for four years (or maybe longer) and still have it considered a PR in certain circumstances – like getting a job more than 40 clicks away.

By the way, Ottawa’s ‘tax expenditures’ document this week is forecasting a 13% drop in the missed revenue on houses in 2018 and a further decline the year after. Do they expect prices to fall that much, or is there something else in store for us?

158 comments ↓

#1 ABB on 04.17.18 at 5:18 pm

Premiere!!

#2 For those about to flop... on 04.17.18 at 5:23 pm

Recent Sale Report/Realtor Assistance Needed.

This house in Richmond sold 19 days ago.

They paid 1.77 and were asking 1.99 with the lowly assessment of 1.59

They were holding out for a 5% or so gain after expenses but might have been happy to settle for a Pink Draw in the current environment.

A lot of houses in the area have been going well below ask ,but these guys needed to get a certain number.

Did they get it…

M43BC

3100 Blundell Rd,Richmond

Paid 1.77 January 2017 ass1.59 asking 1.99

Sold on the 29th March 2018 for ?

https://www.zolo.ca/richmond-real-estate/3100-blundell-road

#3 For those about to flop... on 04.17.18 at 5:24 pm

This house in East Van just took 250k off despite being at the shallow end of the pool with their speedos on.

The more this happens the less pressure on the bottom end of the market.

The didn’t have much patience after tasering the price after 40 days on the market.

It is assessed at 1.18 and they can afford to buzz the price as no recent sales.

They are most likely going to try and get a developer in a corner and then stun them.

Maybe both sides will be shocked…

M43BC

2018-04-16 : $998,000
2018-03-06 : $1,250,000

https://www.zolo.ca/vancouver-real-estate/6174-bruce-street

#4 TurnerNation on 04.17.18 at 5:25 pm

Hearing lots of Toronto homes with wet basements after this recent torrent of cold liquid slop.
Most of these 100 year old SFH and slanty semis should be torn down. End of lifespan.
Yours at only 1-1.5 million.

#5 Fill me in on 04.17.18 at 5:30 pm

“Do they expect prices to fall that much, or is there something else in store for us?”

Who’s going to help a lost guy with the meaning?

#6 TurnerNation on 04.17.18 at 5:39 pm

Guaranteed Minimum Income handout to apparently cost 76 billion. Guess where it’s to come from anyway.
People who dare work and buy and sell.
Why, crime pays.

Tune in turn on and drop out…of Kanada.

#7 Neil Freemont on 04.17.18 at 5:40 pm

Too complicated. I’m just going to rent for as long as I can and enjoy a simple lifestyle. Courts and lawyers must love these new laws though. More work for them $$!

#8 Guy in Calgary on 04.17.18 at 5:40 pm

What if the property you principally live(d) in is a duplex with half rented out?

Do you pay capital gains on a percentage for example:

square footage used for rental/total square footage = % of proceeds to be taxed as cap gain?

#9 BC West on 04.17.18 at 5:41 pm

Hey Garth – can a vacant piece of land count as a principle residence? My wife and I rent, but we own a vacant piece of property that we might like to sell. The vacant property is the only real estate we own.

No. – Garth

#10 Fish on 04.17.18 at 5:43 pm

Thankyou Garth

#11 crowdedelevatorfartz on 04.17.18 at 5:49 pm

The tax man cometh.
Flippers, and specc’rs beware.

#12 TheSpangler on 04.17.18 at 5:51 pm

Bring this one, the PR exemption has been abused for too long and really makes no sense.

#13 mitzerboyakaQueencitykidd on 04.17.18 at 5:55 pm

wow
whata great dog pic

#14 Honey Dripper on 04.17.18 at 5:57 pm

People in my family rent out rooms in their house for income and also Smith Manoeuvre. I don’t get it.

Most have no financial assets outside of savings accounts and houses. I would much rather build a

‘Great Fool Balanced Portfolio’ tankyouveddymuch!
It’s just a helluva lot more fun to.

#15 Bob Dog on 04.17.18 at 5:58 pm

Wow that a complicated mess.

Looks like money laundering is still the crime of choice in canada. Its perfectly legal in Vancouver. I assume the governments allows it in other parts of the country as well. The only requirement is that you are not Canadian while laundering your ill gotten gains.

#16 Reynolds531 on 04.17.18 at 5:58 pm

Well in the news today, Canada is no longer turning away immigrants that are likely to have significant health care costs.

We WILL have to pay for THAT somehow, why not have the rich homeowners pay?

#17 smartalox on 04.17.18 at 5:59 pm

It’s been a while since I had a mortgage, but aren’t mortgages paid with after-tax dollars? Isn’t it double taxation to tax capital gains as well as income used to make mortgage payments?

Or does this mean that Canadians will get some measure of mortgage interest deduction, like they do in the US, where capital gains from real estate are taxed.

Of course mortgage deductibility played a major contribution to the speculative frenzy that led to the major crash in the US, as it incentivized large mortgages, high leverage, while maximizing cash flow.

Still, the tax bite declines the longer you live in the property.
It looks like a lot of Canadians who hyper-extended themselves to occupy the first rung of the property ladder, may be staying for quite some time.

#18 Reynolds531 on 04.17.18 at 6:02 pm

If they do announce they are starting to tax gains on principal residences, it would easily be worth selling to a family member for 90 days then buying back. Even if it cost 10k!

That assumes of course we get some warning.

#19 FOUR FINGERS WATSON on 04.17.18 at 6:02 pm

Half of all the condos sold last year went to ‘investors’ who may decide to move in a for a while so they can game the tax system. Real estate’s an addiction, not basic shelter.
…………………….

Interesting numbers. 14% of GTA families own more than one property. If 50% of condos were sold to “investors” i wonder how many were sold to foreign “ investors”……..I would also like to know what the GVRD numbers show.

#20 Rightwing Canadian Millenial on 04.17.18 at 6:07 pm

The dog sure knows his place. I wonder what else he does tonight.

#21 Flush it on 04.17.18 at 6:11 pm

All these CRA boxes to tick and schedules to fill out is just too little too late. I know way to many housing investors who literally made millions over the past 15 year bull market and NOT ONE paid a single dollar in tax when selling a property. NOT ONE!

Of course they used wary dubious strategies to avoid tax but it is what it is and more common than not. It was very successful for these families’ net worth and none of them need to flip another house again.

Too little too late. Flush this country down the drain.

#22 Millennial falcon on 04.17.18 at 6:19 pm

So, if i have a home and made a legal basement apartment with seperate entrance. And charge 1000 dollars a month for it. What is the tax situation on the pr?
I already report the 1000 per month as income. But what about when i want to sell the house

#23 Andrewski on 04.17.18 at 6:20 pm

Re: ABB
Elle ne jouit jamais en premier!

#24 crdt on 04.17.18 at 6:22 pm

Real estate has been an amazing revenue pump for the government. If they want to maintain the flow, they will need to come up with other strategies then ancillary sources, they need to go to the source….

#25 Equality of Taxation on 04.17.18 at 6:25 pm

#5 smartalox on 04.17.18 at 5:59 pm
It’s been a while since I had a mortgage, but aren’t mortgages paid with after-tax dollars? Isn’t it double taxation to tax capital gains as well as income used to make mortgage payments?
—————

Substitute for….

Its been a while since I had a balanced portfolio that invests in stocks and bonds, but aren’t portfolios paid into with after tax dollars? Isn’t it double taxation to tax capital gains on my portfolio and the income used to create it through regular contributions?

Not so smartalox now…

Why should houses be the only asset class not taxed like any other financial vehicle? Even before the use of homes as investment vehicles, the inflationary growth in houses should have been taxed especially given the leveraged gains.

#26 bdwy sktrn on 04.17.18 at 6:31 pm

just saw the bike on a trailer pic.

what’s the deal? is it from last fall?

it’s time to be bringing them out, not taking them away.

or is it a police impound? (prob not as that thing looks hot but can’t go very fast!!!)

#27 paul on 04.17.18 at 6:32 pm

8 Reynolds531 on 04.17.18 at 6:02 pm

If they do announce they are starting to tax gains on principal residences, it would easily be worth selling to a family member for 90 days then buying back. Even if it cost 10k!

That assumes of course we get some warning.
—————————————————————–
Yes, you will have 14 days. lol

#28 RentYVR on 04.17.18 at 6:41 pm

So government favours real estate (at least in terms of tax advantage) above all other asset classes. Always have and always will. Why? Becuase homeowners vote. And unless we get a federal NDP government (yuck) this won’t change.

#29 Leftover on 04.17.18 at 6:45 pm

Good, I’m glad to hear that the feds are finally getting serious about capital gains tax evasion on housing. It’s about time.

#30 Whatcha Minnie on 04.17.18 at 6:47 pm

It’s incredible how much a simple thing like being lost in a forest for ten minutes will affect your outlook on life. Things like not being able to find your way back to where you came from make you appreciate the little things in life. Looking back on the day, I realize now that it was fate. Moments like that are few and far between and should be taken as a lesson. Surprises like this were, and always will be, an unexpected gift for all.

#31 Ronaldo on 04.17.18 at 6:49 pm

#9 BC West on 04.17.18 at 5:41 pm

Hey Garth – can a vacant piece of land count as a principle residence? My wife and I rent, but we own a vacant piece of property that we might like to sell. The vacant property is the only real estate we own.

No. – Garth
—————————————————————
What if you pitch a tent on it and live in it?

#32 in politics there are No accidents on 04.17.18 at 6:51 pm

1, M puts PR declaration on tax forms
2, specks, flippers and investors abandon the condo market
3, to compensate for a 50 percent drop in sales
a new pool of buyers is needed to appease big developers
4, Enter Jeremy Rudin
5, stress test for everyone

#33 YVR - 60% crash! on 04.17.18 at 6:51 pm

“It’s a step on the path which could lead to the taxation of capital gains on principal residences or, at the least, a levy on speckers and flippers who live in houses for a short period of time. ”

Sound fair enough for me. I have no problem with that.

#34 Reality is stark on 04.17.18 at 6:51 pm

Sucking money out of housing is easy. You simply start doubling property taxes.
The feds will slow down transfers to provinces, but heavily indebted provinces will slash transfers to municipalities much more quickly.
The government will get your money. Remember it’s their money not your money. They have the army.

#35 Victor V on 04.17.18 at 6:53 pm

Poloz to set tone for future rate increases

https://www.bnn.ca/poloz-to-set-tone-for-future-rate-increases-1.1059493

Almost nobody expects Bank of Canada Governor Stephen Poloz to increase interest rates at a policy decision Wednesday, but attention will turn to clues for the timing of the next hike as the central bank tries to steer an economy that’s beginning to run up against capacity.

All but two of the 23 economists surveyed by Bloomberg, including those from the country’s largest banks, predict the benchmark interest rate will remain unchanged at 1.25 per cent. The central bank will also release new quarterly forecasts along with its decision at 10 a.m. in Ottawa, followed by an 11:15 a.m. press conference by Poloz and Senior Deputy Governor Carolyn Wilkins…

…All bets are off for May, however. Odds of a rate hike are closer to 50 per cent, compared with 20 per cent for Wednesday’s meeting, swaps trading suggests. Even if the bank reduces its estimate for 2018 growth, that doesn’t change the fact the rate of expansion remains faster than the rate of potential growth — currently forecast by the bank at 1.6 per cent.

#36 Loonie Doctor on 04.17.18 at 6:57 pm

Staying married sure is expensive from a tax standpoint. If I got divorced, then my newly minted “friend with benefits” and I could income split again and have two principle residences.

#37 Debtslavecreator on 04.17.18 at 6:57 pm

The game’s so obvious
The rules are purposely made so complex and increasingly grey that over the next 10 years the vast majority of taxpayers with any investments, small&medium size businesses will get audited and it is very likely that most will be hit with a massive assessment that a staff member will happily issue knowing they’re performance review and bonus will be better and most tax payers cannot fight back
This trend has been well in gear for years now and many innocent and law abiding tax payers are going to be ruined
Yes your imaginary house gain will be taxed despite being paid off with after tax dollars and one day maybe in the mid 2020s when your house has finally surpassed the 2017 prices you’ll be paying double for property tax and about 1000/week for basic cheap groceries at no frills
It is very concerning

#38 Ronaldo on 04.17.18 at 7:02 pm

#22 Millennial falcon on 04.17.18 at 6:19 pm

This may answer your question.

http://www.moneysense.ca/spend/real-estate/income-properties/principal-residence-exemption-rental/

#39 For those about to flop... on 04.17.18 at 7:02 pm

This is the next big thing going on in my hood.

Cambie Gardens.

25.4 acre site

2160 condos

It is architecturally amazing.

Somewhere in-between all the condos in this massive complex the architects found space for a 25 meter pool…

M43BC

https://www.buzzbuzzhome.com/ca/cambie-gardens

http://vancitycondoguide.com/cambie-gardens-vancouver/

#40 Mark on 04.17.18 at 7:04 pm

“#21 Flush it on 04.17.18 at 6:11 pm
All these CRA boxes to tick and schedules to fill out is just too little too late. I know way to many housing investors who literally made millions over the past 15 year bull market and NOT ONE paid a single dollar in tax when selling a property. NOT ONE! “

Do your patriotic duty and turn ’em in:

https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/suspected-tax-cheating-in-canada-overview.html

#41 NOSTRADAMUS on 04.17.18 at 7:04 pm

CRUSHING SAVERS AND RETIREES !
George Orwell once wrote, that in the time of universal deceit, telling the truth is a revolutionary act.
There has never been an interest rate that no borrower in America has ever seen and that no free market would ever produce. How do you defend slashing the purchasing power of workers pay cheque and transferring wealth from retirees to the banks worshipping a tiny interest rate no one can see? Question . Do banks share information, and if so, do they go in hard if there is even a remote possibility of a problem? Closer to home. All the front line bank employees I see are in complete panic as extreme sales targets are kept the same for credit exposed positions. Banks are reducing and making it very hard for employees to make a bonus or keep a job. They are setting up the staff to resign or be fired within 6 to 12 months. No happy faces at the tellers cage. Work conditions I hear are worsening, fear, anxiety and being treated with contempt is the norm. And sadly, most of the staff are in as much debt as the tapped out debt slaves who never stop rattling their cages with tears the size of horse balls looking to borrow more. The teller of truth in the land of gypsies, tramps and thieves.

#42 Batista on 04.17.18 at 7:05 pm

The language of the CG provision re: renting out a part of your principle residence is so confusing. I have been wondering for years whether renting out my basement is even worth it if I’m going to have to pay CG on the half of the house that I rent out.

Given the price of the whole house has nearly doubled, all the rental income will probably be wiped out by CG that I wouldn’t have had to pay if I just lived in the whole house myself.

What looked like a savvy move is starting to feel like I just gave up half my house and the annoyance of renters for nothing. Ugh.

#43 Camille on 04.17.18 at 7:08 pm

So the government may tax my home. And my home is a condo which is really an apartment. And I won’t resist because I’m not selling yet. And maybe it will be progressive, so I won’t know what to do?

#44 young & foolish on 04.17.18 at 7:13 pm

So, your digital data has been collected and now you are prone to be targeted by political ads …

red herring?

#45 JTZ on 04.17.18 at 7:14 pm

Accountants note here – you’ll want to allocate the exemption to the property that has had the greatest PER-YEAR appreciation first and then allocate the remaining years to the other property. For example, if Property A has appreciated $10K in one year and Property B has appreciated $20K over five years, Property A will have the greater annual appreciation so you’d allocate the PRE to that property for one year and then allocate the remaining years to Property B.

#46 Rexx Rock on 04.17.18 at 7:17 pm

Here in Victoria many homeowners rent out rooms to international students.One lady I know charges $850 for three international students for 8 months,$20,400 not bad and no tax to pay for a year.Thousands of homeowners here in Victoria and Vancouver have been to doing this for years.Good times for them!

#47 young & foolish on 04.17.18 at 7:18 pm

It seems the Government and Facebook, along with every other entity, is happy to collect as much information about you as possible …

#48 Chaddywack on 04.17.18 at 7:20 pm

@3 flop-First SFD home I’ve seen in Vancouver in years that is below $1M. Don’t even need a 20% downpayment.

@15 Bob Dog-In addition, non-Canadian PRs will soon be able to vote in Vancouver! (wonder what the motivation is….) I was SHOCKED to read that. There’s no point being a citizen anymore.

https://globalnews.ca/news/4150131/vancouver-city-council-looks-to-allow-permanent-residents-to-vote-in-municipal-elections/

#49 Ace Goodheart on 04.17.18 at 7:20 pm

They’ll never capital gains tax the sale of a principal residence.

Reason is simple. If you do that, then you lock people in their houses, without the ability to move. Move, sell your house, and you lose a large chunk of money to capital gains tax, and then you cannot buy another house (because you don’t have enough money). That would be in addition to the land transfer tax and real estate commission on the sale of the house.

Doing that, would be anti-mortgage and anti-bank, and governments and banks have always been in bed together.

They want you to sell your house, move up, get a bigger mortgage, borrow for renovations, sell again.

Why? Because it keeps people working. Lock everyone in their houses, with a huge tax if they dare to move, and you get two immediate results:

1. People stop selling houses, and instead pay them off.

2. People stop buying houses, because no one is selling.

That means no new mortgage initiations, no “move up” buyers, no one working long hours to pay off their massive mortgages, people just stay where they are, in the Cuban way, and enjoy their lives rather than working themselves to death to pay for ever larger houses in ever more popular neighbourhoods.

And no one pays taxes and interest anymore. Which means the end of governments and banks (who earn all their money off of taxes and interest).

Governments and banks are in bed together for a reason. To keep everyone working, so they keep paying taxes and interest.

Putting a capital gains tax on a principal residence is counterproductive to that goal.

#50 Willy on 04.17.18 at 7:24 pm

“Half of all the condos sold last year went to ‘investors’ who may decide to move in a for a while so they can game the tax system. Real estate’s an addiction, not basic shelter.”
__ __ __ __ __

Agreed, I wonder how many condo renters will be given their notice in the next few weeks as savvy sky-box speckers see the writing on the wall?

What is the time frame required to turn a sky-box all liquid?

How long does it take, on average, to punt a subsidized tenant?

Of course, greed is an irrational beast. There will be flocks of Greater Fool’s proudly perched aloft on their sky-box “investments” who happily ride this market right to the bottom, condo fees in hand!

#51 Suburban Bob on 04.17.18 at 7:34 pm

Garth, I don’t get your formula.

Let’s say I rent out a place for five years, which after ten years has a $100,000 value increase. Five of those years it was a principal residence.

So 5 + 1 x $100,000 = $600,000

$600,000 / 10 years = $60,000

So I’d have to pay capital gains on $60,000? Seems high.

At an inclusion rate of 50% of that? So $30,000 x maybe 30%?

I can see why accountants and lawyers will make dough from all this!

#52 young & foolish on 04.17.18 at 7:43 pm

Ace Goodheart #49 makes a good point … but who says governments make good decisions?

#53 Ronaldo on 04.17.18 at 7:45 pm

#42 Batista on 04.17.18 at 7:05 pm

The language of the CG provision re: renting out a part of your principle residence is so confusing. I have been wondering for years whether renting out my basement is even worth it if I’m going to have to pay CG on the half of the house that I rent out.

Given the price of the whole house has nearly doubled, all the rental income will probably be wiped out by CG that I wouldn’t have had to pay if I just lived in the whole house myself.

What looked like a savvy move is starting to feel like I just gave up half my house and the annoyance of renters for nothing. Ugh.
—————————————————————
Your right. Many people are going to be in for a big surprise going forward. Especially those who bought the big McMansion with the laneway house.

#54 Mark on 04.17.18 at 7:45 pm

“but attention will turn to clues for the timing of the next hike as the central bank tries to steer an economy that’s beginning to run up against capacity.”

Run up against capacity? Seriously who comes up with that crap? Most of our new college grads outside of healthcare can’t find jobs. Part time job quality is crappy. 2/3rds of Canada’s engineering talent is underemployed per the OSPE. Yet central bankers and economists actually think the Canadian economy is “beginning to run up against capacity”? Good grief, are our ‘leaders’ really that out of touch with reality? And this is before there’s a major employment dump due to the inevitable slowdown in the construction and RE supply industry on account of falling RE prices with little to replace such in the Canadian economy.

Next BoC move will probably be a cut, not a hike. The yield curve is basically flat, inflationary pressure is dead, and guess where those Chinese goods that are increasingly being subject to exclusion and tariffs in the United States will end up? Yes, flooding into countries like Canada. Same deal with Canadian production that increasingly won’t be needed with a slowing US economy.

#55 Frito on 04.17.18 at 7:47 pm

If your interpretation is correct, I can see that the future holds substantially fewer rental properties everywhere in Canada. Complete disincentive to property owners to become landlords. Not worth the headache or tax consequences IMHO.

#56 You know Val on 04.17.18 at 7:55 pm

What will the government do if you own a home then you buy a piece of land and build a house on it ….put your moister kid inside the house for one year and then sell for a profit ….are you taxed ?how will the government know what happen? Lots of people doing that .

#57 Flush it on 04.17.18 at 7:58 pm

#40 Mark on 04.17.18 at 7:04 pm

Do your patriotic duty and turn ’em in:

——————————————————

I actually laughed at that one Lol Good post : )

As for the CRA, those gangsters did nothing with that treasure trove called the “Panama Papers” so I’m willing to bet that they will do nothing with the tax cheat hotline accept go after a few small fish who can’t fight back. It is a pathetic organization and likely never had sound morals since it’s inception.

#58 Boarding Houses on 04.17.18 at 7:59 pm

#46 Rexx Rock on 04.17.18 at 7:17 pm
Here in Victoria many homeowners rent out rooms to international students.One lady I know charges $850 for three international students for 8 months,$20,400 not bad and no tax to pay for a year.Thousands of homeowners here in Victoria and Vancouver have been to doing this for years.Good times for them!

————–

And that is why the CRA has an anonymous tips line that allows neighbours to report on tax evasion.

I have known colleagues in those two cities that have been audited because of an anonymous tip from a disgruntled neighbour. They have also faced inspections from the city because of disgruntled neighours and former ‘students.’

When you rent your house out room by room, that is a ‘boarding house’ – which contravenes local bylaws in most cities. Bylaw enforcement officers show up after gathering evidence from the neigbours and viola, a stop order is given.

Perhaps its cathardic to take action through anonymous reporting instead of seeing willful tax evasion….I would not want to be on the end of an audit because the CRA will always find something.

#59 FOUR FINGERS WATSON on 04.17.18 at 8:00 pm

#30 Whatcha Minnie on 04.17.18 at 6:47 pm
It’s incredible how much a simple thing like being lost in a forest for ten minutes will affect your outlook on life. Things like not being able to find your way back to where you came from make you appreciate the little things in life. Looking back on the day, I realize now that it was fate. Moments like that are few and far between and should be taken as a lesson. Surprises like this were, and always will be, an unexpected gift for all.
………………………..

It is amazing how your life has turned around. Just last year your last psychiatrist comitted suicide and the one before that is still in jail for attempted murder. I am amazed at the way you have bounced back. Is Uncledad still in the slammer ?

#60 Dog in The Fight on 04.17.18 at 8:13 pm

I thought I would throw out this red meat to my fellow deniers. I can across this today, and if it’s true it’s really funny. “Thermometer records have only existed since the 1850s, and were only recently distributed throughout the globe. As a result, scientists have had to get creative to reconstruct the temperature record, developing proxies such as grape harvest times in Europe, or the compositions of sea shells in the ocean. A 2012 paper collated 173 different measurements, and their average accurately tracked thermometer measurements over the past century, yet extend backwards even further.” So I am in Victoria today and plan to head down to the beach and retrieve some temperature calibrated sea shells.

#61 not so liquid in calgary on 04.17.18 at 8:14 pm

@ BC West on 04.17.18 at 5:41 pm

————————————————————————————-

put a structure on it? an RV, perhaps??

#62 not so liquid in calgary on 04.17.18 at 8:17 pm

@ Reynolds531 on 04.17.18 at 6:02 pm

————————————————————————————

must be PR for at least a year… according to the old rules

There never were rules – just interpretation bulletins. It is what CRA says it is. – Garth

#63 jess on 04.17.18 at 8:20 pm

check out trump’ s real estate partners in india
What Trump Jr. has billed it as: “The most prestigious address in the city”
What’s there now: A small patch of empty land

What Trump Jr. has billed it as: “One of the most exciting and sought after commercial towers in India and beyond”
What’s there now: An empty lot with goats grazing

etc etc

”Trump, Inc.” is a production of WNYC Studios and ProPublica. Support our work by visiting donate.propublica.org or by becoming a supporting member of WNYC. Find it wherever you get your podcasts. Our Trump India segments were produced in partnership with The Investigative Fund.

https://www.propublica.org/article/trump-inc-podcast-trumps-partners-in-india-many-red-flags

#64 bubu on 04.17.18 at 8:26 pm

TD lowers the interest rate…

#65 Nonplused on 04.17.18 at 8:27 pm

RevCan isn’t “losing” any revenue by not taxing capital gains on primary residences any more that they are “losing” revenue by not raising taxes to 100%.

Capital gains taxes applied to assets that do not produce revenue, like a family home, are merely “inflation taxes”. You have 1 home. You sell that home for twice what you paid but you buy a new home in a location you need to move to say for work and pay exactly the same amount for the new one because it has also gone up. Where is your gain? You still only have 1 house.

They are already slowly confiscating your house through property taxes, but supposedly that pays for roads and schools. Now they are proposing to tax any changes in the price of your house, which are largely one way or another due to inflation. Some people will say “Oh well it’s not inflation it’s speculation” but how do you tell how much of the change in the price of the house was speculation and how much was inflation? And either way you still only have one house. You still didn’t end up with 2 houses.

This fraud exists across all capital gains taxes. Stocks, for example, might double in price because the business has done really well and doubled in value which might rightly constitute a true capital gain (houses do not even if it is a speculative venture like renting out a condo you still only have one condo). But even when you have a stock that doubles in price over say 35 years, well inflation alone will do that at 2%. When you fill out your tax forms and calculate the capital gains, do you see a line where they allow you to deduct the CPI rate of inflation for the period you owned the asset? No you don’t. They are taxing inflation, which they control, and masking it as “capital gains”. Sure there could be some capital gains as well, but not on a non-productive asset like a family home.

The goal of governments at this point is simple. They are up to their eyeballs in debt so they are going to try and take all your money, one way or another. There are already multiple taxes on everything. But the governments are desperate because lenders are signalling that they cannot continue to borrow more without raising revenues. But on who? Other than the 0.01% nobody has any money. So now they are going to take part of your house. Well the part they aren’t already.

We have income taxes, HST, sin taxes, carbon taxes (just more HST, but for our own good), property taxes, capital gains taxes, licensing fees just to open a lemonade stand, royalties, toll roads, land transfer fees, and lots more already. Everything but the income tax is a tax on a tax. And in some cases a tax on a tax on a tax. It’s simply mind boggling how much tax we already pay.

But it’s not enough. I think the collapse of western civilization is at hand, because the amount of money we need to continue running it just doesn’t exist, at least not the way we run it. Some idiots will say “well they can just print more money” but that doesn’t work because ultimately money has to relate to some actual good or service to have value, and if you print more money all you do is cause inflation, not an increase in goods and services. That’s why they are out to tax everything multiple times.

Also I noticed a new dirty trick RevCan is playing. When your broker sells a stock or bond or mutual fund on your behalf in an account that is not an RRSP or TFSA, they have to report the proceeds of the sale to RevCan, but not the purchase cost. You have to calculate and input that yourself. I played around with it because I made some sales last year and if you don’t do it the total proceeds from the sale appears to be considered a capital gain. You have to figure out what should go in box 20 yourself. Keep good records because I think this is a trap. I cannot confirm this but the tutorials in TurboTax seem to indicate that this is the case and so did the calculations. The government is nothing short of desperate. They are going broke and they know it. Thus, they have no choice from their point of view: They have to take any money we the people still have to pay their bills. All of it if necessary. And if that isn’t enough, now they want your house.

#66 For Richer, For Poorer on 04.17.18 at 8:28 pm

Amongst a relatively small circle of friends, we know of two couples that have either quietly, or boastfully divorced over the last few years all for sake of buying / flipping houses and presumably dodging the CRA. Why own one principal residence when you can divorce (on paper) and own two? Both couples have children who may or may not know that their parents have ‘split’, as on the surface, it’s family life as they’ve always known it, mom, dad, kids (and dogs) living in harmony under one roof. Maybe that’s the ‘for richer’ and perhaps more recently ‘for poorer’ part of traditional wedding vows. I can’t imagine it’s as easy as they’ve made it sound – tax compliance risk, estate planning, sleepless nights? It makes me wonder how many others out there have done the same. It’s been suggested to me that I’m the one missing out, but it’s more real estate madness in my mind.

#67 Mattl on 04.17.18 at 8:41 pm

All you guys claiming that homes have a tax advantage over all other investments clearly haven’t heard of a TFSA or RRSP. Or corp tax benefits.

Enought of the cheering for more tax. Homes are bought with after tax dollars and are subject to more tax post sale, largest being property tax. There are already pr rules in place to handle spec properties. No need to tax gains on pr, and anyone arguing we should is a pinhead.

#68 tccontrarian on 04.17.18 at 8:47 pm

After reading today’s blog, and some of the comments, all I can say is: “give Ceasar what is Ceasar’s”, or you can lose your head. I guess things haven’t changed as much as we think over the millenia.

My policy is to hire a professional and go ‘by the book’, as I don’t like to sleep with one eye open. Not worth the anxiety!
I have a secret desire to be paying $1M in Cap. gains taxes in one of the next few years; that would mean that I get to ‘keep’ the other $3M (based on 50% inclusion rate)! Not a bad place to be, financially!
Sure beats the other end of the spectrum (ie. making so little so as to be paying “0” in taxes).

TCC

#69 Reynolds531 on 04.17.18 at 9:06 pm

Cra deems a capital gain when you rent out your residence. Assuming we get some notice….

You find a buddy. You lease him your house. He rents you his. You change your address rent a truck and swap kids schools. Do this for a year, then “move” back in.

Poof, first gain non taxable. After they start there is no second gain to worry about.

Apparently tax avoidance leads to insanity. – Garth

#70 Loonie Doctor on 04.17.18 at 9:07 pm

#66 For Richer, For Poorer

Amongst a relatively small circle of friends, we know of two couples that have either quietly, or boastfully divorced over the last few years all for sake of buying / flipping houses and presumably dodging the CRA.

—————————————————————–
Wow! I was only joking with my previous #36 comment at the absurdity of the current tax code that treats married couples as individuals, even though their finances/risks/sacrifices etc are also married.
-LD

#71 Smoking Man on 04.17.18 at 9:25 pm

Bungee’s out of fashion.

Last Feb this puppy could fetch 900k

40 Fairfield ave in long branch. List 579k. Sold for 510k a few days ago.

Bond yields heading higher. And blog dog above said TD lowering rates.

Oh boy…get out of the way. This is a disaster. More money fleeing Canada. The gifts of socialism.

#72 For those about to flop... on 04.17.18 at 9:53 pm

These two Eastside houses help show how soft the bottom end of the detached market is in Vancouver.

I wouldn’t like to live there,heck you could even film a horror movie there if you blacked out the windows , but these guys are probably glad they bought in 2011.
They will still get a payday.

Knockdowns are under a million again ,but it could be a while before I will be able to show a house that a family would be proud to call home.

Maybe October/November…

M43BC

1833 Triumph Street, Vancouver ass 971k

2018-02-06 : $995,000
2018-02-27 : $955,000
2018-04-16 : $925,000

https://www.zolo.ca/vancouver-real-estate/1839-triumph-street

1839 Triumph Street, Vancouver 907k

2018-02-06 : $995,000
2018-02-27 : $955,000
2018-04-16 : $925,000

#73 Reynolds531 on 04.17.18 at 10:14 pm

Yes Garth tax avoidance DOES lead to insanity. But we could be talking about a 500k gain for some people. That’s a compelling reason to move out for a year.

I remember lessons in University Economics about left wing governments causing all kinds of odd behavior. Like the American that started a line to nowhere in the USSR in the 80s.

#74 T-Rev on 04.17.18 at 10:26 pm

Sh*t, Gartho. I’m not typically in the tinfoil hat crowd, but reading that post I’ve gotta agree with #65 Nonplussed. The gig is up- the government kitty is empty at all levels, and they’re going to to become increasingly desperate and blatant in their taxation methods as they attempt to keep the music going just a bit longer. They don’t even know it; or at least they’re willfully ignorant to the fact. The administration in Finance, the Public Budget Officer- they know it. But politicians are about as concerned as your average voter, and no more intelligent or fiscally disciplined, either. Whatever keeps the music playing for four more years. Heads firmly in the sand when it comes to what this all means for our people and our nation 25 years from now. Selfish, short sighted, easily offended ideologues who prefer identity politics over work and tough choices- we got the government we deserve, and it’s a reflection of own malignat narcissism.

I’m trying this new thing called sobriety. 10 days and counting. It’s about as fun as it sounds. But trying to make 40 with my liver and family intact after spending most of my 30s in a highly-functional, wildly productive haze of strange drinks and stranger companions. Might need to buy a Harley so I can hang with other middle-aged wash-ups and talk about how cool I used to be.

#75 The real Kip on 04.17.18 at 10:26 pm

No problem, we have a fix for this. It’s called the ‘underground economy’. They pushed hard in the 80’s and the underground economy thrived. It’s thriving again.

#76 The real Kip on 04.17.18 at 10:29 pm

I’ll bet Rin-Tin-Tin doesn’t get much of a workout sitting there. She’s not much to look at.

#77 Ace Goodheart on 04.17.18 at 10:33 pm

RE: #52 young & foolish on 04.17.18 at 7:43 pm
“Ace Goodheart #49 makes a good point … but who says governments make good decisions?”

T2 does what he’s told.

When you get a guy like Trump, you start to see the government handler and over seer system break down. Trump does not do what he is told.

T2 is as obedient as a newly trained puppy.

#78 will on 04.17.18 at 10:33 pm

too complicated for me.

#79 smartalox on 04.17.18 at 10:38 pm

@Equity of taxation #25:

There’s no need to get snitty.

You’re right that capital gains held in un-registered accounts are taxable (currently at 50%) BUT:

– one can borrow to purchase investments in an unregistered account, AND deduct the costs of interest related to that borrowing from one’s income.
– One can also deduct losses stemming from investments held outside registered accounts, to offset gains.
I One can also deduct fees paid to an equities broker, or Financial Advisor, for purchases or sales on your behalf related to your investment accounts.

What Garth has predicted for Real Estate is:
– No deduction for losses related to real estate (though no gains, means no taxes, either)
– No deduction for commissions, legal fees, etc. required to close a sale. (Not stated, but currently not allowed by CRA either)

These conditions seem far from equitable, much like the TFSA, though tax free, is capped, whereas (currently) capital gains on primary residences are also tax free.

These new rules represent such a bad deal for homeowners, compared to alternatives, and the proposed policies are wildly inequitable.

But it looks to me like the Feds are taking for granted that people will just keep buying homes, like lemmings pitching themselves off a cliff.

#80 the Jaguar on 04.17.18 at 11:09 pm

Saskatchewan tabling legislation to support Alberta restrictions of oil and gas shipments to BC.
We all know this ‘will end well’ because this is Canada, after all. It’s also the right thing to do, and all the protests of those who dump raw sewage into the ocean and allow all kinds of OIL tankers from Alaska to pass through their waters as they plan their own liquified natural gas exit points won’t stop it. The pipeline expansion will go through.
But you have to admit it is great theatre. A classic street fight. (or as Albertans might call it, ‘Rope a Dope’).
Just wait for the summer statistics to come out. People are so mad in Alberta about this and the speculation tax. Sleeping in BC on this one. They are in for a big awakening. Seriously. When one considers the land holdings in eastern British Columbia we might want to cut to the chase and go straight to the annexation strategy. Mercy. I get goose pimples knowing the impact of a statement like that on some people’s BC blood pressure.
Regarding subject of todays blog, Garth…can you provide insight on how the taxation issue would impact those who choose to register properties in personal holding companies? Is that a CRA target?

#81 fishman on 04.17.18 at 11:09 pm

Im with you tcContrarion. I took a capital gains of around million selling an asset in my company & then serial transferred to my personal account. Looks like I’ll end up giving “lil potato” $365k after the dust settles, but I look at the $635k as money for nothing. Play by the book,no stomach ache. There’s worse fates awaiting us than paying taxes

#82 cramar on 04.17.18 at 11:17 pm

Still don’t know why Feds don’t tax lottery winnings? Seems like they are leaving free money on the table with this.

I think that if they tried charging capital gains on a principle residence it would be political suicide. So why even think about doing it? They wouldn’t be around to reap the windfall.

#83 bobdad on 04.17.18 at 11:19 pm

My ex rents out her basement to a tenant but does not claim it on her tax. I know because I see her taxes for child support. This has been going on 3 years. What would happen if she was caught? I say nothing for the kids sake.

#84 Capt. Serious on 04.17.18 at 11:22 pm

And be careful about what the CRA calls a ‘change in use’ when you decide to take in a tenant. That’s considered a phantom sale of the property and “you are considered to have sold the property at its fair market value and to have immediately reacquired the property for the same amount. You have to report the resulting capital gain or loss (in certain situations) in the year the change of use occurs. If the property was your principal residence for any year you owned it before you changed its use, you do not have to pay tax on any gain that relates to those years. You only have to report the gain that relates to the years your home was not your principal residence.”

How does one determine the FMV of the property for date X? Like say I have a property for 5 years that I live in as my principal residence. I know what I paid for it, but what would be its FMV in year 5? The assessed value for taxes that year? Appraisal needed? Then thereafter I rent it out for 3 years and sell it, and need that FMV from X to calculate the gain (hopefully not a loss).

#85 Sm_yycbksc on 04.17.18 at 11:32 pm

Garth, check this out…..unbelievable…..
https://www.communityforfairness.ca/

#86 Moister Miller on 04.17.18 at 11:34 pm

Good news coming in the spring
https://www.thestar.com/business/real_estate/2018/04/13/gta-housing-market-poised-for-spring-thaw.html

Oh Wait
https://www.thestar.com/business/real_estate/2018/04/13/canadian-home-sales-dropped-227-in-march-national-average-price-down-104-crea.html

#87 paulo on 04.17.18 at 11:52 pm

Surprise! something else is in store:
behind Door Number one: tough new guidelines governing the capitol gains exemption on sale of principal residence.
Door Number 2: a partial elimination of said exemption.
Door Number 3: a complete elimination of said exemption.

Reality: to many people have gamed this exemption,the taxman knows this,and in all likelihood is getting ready to close the door on it.

risk and reward: killing this exemption would force a correction that b20 or higher interest rates could never achieve,and correct the market along with making multi home owners and speckers road kill instantly.

would create a massive windfall in tax revenue.

would likely put the sox and crew out to pasture next election,unless they offer up a carrot: such as US style mortgage interest tax deduction possibly.

either way i suspect the music of capitol gains exemption on PR is a endangered speices is about to go silent,stay tuned we will know all about it sooner rather than later.

Outlier: the fed is penciling in the mother of all corrections in its projections.

#88 Victor V on 04.17.18 at 11:57 pm

A wide swath of young homebuyers is beginning to grapple with something unseen in their adult lives—a market that actually goes down

http://www.macleans.ca/news/canada/the-wake-up-call-for-a-generation-of-wide-eyed-home-buyers/

#89 pricedoutfornow on 04.18.18 at 12:18 am

How about all those people who rent out their basement suites and never report the income? I’d swear I know at least ten of them. So it would seem to me if the government goes after those who reported the income for all those years, they’re missing a big chunk who never reported the income at all.

#90 Damifino on 04.18.18 at 12:23 am

#49 Ace Goodheart

They’ll never capital gains tax the sale of a principal residence.
——————————-

Maybe not, but from now on, that portion of your house you rent out does not form part of your principal residence for the purposes of capital gains exemption.

#91 Smoking Man on 04.18.18 at 12:43 am

Diving into the abyss of an empty bottle searching for truth is feeling like a waste of time.

You find it. It’s in your hand.

You hold it up hoping for an applause. What you end up with is a brain washed mob that want to kill you, destroy you.

Truth seeking is risky. Do it drunk. You have an excuse before the judge.

#92 Deplorable Dude on 04.18.18 at 12:49 am

Nobel Peace prize incoming for President Tump.

…he’s done the impossible….brokered the end of the 65 year old Korean war, with diplomacy and extreme sanctions….to be announced formally next week. Has literally spoken to Rocketboy who wants to disarm…..South Korea said it couldnt have been done without Trump. (But…but Drumph was gonna start a Nuclear war!).

And even more winning. Trump has got Mexico to pay for the big beautiful Wall…..the incoming Marxist Mexican president admitted today Trump has ALL the leverage with NAFTA negotiations….and will be finacially decimated if they don’t cooperate…..that means only one thing….the wall will be paid for….

https://theconservativetreehouse.com/2018/04/17/breaking-mexico-agrees-to-pay-for-wall-offering-emergency-deal-to-close-nafta-tariff-loophole/#more-148197

Now back to you regular MSN programming…something to do with a washed up porn star……

#93 Smoking Man on 04.18.18 at 1:06 am

When the machine nukes you and you got a good buzz going and this is on the ear buds.

It’s not that bad.

https://youtu.be/0fi2z4KBnNE

#94 Fortune500 on 04.18.18 at 1:08 am

I’ve said it before, and I will say it again, I think taxing profits on capital gains made on primary residences is long overdue.

Homes stopped being homes in Canada decades ago. We all know that they are financial instruments now traded for profit. Why should someone using government incentives to leverage up and make multiple six figure profits be allowed to do so tax free, while someone investing in the market (which arguably is of greater good for our society on a whole) be subject to capital gains taxes?

The answer is simply that those already in the market don’t want this because it is their complete financial and retirement strategy. The fact that Boomers are mainly the ones who have benefited from this unbalanced policy and are the ones still deciding politics in Canada is a big reason why this has lasted as long as it has.

Just as the CMHC has long since moved past its original mandate, we need to realize as a society that things have changed. Homes are no longer simply places to live. That is, unless we remove the massive incentives to treat them as financial instruments.

#95 Smoking Man on 04.18.18 at 1:15 am

Mellinalis if you want to understand these lyrics get fkd up first. Not weed or oxy. Just a good bourbon.

You will see it.

tps://youtu.be/Rpq35wyDi7I

#96 crossbordershopper on 04.18.18 at 1:29 am

it seems so complicated in Canada, just go to the usa. this cra guys just make stuff up and its your job to fight them, which most cant or wont. so i guess as canadians you suck it up
i guess i was right, you work for the governement, and the governemnt works for the millions of bumbs who need cheques every month
structure deficits, just create a situation where people work and pay and pay and pay and others recieve receive receive.
eary bird buffet for 8 bucks is great at golden corral.
beats carrying of what trudeau is up to up north, pipelines, and looney lefties who dont like oil
canada cant be this stupid.

#97 diharv on 04.18.18 at 1:49 am

A government cannot have “lost” that revenue which it never possessed or was not entitled to in the first place . in order to “lose” it , they would have had to have had possession of it previously . Splitting hairs to the nth degree I know , but it really grinds my goat whenever I read anything about the government lamenting about all the “lost’ revenue by not taxing RSPs , TFSAs principal residences etc .

#98 Myra Andrews on 04.18.18 at 2:11 am

Greater Vancouver Stats from realtor Paul Boenisch

April 17 New 297 Sold 120 TI: 9898
April 16 New 377 Sold 191 TI: 9799

April 13 New 152 Sold 137 TI:9727
April 12 New 199 Sold 112 TI:9748
April 11 New 248 Sold 101 TI:9709
April 10 no posting from Paul
April 9 New 382 Sold 117 TI: 9450

April 6 no posting from Paul
April 5 New 268 Sold 164 TI: 9264
April 4 New 324 Sold 154 TI: 9204
April 3 New 538 Sold 131 TI: 9104

Mar 26-29 New 793 Sold 455 TI: 9032
Mar 19-23 New 1041 Sold 617 TI: 8916
Mar 12-16 New 1147 Sold 682 TI: 8743
Mar 5-9 New 1101 Sold 542 TI: 8510

#99 What can I say on 04.18.18 at 2:14 am

Neither Poloz, nor his successors, will raise the benchmark rate over 2.25 (if that) for a long, long time. Not unless they’re interested in causing massive economic chaos. BOC simply can’t pull that trigger because rates have been so low for so long, the economy depends on it. To say otherwise is absolutely silly.

#100 Islander on 04.18.18 at 3:15 am

http://www.moneysense.ca/spend/real-estate/8-questions-about-the-principal-residence-tax-rules/

More questions..more answers…

#101 theoryAndPractice on 04.18.18 at 6:52 am

#73 Reynolds531 on 04.17.18 at 10:14 pm
“Poof, first gain non taxable. After they start there is no second gain to worry about.”
——————————————————————–

Reynolds531 ,

How “moving out and back in” for 1 year leads avoidance of 500K in capital gains ?

About taxes :
1- What happened to rental income for 1 year ?
2- What happened to formula in capital gains number of years you owned the property vs you lived in

#102 Andrewt on 04.18.18 at 7:38 am

98 What can I say on 04.18.18 at 2:14 am
Neither Poloz, nor his successors, will raise the benchmark rate over 2.25 (if that) for a long, long time. Not unless they’re interested in causing massive economic chaos. BOC simply can’t pull that trigger because rates have been so low for so long, the economy depends on it. To say otherwise is absolutely silly.
—-

There’s a difference between having your (or my, or any individual group’s) economy depend on it, and having THE economy depend on it.

#103 Wrk.dover on 04.18.18 at 7:59 am

All of my NS deeds say sold to me in consideration of the sum of one dollar.
That is how the local legalise rolls.
Should be fun proving what I paid come gain judgement day.

Meantime part of Garth’s post points to appraisals possibly soon being needed before and after renting periods. Hoo boy. I paid $250 1981 dollars for a $21,000 appraisal once, so I could borrow $18,000. Buddy drove up in a Buick Electra with chrome wire wheels, looked at my blue print and my location from the road, and left with a cheque for a week of my pay.

Appraisers get big money for little to nothing. Some job!

And about today’s photo, painted face granite kitchen with no drawers! Luxury not.

#104 jess on 04.18.18 at 8:12 am

the past indicating the future
https://www.propublica.org/article/trump-inc-podcast-michael-cohen

#105 Big Kahuna on 04.18.18 at 8:17 am

DELETED

#106 Atrate on 04.18.18 at 8:26 am

Though he is not mentioned by name, I believe that Derek’s plight is mentioned in this article:

http://www.macleans.ca/news/canada/the-wake-up-call-for-a-generation-of-wide-eyed-home-buyers/?utm_source=nl&utm_medium=em&utm_campaign=mme_daily&sfi=e9df0d618568fea2bfa837015921f7fd

#107 dharma bum on 04.18.18 at 9:07 am

#9 BC West

Hey Garth – can a vacant piece of land count as a principle residence?
——————————————————————-

Garth says no.

But what if you put up a teepee?

#108 Shawn Allen on 04.18.18 at 9:43 am

Lower Tax “losses” from designated principle residence in 2018 and 2019?

“By the way, Ottawa’s ‘tax expenditures’ document this week is forecasting a 13% drop in the missed revenue on houses in 2018 and a further decline the year after. Do they expect prices to fall that much, or is there something else in store for us?”

*************************************
The reason for that would be the lower number of sales. Fewer sales amounts to lower gains even with prices unchanged. This blog has predicted and documented lower sales. No need to read more than that into the forecast reduction of 13% – although for many reading in more is just more fun.

#109 LivinLarge on 04.18.18 at 9:43 am

“Splitting hairs to the nth degree I know , but it really grinds my goat whenever I read anything about the government lamenting about all the “lost’ revenue by not taxing RSPs , TFSAs principal residences etc .”…so there must be a helluva lot of grinding when you read folks talking about the lost investment potential of money in a home. There is also no mention of the huge tax windfall the feds and provinces reap when folks take money out of RRSPs or RIFs at their highest marginal rates at the time of withdrawal.

#110 Shawn Allen on 04.18.18 at 9:49 am

People Are Self- or Small-Group Centered by Nature

Historically, for time immemorial, people lived in small groups and outsiders were often competitors in a life and death struggle for food.

Therefore it is perfectly natural to have an attitude that any tax break that others benefit from and you do not is something to oppose. Why should outsiders get ahead of you? It’s wired in our brains to resent the wealth and benefits that outsiders enjoy. We can overcome this when we think logically or when we feel an emotional connection , but our brains are wired to be self centered. Believe me.

People can be unbelievably generous and selfless at times. But a large part of out brains succumbs easily to baser instincts.

#111 LivinLarge on 04.18.18 at 9:52 am

“Still don’t know why Feds don’t tax lottery winnings? Seems like they are leaving free money on the table with this.”…too true. I can’t fathom why they don’t either.

They wouldn’t even have to tax the small winnings that are paid at the POS, just the level that require the lottery corps to issue the cheque. Right there they have the simple and clean accounting and remitting infrastructure already in place.

One explanation I was given years ago was that in Canada we tax earned incomes that require some level of skill or work to earn and lotteries are games of pure chance. Not saying I agree but that was what I was told when I worked at CRA mannnnyyyy moons ago.

#112 David on 04.18.18 at 9:54 am

No word of the people renting suites in their house(s) and not claiming the income?

In Quebec, the renter receives a receipt for a small tax deduction on rent paid so the government knows who is renting what. This should be universal.

#113 JohnnyBoy on 04.18.18 at 9:56 am

#71 Smoking Man on 04.17.18 at 9:25 pm
Bungee’s out of fashion.
Last Feb this puppy could fetch 900k
40 Fairfield ave in long branch. List 579k. Sold for 510k a few days ago.
Bond yields heading higher. And blog dog above said TD lowering rates.
Oh boy…get out of the way. This is a disaster. More money fleeing Canada. The gifts of socialism.
………………………………………………………………………
Last February as everyone knows was an anomaly in the real estate world. 40 Fairfield is not necessarily the most desirable location either and if you look carefully is a major fixer upper or tearer downer. (I used words you could understand) It would not have fetched $900K dumb dumb. It was an extremely tiny home with no room for improvements. I have acquaintances who live on Fairfield. It is in fact being torn down for a McMansion dumb dumb. There are already 4 McMansions across the street. So they bought the land. Now for another comparison if I remember you lived at 57 James and sold for around $900K as you couldn’t get another HELOC, sold your boat and were unemployed at the time. Ouch!
Your next door neighbour is selling at just under $900K.
Ouch!

https://www.realtor.ca/Residential/Single-Family/19276353/59-JAMES-ST-Toronto-Ontario-M8W1L4-Long-Branch

I bet you’re pleased that you’re now Making America Great Again by taking your money and living in the USA instead of here? Well that is satisfactory, stay there we will plumb through the socialism here and be fine without ever seeing your facade again. I’ll be at the meet in May with the rest of us Canadians just to make sure.
Ouch!

#114 Linda on 04.18.18 at 9:59 am

Question: would the sale of property in another country require the reporting of that sale on your Canadian tax return? Or do the rules apply only to property located within Canada?

Regarding renovations. Would there be a ‘safe’ period between doing renovations & renting out a renovated space? As in if one renovated in 2018 but didn’t rent out that space until 2020. Would the length of time between the two actions keep the CRA from deeming one action had led to the other?

#115 JohnnyBoy on 04.18.18 at 9:59 am

#106 dharma bum on 04.18.18 at 9:07 am

#9 BC West

Hey Garth – can a vacant piece of land count as a principle residence?
——————————————————————-

Garth says no.

But what if you put up a teepee?
……………………………………………………………………
That is what the Occupy Toronto groups do! Oh baby the anarchists will have something to say about this!

#116 Shawn Allen on 04.18.18 at 10:02 am

Tax Expenditures…

#96 diharv on 04.18.18 at 1:49 am said:

“A government cannot have “lost” that revenue which it never possessed or was not entitled to in the first place . in order to “lose” it , they would have had to have had possession of it previously . Splitting hairs to the nth degree I know , but it really grinds my goat whenever I read anything about the government lamenting about all the “lost’ revenue by not taxing RSPs , TFSAs principal residences etc .”

**********************************

I hear where you are coming from and am partly sympathetic to that view.

All would be fine if everone benefited from those tax breaks equally in propoertion to their income. But that is not the case.

One (wo)man’s tax break is another (wo)man’s higher tax bill. So who pays more to fund RRSP and TFSA and capital gains tax breaks and all the othe tax breaks? Often it is the same people benefiting. But also often it can be someone not benefiting from those breaks (albeit sometimes by choice).

We could have a simpler tax system with lower average tax rates if we did not have so many so called “tax expenditures”. That is simple math.

#117 IHCTD9 on 04.18.18 at 10:07 am

When you widen the angle all the way, you’ll see a government starving for revenues – and they know it’s going to get worse.

Look at Ontario, 13.6 million population with an active labour force of 7.6 Million. 1.2 Million of those are public sector workers who generally make way more than the poor folks paying their salaries and pensions.

That leaves 6.3 million total who have to pay for everything. Less than half of the total population.

Ontario is currently over 300 Billion in debt, and those 6.3 million schmucks in the private sector are on the hook. That’s almost 48 grand per head.

The Province is now resorting to selling off huge publicly owned infrastructure like the hydro grid trying to scrape together a balanced budget. Future infrastructure projects will be heavily financed by foreign private corporations and will be operated by said corps as “pay per use” for profit.

Ontario has also lost over 350 thousand excellent private sector jobs since the Libs came to power.

Ontario voters elect their leadership based on how many freebies they promise to hand out, even if said freebies are paid for by more debt.

Ontario voters like to burn piles of cash on SJW/global warming/culture fluff that does almost no one any actual good.

Ontario voters do not care much about costs, deficits, or debt.

Ontario’s taxation powers have virtually no legislated limit.

The whole country is following Ontario’s lead, and you can bet that the tax and fee increases will be swift and continuous.

Taxing house appreciation is just another one that falls in line with my theory that future taxation will be on things you can’t say no to. Consumption taxes are too risky as the proletariat retain too many options to avoid them.

Better to cinch it down for a guaranteed revenue stream via Property taxes, Gasoline taxes, Carbon Taxes, Electricity costs, Heating fuels, transportation related taxes and fees – and now maybe in the near future: capital gains taxes on your primary residence upon sale?

Wouldn’t surprise me a bit.

#118 SilverSon on 04.18.18 at 10:08 am

#95 crossbordershopper on 04.18.18 at 1:29 am

Most Canadians can’t “just go to the USA”. You make it sound like getting US residency status is just filling out a form and paying a fee. Also the CRA has a process by which they judge whether or not they are willing to release you from the responsibility of paying income tax in Canada. So even if you did live in the USA you’re still responsible to pay Canadian taxes on your world-wide income until the CRA says you aren’t. For that you have to be declared a non-resident for tax purposes by the CRA which requires that you NOT have any significant ties to Canada. You have to give up pretty much every physical possession that you cannot take with you to the USA.

I have done all this and it’s certainly not a quick and simple solution unless a Canadian marries and American (and even that’s not so easy). It is a long and difficult process, not to mention expensive. Please do more research before posting comments that make it sound like moving to USA is simple and implying that Canadians who don’t do it are stupid.

#119 JohnnyBoy on 04.18.18 at 10:10 am

#110 LivinLarge on 04.18.18 at 9:52 am

“Still don’t know why Feds don’t tax lottery winnings? Seems like they are leaving free money on the table with this.”…too true. I can’t fathom why they don’t either.
They wouldn’t even have to tax the small winnings that are paid at the POS, just the level that require the lottery corps to issue the cheque. Right there they have the simple and clean accounting and remitting infrastructure already in place.
One explanation I was given years ago was that in Canada we tax earned incomes that require some level of skill or work to earn and lotteries are games of pure chance. Not saying I agree but that was what I was told when I worked at CRA mannnnyyyy moons ago.
……………………………………………………..
Gambling is for idiots so tax em! They tax everything else. Maybe it is their Golden Goose though and they don’t want to kill it as its still laying golden eggs. Have a friend who works for Woodbine racetrack now Called Woodbine Casino, they are now expanding with some large corporation major project. 2000 to 3000 jobs.

#120 NEVER GIVE UP on 04.18.18 at 10:19 am

#36 Loonie Doctor on 04.17.18 at 6:57 pm
Staying married sure is expensive from a tax standpoint. If I got divorced, then my newly minted “friend with benefits” and I could income split again and have two principle residences.
==================================
All part of the assault on marriage and family that started in the 70’s.

It won’t be long before there are no marriages at all.

Most kids don’t even consider marriage an option any more after seeing what the legal system did to their parents.

The assault is many a many pronged attack from Divorce law which includes Deceptive law practices to make sure the two parties do not reconcile before the Lawyer gets his cut. Also as noted above is Tax law now unmarried people.
And general media subtle attacks on marriage whenever possible.

I will say that a stable marriage is still a great place to provide safety and security for children to grow up.
Anyone who has had their parents divorce will know how devastating it is to their psyche.

#121 Canuckle Head on 04.18.18 at 10:35 am

112 JohnnyBoy on 04.18.18 at 9:56 am

——————————

Chill out Pinhead. Smoking dude has every right to live and take his money anywhere he likes. Are you enjoying your dead of January weather only 10 days before May? That seller is dreaming and you know it. Pile of shit that would buy you a mansion in the sun where Smoking dude resides.

Freaking Canuckle heads always so easy to trigger and hypersensitive about their 3rd world meat locker.

Ouch.

#122 PumpthatRE on 04.18.18 at 10:57 am

Hey Garth,

I thought you’d get a kick out of this:
http://www.moneysense.ca/where-to-buy-real-estate-2018/

#123 Westcdn on 04.18.18 at 11:08 am

Time for my musings – sometimes things are best left unsaid.

I endure. I tripped out of the gate this year and have been inching my way back to profitability. Isn’t saving fun? I should be spending more on myself but I more like the wealth and the freedom it buys. I don’t like losing and will take any silver I find afterward. I see ‘freebee’ benefit reductions rather than higher taxes ahead. Anyway, I live for a fight against the tide but I have learned when to back down. Life is a venture and you will not find me hiding under a rock. I do wonder about a future for my daughters (millennials) and my grandchildren.

I worked for mighty Imperial Oil but I never took steps to protect myself. When I was hired there were 15,000 employees and only 4,000 when I was laid off. That may have been a mistake as those that survived the layoffs have an easy retirement. Luck is something I cannot control so I try to make time my friend thus perseveration rules me and I will not hurt someone for money.

I said a few months ago that oil prices would be $55 plus/minus 8. Ryan or Doug convinced me I was wrong to my benefit. It pays to listen to other ideas although I disregard most after researching – I can be an asshat. My will is simple – my daughters decide how to spread the loot. GT, thanks for what you do – it is your blog. If I was lord, we would discuss.

#124 For those about to flop... on 04.18.18 at 11:14 am

It looks like my only hope of ever making this list is to open an ice-cream parlour in New Hampshire…

M43BC

“Mapping the Richest People of All Time from Every State.

The U.S. is home to more billionaires than any other country in the world, but you might be surprised to learn that there are 7 states that haven’t produced a single billionaire. In fact, ranking the richest people of all time from every state reveals extremely wide differences in wealth.

How do you figure out the net worth of the richest individual of all time? We found our data thanks to Forbes, which did much of the number crunching for us. A lot of the richest people ever have long since died, meaning we had to adjust numbers for inflation to fairly compare it to today. We then color-coded each state to represent the range of its most successful citizen, and we added a picture of the millionaire or billionaire in question.
Top 10 States with the Wealthiest People of all Time
1. New York: John D. Rockefeller, $257.25B

2. Oklahoma: Sam Walton, $171.55B

3. New Mexico: Jeff Bezos, $116.57B

4. Pennsylvania: Richard Mellon Scaife, $104.73B

5. Washington: Bill Gates, $90.54B

6. Nebraska: Warren Buffett, $90.44B

7. Massachusetts: Marshall Field, $76.26B

8. Michigan: Henry Ford, $68.33B

9. Illinois: Larry Ellison, $56.76B

10. Maryland: Sergey Brin, $53.32B

Our map reveals several interesting trends about the richest person from every state. First off, almost every person on the map is a man, although there are a few exceptions. Anita Zucker is the wealthiest of the 3 women with a personal fortune of $3.83B. At the very upper end of the spectrum, only four people cross the $100B mark, with nobody coming anywhere close to John D. Rockefeller at the very top ($257.25B). That’s the kind of money that lets you establish permanent multi-generational foundations long into the future.

Another interesting fact about our map is the relationship between where someone was born and where they made their money. In other words, clearly sometimes people have to move to make a fortune. Jeff Bezos is originally from New Mexico, but Amazon is headquartered is in Seattle, Washington. Sam Walton may have been born in Oklahoma, but his company (Walmart) is headquartered in Arkansas. Other names are synonymous with their birth states. Bill Gates founded Microsoft in Washington, and John Menard Jr created the eponymous hardware store in Wisconsin. Henry Ford came from Michigan, the same state he built the famous car company. Warren Buffett is the Oracle of Omaha, and guess what? He still lives in Nebraska.

It is hard to grasp just how enormous these personal fortunes really are. As a whole, the group averages about $30B in net worth. If you combine all their fortunes together, you would have more than $1.5 trillion. That’s about the same size as Canada’s entire economy. So where are the best odds of making this list? You might be in luck if you come from New Hampshire. Brooke Astor only made $150 million.”

https://howmuch.net/articles/richest-person-of-all-time

#125 IHCTD9 on 04.18.18 at 11:32 am

3000 jobs.
.#119 NEVER GIVE UP on 04.18.18 at 10:19 am
#36 Loonie Doctor on 04.17.18 at 6:57 pm
Staying married sure is expensive from a tax standpoint. If I got divorced, then my newly minted “friend with benefits” and I could income split again and have two principle residences.
==================================
All part of the assault on marriage and family that started in the 70’s.

It won’t be long before there are no marriages at all.

Most kids don’t even consider marriage an option any more after seeing what the legal system did to their parents.

The assault is many a many pronged attack from Divorce law which includes Deceptive law practices to make sure the two parties do not reconcile before the Lawyer gets his cut. Also as noted above is Tax law now unmarried people.
And general media subtle attacks on marriage whenever possible.

I will say that a stable marriage is still a great place to provide safety and security for children to grow up.
Anyone who has had their parents divorce will know how devastating it is to their psyche.
_____________________________________

Marriage is shot to hell anyway. Few folks these days know the first thing about making a long term commitment to anything, forget about a marriage. Kids? Canadians haven’t wanted too many of those for a few decades now. Too much work, and bloody expensive!

Marriage and kids were for folks from an era now nearly passed by. Folks that were mentally tough, who expected to make sacrifices, who could delay gratification, and understood real priorities.

Kids these days can’t even entrust their significant others with their Cell password, or trust each other with a joint chequing account.

#126 Stan Brooks on 04.18.18 at 11:33 am

Il dollare shitto /aka poloz pesso /aka the loonie down 0.7-1 % so far against all currencies with oil up over 2 % today.

#127 waiting on the westcoast on 04.18.18 at 11:40 am

Canada decides inflation and lower dollar are key to keeping the economy afloat…

https://www.ctvnews.ca/mobile/business/boc-maintains-key-interest-rate-at-1-25-per-cent-1.3889800

#128 Renter's Revenge! on 04.18.18 at 11:52 am

#49 Ace Goodheart on 04.17.18 at 7:20 pm

“That means no new mortgage initiations, no “move up” buyers, no one working long hours to pay off their massive mortgages, people just stay where they are, in the Cuban way, and enjoy their lives rather than working themselves to death to pay for ever larger houses in ever more popular neighbourhoods.”

What you say is funny, because it’s probably true.

But really, what’s stopping people from doing that now? Psychology?

#129 For those about to flop... on 04.18.18 at 12:00 pm

Dodging taxes didn’t work out too well for this guy…

M43BC

Surrey developer Rajinder Singh Mann sentenced for tax fraud.

“It’s been a particularly painful tax season for Rajinder Singh Mann of Surrey.

The real estate developer was sentenced on Monday for evading almost half a million dollars in GST and HST in 2010 and 2011.

Mann got a conditional sentence of two years less a day, including nine months of house arrest and 150 hours of community service.

He was also ordered to repay the full $462,092 he evaded in goods and service tax and harmonized sales tax after Millennium Century Investments Ltd. — of which Mann is the sole director and shareholder — sold 44 units in a Maple Ridge townhouse complex built by Millennium and failed to report and remit the taxes collected.

Mann pleaded guilty in January in provincial court to seven counts of fraud under the Excise Tax Act.

Failing to follow tax laws has serious consequences, the CRA said in a statement.

Taxpayers convicted of GST evasion must repay the full amount of taxes owing plus interest, and any civil penalties the CRA assesses.

As well, the court may fine those found guilty up to 200 per cent of the taxes evaded and impose a jail term of up to five years. ”

http://vancouversun.com/news/local-news/surrey-developer-rajinder-singh-mann-sentenced-for-tax-fraud#click=https://t.co/JBR7P61ukx

#130 LP on 04.18.18 at 12:38 pm

#76 The real Kip on 04.17.18 at 10:29 pm
I’ll bet Rin-Tin-Tin doesn’t get much of a workout sitting there. She’s not much to look at.
*************************************
What a knob you sound like! How could you possibly know what the woman looks like from that photo? And who cares anyway? Maybe your chihauhau doesn’t think you’re much to look at either.

#131 JohnnyBoy on 04.18.18 at 12:42 pm

#120 Canuckle Head on 04.18.18 at 10:35 am

112 JohnnyBoy on 04.18.18 at 9:56 am

——————————

Chill out Pinhead. Smoking dude has every right to live and take his money anywhere he likes. Are you enjoying your dead of January weather only 10 days before May? That seller is dreaming and you know it. Pile of shit that would buy you a mansion in the sun where Smoking dude resides.

Freaking Canuckle heads always so easy to trigger and hypersensitive about their 3rd world meat locker.

Ouch.
………………………………………………………………
No ouch here Canuckle, the little Smoking turd loves to come on here and taunt all of us who still love Canada and who still live here. Lived in the USA before for two years, in fact not far from where little Smoking turd is now. You have to know that racism and class are endemic in the USA. A lot of NIMBY people that hide. Holy shit they are places I as a of Italian decent could not go and visa versa. One of my friends was black and told me he didn’t feel comfortable coming to my neighbourhood, WTF? The other thing that was constantly on my mind was the gun mentality there, if you lived in the fringe area you needed a gun. Everybody I knew had a gun. As for third world let me tell you unless you have medical coverage and I mean the best coverage you are dead. The ones that can’t afford coverage rely on Medicaid and also roll the dice every day, no coverage at all. There is no middle class anymore it is poor and rich. I know we are an mirror of the USA but we are not that close. The weather yes much better, the gated communities, gun culture, racism and medical coverage worries, no thanks I’m glad I’m back here shoveling snow beside my Srilankan neighbour on one side who doesn’t want to shoot me with a gun because I’m white.

#132 What can I say on 04.18.18 at 12:44 pm

#101 Andrewt on 04.18.18 at 7:38 am

There’s a difference between having your (or my, or any individual group’s) economy depend on it, and having THE economy depend on it.

——————————————————–

You’ve got to be kidding? Right? You do know that many, many individuals have drunk from the low rate punch bowl. These people are THE economy. If Poloz declares the party to be over by raising rates, what happens to their profligate spending on which the economy depends? We’ve all gone to this party and even if we personally didn’t overdo it with the drinking, when the beer mugs start flying, we can all be hurt.

#133 What can I say on 04.18.18 at 12:46 pm

Newsflash: Bank of Canada holds rates, cites progress in inflation, wages.

——————————————

I guess Poloz knows the economy depends on cheap rates.

Nobody expected an increase today. Next month is more likely. – Garth

#134 IHCTD9 on 04.18.18 at 12:49 pm

#49 Ace Goodheart on 04.17.18 at 7:20 pm
They’ll never capital gains tax the sale of a principal residence.
_________

I’d not be so sure. We’re talking Canadians here. All it’s going to take is more non-home owning Canadians that always show up to vote, than home owning Canadians who always show up to vote, to appear.

Butt-hurt jealous Canadians in sufficient numbers could make it happen. We see many right here on the GF, Imagine how many more are out there. I’d bet their number grows daily.

I know lots of folks who build a house, live in it for a year, and list it. They pocket the gains and then build another. The last few years, a few have had trouble keeping their mouths shut about how much they made on these deals. Not much has been said, but a few were genuinely shocked – they had no idea how lucrative.

You know damn well what would happen after too many revelations like have had a light shone on them.

In the privacy of the voting booth, when one has the option to help spoil the party…

But are Canadians better than this?

Hell no.

#135 Canuckle Head on 04.18.18 at 1:01 pm

#130 JohnnyBoy on 04.18.18 at 12:42 pm

——————————–

Yup triggered.

Diversity and Siberian climate.

Enjoy.

#136 jess on 04.18.18 at 1:14 pm

Reports by ProPublica Illinois and the Chicago Tribune show that the tax appeals system can exacerbate existing inequalities in the tax system in Illinois, in part because appeals are filed most frequently by those who can afford lawyers. Experts said they see this in many places across the country.

https://www.wnycstudios.org/story/trump-inc-podcast-trump-company-suing-towns-tax-breaks

see

The Tax Divide
Cook County’s Residential Property Tax Assessments Deeply Unfair, Independent Study Confirms
Findings that assessments were error-ridden and burdened the poor….
by Jason Grotto, ProPublica, and Hal Dardick, Chicago Tribune Feb. 15, 3 p.m. CST

The report released Thursday found problems at every level of the assessment process, including the computer programs used to produce initial valuations. The study found those programs, known as regression models, produced values that are “outside the target range” of industry standards.

The problem of regressivity — the tendency to overvalue lower-priced homes and undervalue more expensive ones — is worse in Chicago than in the suburbs, the study concluded. In the city, the owner of a $600,000 home is likely to have an effective property tax rate that’s 24 percent lower than the rate for the owner of a $300,000 home, the report states.

More than 90 percent of the values created by the models are eventually changed by the assessor’s office before notices are sent to homeowners, according to the report. The opaque process, which includes something called “hand reviews,” allows the introduction of “systematic bias,” it found.

The office also engaged in “selective reappraisal” by modifying the valuations of properties that recently sold based on the sales price, according to the study. That practice, known in the field as “sales chasing,” violates industry standards. Illinois’ constitution also requires that assessors treat all properties in the same way.

Sales chasing not only introduces inequities into the system but also causes assessment systems to look better on paper than they are in reality, the report said.
https://www.propublica.org/article/cook-county-residential-property-assessment-study-results

#137 Penny Henny on 04.18.18 at 1:33 pm

You can designate a cottage (or a boat, or RV if you’re really weird) as your principal residence. But remember only a single PR can be designated in any one year, so choose the property that has appreciated the most.-Garth

/////////////////////////

No. 2: Must inhabit the home

For tax purposes, there is no minimum period for which you have to own or inhabit the property in order for it to qualify as your principal residence. From the CRA’s perspective, a home would qualify as a principal residence if you and your family “ordinarily inhabited” the dwelling during the calendar year.

But be warned: The CRA will look at all evidence—including length of time in dwelling, primary income sources and patterns of buying, living, moving and selling—to determine if, in fact, the home is a principal residence or part of a business created to earn money off of real estate flipping.

http://www.moneysense.ca/spend/real-estate/8-questions-about-the-principal-residence-tax-rules/

#138 Ace Goodheart on 04.18.18 at 1:46 pm

RE: #133 IHCTD9 on 04.18.18 at 12:49 pm

“You know damn well what would happen after too many revelations like have had a light shone on them.”

You may be right.

I just wonder about a situation where a person could not sell their house and purchase another one, because of the capital gains tax that would involve. I can see that crushing bank profits, putting 3/4 of realtors out of business, and causing an exodus of money out of this Country.

They might put a ten year or a five year limit on occupancy, ie so if you live in the house for less than five or ten years, you have to pay full capital gains.

Western style governments are giant kleptocracies, funding their mostly useless endeavors using tax money, and making tax money into their “right” rather than something they collect to provide for the needs of the citizens they are supposed to serve.

They will tax us until it hurts them. That is why I think they won’t tax principal residence sales as a capital gain. Because doing so would stop people from buying and selling houses.

If people stop buying and selling houses, then banks stop writing mortgages, people stop working to pay those mortgages, and governments stop collecting taxes.

Governments will not knowingly hurt their own interests. They need to make money for themselves and their friends and relatives. That is how governments work.

#139 PastThePeak on 04.18.18 at 1:57 pm

#65 Nonplused on 04.17.18 at 8:27 pm
#116 IHCTD9 on 04.18.18 at 10:07 am

..We have income taxes, HST, sin taxes, carbon taxes (just more HST, but for our own good), property taxes, capital gains taxes, licensing fees just to open a lemonade stand, royalties, toll roads, land transfer fees, and lots more already. Everything but the income tax is a tax on a tax. And in some cases a tax on a tax on a tax. It’s simply mind boggling how much tax we already pay.

But it’s not enough. I think the collapse of western civilization is at hand, because the amount of money we need to continue running it just doesn’t exist, at least not the way we run it.

++++++++++++++++++++++++++

I know people mostly don’t care for “doomsday” discussions, and the future isn’t written yet – but it is difficult to see how Canada can right the ship before it really hits the rocks (maybe not Venezuela, but something far different that the country we grew up in).

As noted above, Canadians are already heavily taxed in many areas. The last 2 years have seen some of the better growth in a decade – and EVERY ONE of Canada’s provinces, territories, the Federal gov’t and (to my knowledge) municipalities have all been in true deficit – meaning adding to their overall debt.

So in the “best of times”, with high taxes, and ultra low interest rates, 9 years out from the last recession – expenses exceed gov’t revenues in every corner of the land. No one has a plan to balance that. Consumer debt levels are some of the highest in the world. Businesses have taken on significant debt, but mostly to buy back stock – not invest for productivity.

The gov’ts and population are blissfully unaware / unconcerned / ignorant. Most want more gov’t spending, greater benefits, more regulation, more tax.

Correcting course is possible, but it would be painful (by today’s standards) and would take many years with coordination across the fed & provinces. It just seems very unlikely. And so closer to the cliff we go…

#140 IHCTD9 on 04.18.18 at 2:17 pm

#131 What can I say on 04.18.18 at 12:44 pm
#101 Andrewt on 04.18.18 at 7:38 am

There’s a difference between having your (or my, or any individual group’s) economy depend on it, and having THE economy depend on it.

——————————————————–

You’ve got to be kidding? Right? You do know that many, many individuals have drunk from the low rate punch bowl. These people are THE economy. If Poloz declares the party to be over by raising rates, what happens to their profligate spending on which the economy depends? We’ve all gone to this party and even if we personally didn’t overdo it with the drinking, when the beer mugs start flying, we can all be hurt.
________________________________

The long and short of it. If the SHTF with rates in the future, those who had gone to the punch bowl looking for trouble in years past, will find it.

Many others will have understood the potential trouble, made preparations for it; and be just fine.

Also, if the S does HTF, much brand new spending will appear out of nowhere from us guys who said no to the punch bowl. We aren’t spending too much right now, or in the last 10 years or so. But none of us will be able to resist 25-50% off on cars, trucks, you name it.

And we’ve got bank – no need for a LOC.

#141 Bytor the Snow Dog on 04.18.18 at 2:20 pm

#116 IHCTD9 on 04.18.18 at 10:07 am sez:

“Ontario voters like to burn piles of cash on SJW/global warming/culture fluff that does almost no one any actual good.

Ontario voters do not care much about costs, deficits, or debt.”

——————————————————–

Don’t you mean “Liberal” voters, provincially and Federally?

#142 natrx on 04.18.18 at 2:33 pm

Let the Feds try to implement that tax. It will be a ‘death’ knell for that government.

#143 Rolldaddy of Surrey on 04.18.18 at 2:47 pm

Hey Garth, You fail to mention the unintended consequences of trusting spouses getting a “tax divorce” and putting one propery in each partners name. Now that we are on the downside of the Laffer curve, strategies like this will become common place.

#144 Gravy Train on 04.18.18 at 2:51 pm

#104 Big Kahuna on 04.18.18 at 8:17 am
DELETED

Hey, big guy. Can you run that by me again? Sorry, but I wasn’t paying any attention! :)

#145 IHCTD9 on 04.18.18 at 2:58 pm

#138 PastThePeak on 04.18.18 at 1:57 pm
_________________________________

Forget it, not happening. I’ve thought about this a lot. It’s the Canadians themselves who are the problem. It just doesn’t matter anymore who gets in if we’re wanting to talk about financial stewardship.

Canadians have priorities that do not include living in the black. Debt and deficit are fine. The economy is not really all that important. It is much more important to get rid of mean politicians, even if everyone loses their jobs under the new leadership.

Watch the Ontario election. Wynne will make more give away promises, and her fortunes will improve. Even after her last horrible, disastrous tenure – I still won’t rule her out due to the stupid Ontarian voter.

Wynne is already working the “Doug is a mean bully” angle comparing him to Trump lol! Ontarians will eat it up. It’ll be Wynne or Horwath when it is all said and done.

If you want some good advice: If you truly believe that debt needs to be repaid with interest, then you need to start making a plan to avoid new taxation on the essentials of life. Anything you can’t say no to will be what you need to work on.

I am well along in a vast drop in my consumption of transportation fuels, and heating fuels. Garth has written on minimizing tax, others here have commented on some of the things they are doing, or their plans. I have written many of the things I am doing.

It’s all going to need to be paid back, and the money is going to be carved out of the middle class in the form of taxes and fees. Minimal-to-no efforts will be made to find efficiencies or cut costs.

You can take that to the bank.

#146 JohnnyBoy on 04.18.18 at 3:08 pm

#134 Canuckle Head on 04.18.18 at 1:01 pm
#130 JohnnyBoy on 04.18.18 at 12:42 pm
——————————–
Yup triggered.
Diversity and Siberian climate.
Enjoy.
……………………………………………….
Nope no trigger, don’t have any guns!
Ba ha ha ha nice one a$$hole……………….
Ouch

#147 Moister Miller on 04.18.18 at 3:08 pm

credit line pain going up

https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-how-the-interest-rate-vise-is-closing-on-people-with-home-equity-lines/

#148 IHCTD9 on 04.18.18 at 3:11 pm

#140 Bytor the Snow Dog on 04.18.18 at 2:20 pm
#116 IHCTD9 on 04.18.18 at 10:07 am sez:

“Ontario voters like to burn piles of cash on SJW/global warming/culture fluff that does almost no one any actual good.

Ontario voters do not care much about costs, deficits, or debt.”

——————————————————–

Don’t you mean “Liberal” voters, provincially and Federally?
___________

I am talking about sentiments of most Ontario voters.

So obviously right now that would be Liberal voters.

#149 IHCTD9 on 04.18.18 at 3:27 pm

#137 Ace Goodheart on 04.18.18 at 1:46 pm

Governments will not knowingly hurt their own interests. They need to make money for themselves and their friends and relatives. That is how governments work.

___________

I agree.

But ask yourself this question:

Would Kathleen Wynne declare her intent to eliminate the CG tax exemption (if she could) on PR’s if she knew it would guarantee her re-election?

She might be fighting for her political life right now.

She won’t be doing jack if she gets turfed.

An act of desperation to get another 4 years?

Wouldn’t be the first time.

#150 Smoking Man on 04.18.18 at 4:04 pm

112 JohnnyBoy on 04.18.18 at 9:56 am

You’re going to ouch me @ the meet up?

We have never met yet vial hatred. Testament to my profound writing skills. Bring a tee shirt. I’ll sign it for you.

#151 Calgary Rip Off on 04.18.18 at 4:06 pm

The thinking in this article is commonplace, yet all wrong.

Housing is a place to live in. Maybe an investment. Apparently in NW Calgary when I bought the mortgage for $420K its now assessed at around $500. Yay? I don’t count on making money off it. Im just not willing to pay money to some idiot that happened to buy the mortgage pre 2004 when housing was reasonable. Hence the mortgage.

In some parts of the world, UK I think, say you defaulted on the mortgage, the bank gets the property and you still owe for the mortgage.

The other day I harassed again one of the docs I work with: Told him he should buy the $11 million property in Calgary and the $38 million penthouse in Vancouver. Apparently he didn’t like being on the receiving end of a one way conversation: He muttered something then said “Go”. I wished him a nice day and walked away. That’s the thing about money: Its never enough.

As far as renting my basement: No. I need at least 40 acres around my person at all times. If you intrude closer than that, its my personal space.

#152 SilverSon on 04.18.18 at 4:33 pm

People keep making comments here about how the Canadian banks would really suffer if they couldn’t collect mortgage interest. I seem to recall that Canadian banks were making absolutely obscene profits throughout the entire period of time when mortgages could be had at an interest rate less than 2.5%. Considering that the banks have to pay some of that interest on to those they borrowed the money from, doesn’t that suggest that banks aren’t really making their money from charging interest? Seems to me that the banks realized a good 20-30 years ago that they can collect far more money from charging fees than they can from collecting interest. And collecting fees is 99.999% guaranteed for them because they simply deduct it from their customers’ accounts, but mortgage interest carries more risk because people do go into default on mortgages.

Personally, I think the banks are in it for the fees and have been for a very long time. They only do mortgages because it keeps people coming into the bank to so [email protected] can sell you products for which the bank can charge perpetual fees. If that’s correct, maybe the banks couldn’t care less if fewer houses change hands. Besides that, they already have the huge mortgages of so many Canadians anyway, and thanks to B20 they can leverage interest rates upwards without having to worry too much about their customers going to different lenders for their mortgage. All of this will continue to happen regardless of whether or not people continue to buy houses.

#153 Smoking Man on 04.18.18 at 4:41 pm

No smith manoeuvre here, people using helocs for personal consumption at a record rate.
This going to get ugly real fast with the next BOC spike.
Moodys just down graded ontairio which means Ontario to pay a hell of lot more to service its debt. Free drugs and free day care. Yeah Right.

#154 jess on 04.18.18 at 4:49 pm

He fooled everybody, because he’s an easy going, nice talking, smooth guy. And you just wouldn’t doubt him for a minute.”

Calgary fraudster behind $8.8M Ponzi scheme gets 11 years
B.C. investment adviser seeks to exclude evidence from fraud trial

Closson, 47, ran two financial companies: Optam Holdings Inc. and Infinivest Mortgage Investment Company.

He would use funds from Infinivest to pay off investors in Optman, creating the illusion that he was raking in huge returns. cbc

He was able to raise more than $10 million before Optman went bankrupt in 2013, triggering an investigation by the Alberta Securities Commission and the RCMP.

#155 Gravy Train on 04.18.18 at 9:05 pm

#149 Smoking Man on 04.18.18 at 4:04 pm
“We have never met yet vial hatred.” That’s spelled vile hatred, genius. Did you think it came in pill form? 10 or 20 mg?

“Testament to my profound writing skills.” What! As a comedy writer? You suck and blow as any kind of a writer! Jackass! :)

#156 Canuckle Heads on 04.19.18 at 7:43 am

145 JohnnyBoy on 04.18.18 at 3:08 pm
#134 Canuckle Head on 04.18.18 at 1:01 pm
#130 JohnnyBoy on 04.18.18 at 12:42 pm
——————————–
Yup triggered.
Diversity and Siberian climate.
Enjoy.
……………………………………………….
Nope no trigger, don’t have any guns!
Ba ha ha ha nice one a$$hole……………….
Ouch

——————————————————-

Calling people assholes and thinking you’ve scored some kind of intellectual victory. Hahaha.

Snowflake Johnny is definitely triggered and needs a box of tissues :p

#157 Steven Rowlandson on 04.19.18 at 8:28 am

Surely it must be tempting for the government to tax profits on principle residences and all real estate after giving it preferential treatment for so long and allowing the price to highly inflate. What a plum to be plucked and devoured by the tax man. Seriously what could the public do to prevent it? Vote for another party that is like minded and essentially a clone of it’s competition?

#158 Steven Rowlandson on 04.19.18 at 8:40 am

RE#144

“It’s all going to need to be paid back, and the money is going to be carved out of the middle class in the form of taxes and fees. Minimal-to-no efforts will be made to find efficiencies or cut costs.

You can take that to the bank.”

It will take the kind of leadership that is tough, cruel, smart, capable of discipline, long range planning and is not legally allowed on the ballot or even in the country.
The possibility of salvation for Canada is legally locked out and short of changing that the country is doomed.