The question

The economy is China is sputtering. The American government is paralyzed. The US president denies he’s a Russian agent. And Brexit’s about to blow up.

And how do stocks markets react? Yawn, basically. Small moves in the last couple of days following big advances provide more evidence a bottom was formed about the time you were thinking of eggnog, Donner and Blitzen. As this blog argued, markets don’t collapse without a damn good reason. A weird president is worrisome, but not reason enough to ignore corporate profits, consumer spending, expanding jobs and all the other reasons no recession lurks.

Markets sold off in the fourth quarter. Assets got cheaper. And compelling. Those who bailed foolishly turned paper losses into real ones. Those who ignored the noise were wise. Those who came here to tell you it was 1929 again have mysteriously vanished. It’s a pattern that never alters. Every correction is the end of the world.

But let’s ignore that, and talk about Darrin, of Cowtown. I present his case today, since he poses a question repeated over and again. Strange. The answer is so clear…

I’ve read your blog for years, trying my best to follow your advice when making financial decisions over the last decade, and have now hit a moment where I need a specific answer to a specific question I have.

As a 34-year-old married man living in Calgary. We have two young children and have lived in a townhouse for the last little while; we paid $330 000 for it when we bought it and listed it on Thursday to sell. We have recently put in an offer ($360 000) to buy another place and are will be finding out soon if we got it; it’s a foreclosure.

My wife says we should rent our townhouse, which would bring in about $1 700 a month. This would cover almost all of our monthly costs, which come in at about $2 000, including our condo fees that are $245 and taxes.

Here’s the question: Should we rent and deduct all the expenses (i.e. general cleaning and maintenance, repairs, local property taxes, mortgage interests, etc.) from our taxes and let it build equity, or should we just sell the townhouse and maybe take a loss due to the current housing market?

I have a feeling I know your answer, but I am wondering if you would ever recommend keeping a place and renting it out to help build equity. Thank you for all your help over the years.

First, Darrin, why would anyone ever want to be a landlord? Not only will you be subsidizing the person who leases your place (since it costs you more to own than you are receiving monthly), but you’re now obligated to look after this human. Yeah, just like a beagle. The heat and water have to work. The appliances, too. No safety issues. No outstanding repairs. Functioning toilets. And a tough time getting rid of someone, even if they don’t pay the rent. All so you can lose money? Huh?

However, there are five overriding reasons this is a Bad Idea. So go and get your wife and read the next paragraphs to her. That’s okay. We’ll wait.

One. The way to succeed at investing is to have money in multiple asset classes. That doesn’t mean two houses. By buying the new place and retaining the old you’re just doubling down on real estate exposure – and in a city where the market croaked years ago. As interest rates nudge higher, Calgary’s business core hollows out and oil stays wonky, why would you increase your reliance on it? Don’t be dumb. Diversify.

Two. The losses from renting are far greater than you think. Sure, it costs two grand a month to carry the place, but that doesn’t include the money you have locked in equity. If that’s $150,000, for example, the wad could be earning $750 a month if left invested in a retirement portfolio. Now your true losses are a grand a month – and I can guarantee the property will not appreciate that much (and could depreciate).

Three. Sure you can deduct expenses related to the rental property from your income, but not forever. The CRA has other ideas about that. Anyway, you must add the rental income to your own employment wages and be taxed at your marginal rate on every single dollar. In fact, this might push you into a higher bracket. Investment income in the form of dividends or capital gains comes with a big, fat, juicy tax break.

Four. Once you change addresses and rent out the house you give up your PR exemption. That means any future appreciation in the value of the property will be taxed as a capital gain. In Calgary, where most houses have declined in value over the past few years it could mean you have the worst of both worlds – no tax-free gain while living there but a taxable one when it’s rented.

Five. This is just bad financial planning. Why would you buy before you sell? In a lousy market like Calgary it could take a year to find a buyer, and meanwhile foreclosures continue to pile up. Why would you incur a pile of new debt instead of using the equity in the old place to finance the new one? And if you’ve got a stay-at-home spouse and two little screamers, you should be asking me about income-splitting and RESP investing instead of flipping houses.

Face reality. Your wife’s leading you astray, Darrin. (But you don’t need to read that to her.)

About the picture:

Blog dog Cora shot this a day ago near Canary Wharf, in Brexit-troubled Britain. The Great Eastern bills itself as “Traditional boozer for British pub grub and pizzas, live music and karaoke nights.” Plus, an indoor doggie zone and free drinks for Bowser! They’re all going to need them soon.

138 comments ↓

#1 dakkie on 01.14.19 at 4:32 pm

Homebuilders Set To Deliver “Canary” Message Again!

https://www.investmentwatchblog.com/homebuilders-set-to-deliver-canary-message-again/

#2 expat on 01.14.19 at 4:36 pm

It would seem cruel to tell this fellow that the only renters left are the deadbeats who couldn’t buy.

We sold all of our rentals 5 years ago as everyone was slobbering trying to get into rentals…. W ehad been landlords in some cases for 35 years.

I wouldn’t have a rental now if it killed me.

For 40 years one could count on the layer of the rental pool renters who were decent hard working people who simply couldn’t afford to buy or didn’t want to.

These people rented our properties for a long long time. Taking immaculate care of them in some cases and several stayed for 20 years.

The change in renters happened about 6 years ago as this layer of renter bought homes.

In our experience the only renters left were the skippers, deadbeats, and druggies.

We sold everything not nailed down.
Now they can grow pot in your rental….

Good luck with the black walls and flowering hardwood floors

#3 expat on 01.14.19 at 4:44 pm

I notice alot of people here focus on one element of the economy…

I’d like to say that the “BUBBLE IN EVERYTHING” seems to be popping.

As interest rates rise it’s taking speculation out to the woodshed.

They are driving the economy worldwide toward recession I believe to try to cool down the economy…

US real estate is literally crashing in some areas as well as Canada.

Australia – well good luck there as the economy collapses….

One thing I notice in Cananda is the size of local government in the last 20 years. I live away from Canada now but am staggered by the sizes of the municipalities.

These monsters are like Russian states. Dictators and thieves they seem to be….

Gobbling up capital through taxes to pay for 100K janitors on the street corner cleaning waste baskets.

As assessments drop expect area rates to explode to make up for the loss of taxes.

At some point bankruptcy may be a real possibility. Here in the states there are 1000’s of municipal pension funds nearly broke from 100K a year pensions and zero growth in the last decade.

Ask your mayor how your local pension fund is doing…

#4 Tony on 01.14.19 at 4:49 pm

Anyone who bought a townhouse in Calgary since the year 2005 is in a negative equity situation. Prices peaked early in 2008 and have plummeted ever since. Most townhouses in Calgary today are worth half of what they were worth way back in 2008.

#5 Kelly on 01.14.19 at 4:51 pm

How could Darrin from Cowtown “read your blogs for years” and still ask if he should become a landlord? Puzzling but I surmise he is under some pressure and needs a friend.
Great answer.

As for the 1929 concerned readers, they have not vanished. Another leg down in the markets will burp up many readers with a different market analysis for the future.

I for one, am convinced that this market built on debt, has a rocky road ahead.

#6 Brian Ripley on 01.14.19 at 5:02 pm

Darrin,

My Calgary housing chart looks pretty bearish (December data)
http://www.chpc.biz/calgary-housing.html

But my revamped Plunge-O-Meter chart has Calgary single family detached housing as a “buy” if prices at the 2013 level represent price support. (the chart also shows 2009 and 2005 support)

My “Months of Inventory” (MOI) chart based on total inventory at month-end is also supportive for buyers since listings are averaging 6 months on the market before being sold or de-listed. But long listing times means listing prices are too aggressive for the market.

So if you are going to buy, get your present unit sold first and get a large non-refundable deposit on that contract before you enter a new one. The time you need to sell your present unit will give you a better idea of what’s going on before you commit to setting a price for the new purchase.

#7 The Answer on 01.14.19 at 5:03 pm

This has been covered rather well, and cannot add anything more to this train wreck about to take place, other than wishing you the best of luck with this complex transaction.

#8 Ray Skunk on 01.14.19 at 5:03 pm

For anyone considering becoming a landlord, there are two eye-opening UK reality TV shows on Netflix:
“Nightmare Tenants, Slum Landlords”
“Can’t Pay? We’ll Take It Away”

Strongly suggest banging through a couple of episodes of each before dipping your toe in the water.

#9 Ken M. on 01.14.19 at 5:12 pm

Good, back to finance – too many cancer and diet “experts” the other day.

#10 PastThePeak on 01.14.19 at 5:22 pm

Garth, the stats you speak of from the US are certainly true, and it seems inconceivable that country would enter into a recession anytime in the next 12 months. While the federal debt is exploding, that isn’t going to be an issue in the short term.

I wouldn’t be so confident of Canada though. Our GDP growth is expected to be a good bit lower than the US, and we have the consumer debt issue the Americans don’t. Our job market is not as strong, wage growth is less, and taxes are going up for companies, not down. Obstacles to business abound in our resource sectors. Now there is also China’s hate-on for Canada, which is certainly not a positive catalyst for export growth. It is just hard to find any positives for the Canadian economy over the next few years.

As mentioned a couple days ago, I wouldn’t be betting money on the TSX outperforming the S&P 500 over the next few years (I am invested in both, but feel the US is better value, other than it costs me 35% more to put the money into USD).

Is 1929 coming some day? No idea. I am certainly invested as though it will not (I have no idea how to invest otherwise:) I do wonder how the world will deal with the never ending accumulation of government debt. By now it must be obvious that the US will never pay down 21T in debt (25T before you know it). Canada (fed + provinces) will never pay down their 1.4T in debt (2T in short order). Most countries will never pay theirs down. So how does that get reconciled, at some point in the future?

#11 not 1st on 01.14.19 at 5:23 pm

Garth you forgot about the chronic vapers.

#12 Fish on 01.14.19 at 5:25 pm

Economic growth in Canada and the world is slowing, OECD says  

U.S., Germany and most of the euro zone should anticipate easing growth that were flagged in last month’s assessment,

The Organization for Economic Co-Operation and Development released new data on Monday

CBC News · Posted: Jan 14, 2019 12:06 PM ET | Last Updated: an hour ago

https://www.cbc.ca/news/business/oecd-canada-economy-1.4977307

#13 Mike in Calgary on 01.14.19 at 5:28 pm

I have a rental condo in Calgary. I bought in in May 2008 for $325,000. Today, I’d be lucky to get $290,000. After realtor fees, legal, etc. I’d be looking at a loss of almost $45K. It doesn’t have a mortgage, but even still the rent from it generates an after tax return of 1.08% (I’ve done the math).

I bought it so my kids had a place to stay while in university. That’s come to an end and I’m now looking at options.

It’s in a great location very close to downtown and the c-trains. Walkable to restaurants and pubs. The view of the downtown towers from the front window at night is incredible. And it’s a very nice building. I honestly wouldn’t mind living there myself except they don’t allow dogs. But investment-wise, it’s a real pig.

My two cents…sell the townhouse and move on. At least you won’t have to deal with tennants.

#14 Terry on 01.14.19 at 5:37 pm

Canadian and U.S. companies…………Get out of China now! We cannot trust the Communists! Travelers also beware………….never ever travel to China again!

https://www.cbc.ca/news/politics/schellenberg-death-sentence-china-1.4976959

#15 Yellow Vest on 01.14.19 at 5:38 pm

Do you think Trump is a Russian agent?

#16 Grayden Cornapple on 01.14.19 at 5:46 pm

Garth, Once the US Govt shutdown ends, do you think markets may go parabolic for a few days to recover from this period of uncertainty?

#17 Reality is stark on 01.14.19 at 5:54 pm

Darrin has a life of slavery and poverty ahead of him. I wish that on no man.
There is no reason to kill yourself if you don’t have to.

#18 Dolce Vita on 01.14.19 at 5:55 pm

#5 Kelly

Garth mostly talks about the US economy, they’re fine.

The Cdn. economy is churning out jobs with Seasonal adjustment (Dec. 2018 +90,000), Unadjusted (Dec. 2018 -50,000).

The Cdn. Consumer decides and not Mr. Market.

2018 retail sales HALF of 2017. Dec. 2018 retail sales -0.8% (ya, Christmas was a bust in Canada unlike in the US). RE fast becoming a shambles.

Many people flush with cash buy stuff. Pressure on prices. Poloz did not jack the prime rate. No inflation pressure (prior excuse to jack the rate).

In debt up to their eyeballs. Most of it in single asset RE. 70% debt underwritten by RE.

Maybe not 1929 but there are many good reasons it’s not looking good for Canada.

I say this Qtr. slowing way, way down. By 2nd Qtr. the “R” word will be used.

And Garth, I’m not a sky is falling guy.

I look at the fundamentals and Mr. & Mrs. Cdn. Consumer are not happy campers.

#19 Catalyst on 01.14.19 at 5:56 pm

Your getting paid in reduced mortgage so I dont think it’s so clear. And 12k appreciation a year is not unrealistic. It really all relies on the tenant you get and there are no guarantees. Also, having a lucky house with minimal issues is important as some seem to be in a constant need of repair.

Stocks dont look very attractive right now either so it’s a tough call.

#20 Sail away on 01.14.19 at 6:10 pm

Why do so many people ask these questions after pulling the trigger? I’ll sometimes take a small equity position while continuing to research an interesting opportunity in greater detail, but wouldn’t dream of risking everything plus leverage without having a clear understanding of the situation. It’s painful to watch and bafflingly common. Maybe not too baffling, actually- if someone misses the MAIN POINT of this blog after following it for years, why expect greater wherewithal in their financial dealings?

#21 Dolce Vita on 01.14.19 at 6:15 pm

#12 Fish

“Easing growth”?

Are you kidding me? If ever there was an understatement, that would be it as far as the EU is concerned.

Here in Italy they are looking at -‘ve growth this year and they’re the 3rd largest EU economy (well, add in “sotto tavolo” and it’s the 2nd largest just a pubic hair less than the German’s…Italian’s will do anything to avoid a 22% VAT [GST to Cdn’s]…and so would Cdn’s if that were the GST).

Italy has been in a funk for 10 years and getting worse. At least we are happy with our Gov.

Ask the Brexit Brits, Yellow Gilet French and AfD German’s how happy they are with their Gov’s and/or economies?

Not very.

The EU will do a lot more than ease in 2019. Cdn’s not the only unhappy campers.

#22 crdt on 01.14.19 at 6:18 pm

Is Garth denying he is a Russian agent? He must be one then. Logic, so easy. If you accuse and they deny it, bam.. The truth…

#23 crossbordershopper on 01.14.19 at 6:20 pm

well when it comes to investing, being a landlord has its ups and down and the market goes up and down.
the various institutions are giving actual cash to move your account to them, people should look into it.
bmo, $1600, hsbc $3200 quite a bit of cash upfront, sure you have to move your 1/2 mil over, but much easier and simpler than worrying about a house, a toilet and a tenant.
i still think that if you can get 5% gtd with no worries, risk, volatility etc, 90 percent of all other investments arnt work the risk adjusted return.
if you asked me 20 years ago, i would never have been in 100% gic, but thats where i ended up.
sleep at night and nothing to worry about.
dont ask me about taxes, thats a canadian thing, the CRA is a joke, second rate civil servants looking for bits of cheese from people.

#24 Cristian on 01.14.19 at 6:22 pm

“And a tough time getting rid of someone, even if they don’t pay the rent.”

You can say that again. I am a doctor and recently one of my patients came to ask me for a sick note to support her attempts to end a tenancy – she’s been trying to get the tenant evicted for years now apparently without success – he’s apparently laughing at her and insulting her whenever seeing her, telling her that she’s never going to be able to get rid of him. I really felt sorry for the poor old lady (she’s 70-something). So, yeah, why would anyone want to be a landlord?…

#25 Yellow Is A Bad Colour on 01.14.19 at 6:30 pm

#15 Yellow Vest – I think that Yellow Vests are nothing more than a radical bunch of trouble makers. Trump’s political position is unknown, but I have my own personal theory about this buffoon.

#26 Shawn Allen on 01.14.19 at 6:33 pm

When will countries repay their debt?>

Past the Peak at 10 said/asked:

“Most countries will never pay their [debt] down. So how does that get reconciled, at some point in the future?”

************************************
Excessive debt by some countries may well prove to be a big problem.

But the notion that they ever have to pay it down to anything close to zero is false. Countries, unlike humans, have an indefinite expected life. They can keep rolling forward debt indefinitely. A debt at a certain percentage of GDP (that percentage is debatable and declines at higher interest rates) can be sustained and grow forever with GDP.

Similarly, consider Berkshire Hathaway. Its debt grows exponentially over the years. Yet it has “Gibraltar-like” financial strength. There is no expectation that it will ever reduce its debt to zero, or even reduce it at all.

#27 kommykim on 01.14.19 at 6:35 pm

RE: #15 Yellow Vest on 01.14.19 at 5:38 pm
Do you think Trump is a Russian agent?

=======================================

If he is, then he’s not very stealthy about it.

#28 Smartalox on 01.14.19 at 6:35 pm

@ Yellow Vest #15:

I’d suggest that the possibility that Trump is a Russian agent, is about as likely as Russia being behind the Yellow Vest protests in France.

Which is to say: very.
http://nymag.com/intelligencer/2018/07/trump-putin-russia-collusion.html

#29 renter in Surrey on 01.14.19 at 6:35 pm

#15 Yellow Vest

Do you think Trump is a Russian agent?

—————————————————————–

Sure he is.
Remember how he was paid $500K for a speech in Moscow?
Oh, wait. It was Bill Clinton.
Never mind.

#30 MBA101 on 01.14.19 at 6:36 pm

Regarding Garth’s point #3, one could claim CCA against the rental to defer the income tax to later years. A dollar today is worth more than a dollar tomorrow. It’s best to talk to an accountant. I’m curious what Garth meant by CRA having “other ideas” related to deducting expenses mentioned the by poster against income (i.e. maintenance, repairs, local property taxes, mortgage interests, etc.). How could these be challenged?

#31 Paul on 01.14.19 at 6:38 pm

#15 Yellow Vest on 01.14.19 at 5:38 pm
Do you think Trump is a Russian agent?
————————————————————————————————
Wow, even the “reporters” asking the question know he’s not.But keep putting it in stories thanhalf way through say there is no evidence but we are investigating yada yada yada,

#32 Welcome to Slurrey on 01.14.19 at 6:39 pm

Hey Garth quick question ( and to anyone else on the blog) . I plan on moving, is it better to list and sell your place first before buying another place, put a subject to sale clause in your offer if you find a place, or buy another place first before selling.

I know the last option doesn’t seem wise, but the issue becomes that if your looking for a specific type of property and find it, waiting for your place to sell might remove your opportunity to acquire that property -> now your stuck with no home, renting and house hunting……..

#33 Brian Ripley on 01.14.19 at 6:42 pm

Do you think Trump is a Russian agent? #15 Yellow Vest

If you watch MSNBC you will often see the NBC counter-terrorism analyst Malcolm Nance. He explains:

“No, he’s not an agent of the Russian government, because that’s an actual technical term that’s used in the intelligence community,” “I believe that he started out as a useful idiot, a person who had alignment with their philosophy, but was doing it for his own purposes,” he continued. “Then he became an unwitting asset, which is a person who is working with them but doesn’t understand that the strings are on him.” “But I’ll tell you, July 27th, 2016 when he said ‘Russia, if you’re listening and you want to release Hillary Clinton’s 30,000 e-mails,’ he became known what we say in the community, as a witting asset.”

Source: https://www.mediaite.com/tv/nbc-counter-terror-analyst-trump-went-from-useful-idiot-to-witting-agent-of-russia/

Nance, a retired Navy officer, just released a book The Plot to Destroy Democracy: How Putin and His Spies Are Undermining America and Dismantling the West

I recommend if you also read Nancy MacLean’s new book; a study of the Koch brothers agenda, namely: to rewrite the US constitution and move power away from the federal government to the states where corporate control over policy is easier to achieve.

Here is Bill Maher’s interview with MacLean
https://www.youtube.com/watch?v=rMHPH96Z3ic

MacLean’s book on this:
https://www.goodreads.com/book/show/30011020-democracy-in-chains

And if you don’t understand that Trump is a psychopath here is my post on Robert Hare’s psychopathic check list (notice how high Trump scores) http://www.chpc.biz/history-readings/category/trump

And finally here is a 300+ year old quote that sums up Trump’s political conduct:

“The superiority of his genius consists in nothing else but an inexhaustible fund of political lies, which he plentifully distributes every minute he speaks, and by an unparalleled generosity forgets, and consequently contradicts, the next half hour. He never yet considered whether any proposition were true or false, but whether it were convenient for the present minute or company to affirm or deny it… the only remedy is to suppose that you have heard some inarticulate sounds, without any meaning at all.” from Jonathan Swift’s essay “The Art of Political Lying”, published in The Examiner, 9, November 1710

#34 NothingBurger on 01.14.19 at 6:42 pm

Let’s all hope China keeps doing things to deteriorate their relationship with Canada. Once they execute enough Canadians, the political class in Canada might then be convinced by voters to start drafting laws to expropriate properties owned by Chinese nationals. Wouldn’t that be a wonderful thing to dream about!

When it comes to China, the Canadian media are cowardly hypocrites. As a comparison, you will have more chance of business success in Saudi Arabia, more respect from Saudi locals, and less chance of being executed in Saudi Arabia, but the Canadian media aims to dump on Saudi Arabia but stays respectfully silent with China. right….

“All action results in a reaction, some intended, some unintended” – old guy

#35 Smoking Man on 01.14.19 at 6:44 pm

DELETED

#36 Welcome to Canada and BC on 01.14.19 at 6:45 pm

I see Calgary as a buy opportunity.

A place where the math just barely works for those working an honest living and looking to raise a family.

Especially if you are exiting BC, the biggest RE money laundering drug cartel bubble on the planet.

Calgary will one day recover and the math won’t look too good anymore for those looking to enter the market. Maybe a decade out, but it will happen.

I feel sorry for the Albertans leaving Alberta for good and coming to BC only to find out a small town is now double in price what Calgary is. Truly unprecedented.

But hey, if you want to spend your brains out on some property, come to BC.

I remember the days when a home in Calgary was more expensive than a small BC town and you could cash out and move comfortably to BC. Not anymore! Better be bringing a lot of cash.

I have a house in Enderby, BC that I will sell at a discount to any Albertan. $788,888.88. It is 1,200 square feet freehold. I havn’t done anything updates to it. That is your responsibility. BC property sells itself. You should be able to sell your freehold house in Calgary for 400k so will need about a 400k mortgage to live the dream in Enderby, BC. Mable Lake is nearby and a nice fresh water lake to go fishing.

#37 Dolce Vita on 01.14.19 at 6:47 pm

On a positive note here in Italia, I can now buy top shelf Canadian Maple Syrup AND it’s €0,10 cheaper than the “poser” Vermont Maple Syrup (and has better labeling too, good ‘ole Canada).

I say that since Canadian’s rough it with the watered down stuff or Aunt Jemima Corn Syrup substitute. GRAZIE Canada for having to do without for our sake here in Italia.

AND we are your biggest EU Glyphosate (Roundup) tainted grain purchaser.

It’s not for us.

It’s for all you German, English, Cdn. and US tourists that all you order here is pasta and pizza, as if that’s the only 2 things we know how to make.

See WHAT WE THINK ABOUT YOUR CUISINES in the link below (note the West & East facing “Fake” arrows, consider “West” includes Canada, and Mexico).

We won’t buy your steroid juice pig beef despite what CETA says or your GMO veggies (no fruit your too cold Canada, or drenched La La Land).

Still love making pancakes with my Glyphosate tainted flour and drenching it in sirop d’érable from La Belle Province.

For THAT ALONE, Long Live Canada!

https://brilliantmaps.com/italian-food/

————————————

Yes Garth I know, Buonanotte da me.

#38 Tayyab on 01.14.19 at 6:49 pm

Hi Garth, I’ve been reading your blog for a couple months now.

Wondered if you have come across Ray Dalio’s take on the recent market correction. I would love to have your opinion on what Ray Dalio is thinking. Too alarming or do you agree with most of what he says?

It is a long read tho, https://www.linkedin.com/pulse/help-put-recent-economic-market-moves-perspective-ray-dalio/?trk=portfolio_article-card_title

#39 JSS on 01.14.19 at 6:52 pm

For the majority of Canadians (who are middle class), rental properties doesn’t always work financially the way they want it to.

Rising property taxes, insurance, utilities – yet, how will you pass these costs to your tenant? The tenant might say “no”, and pack up for another rental property. Does anyone know how many rental properties are currently available in Calgary or Edmonton? It appears like there’s a lot. This is a hugeo problem in Alberta, and I’m gonna bet it will stay this way for years to come.

If you really want an income property, put down at least 20%, and amortize it for as long as you can. You can bring the monthly mortgage down, and cash flow positive.

I must say, telling someone you have an income property sounds like you’re rich. It’s a way to gain lots of friends! You can walk around those backyard parties like you’re Elvis.

PS. if you really want an easier way to make money, buy shares of Canadian banks, utilities, REIT’s, telco, and railroads. Maybe an ETF or a low-fee mutual fund. You just won’t have any friends at the backyard party.

#40 Donal'd Trumpov on 01.14.19 at 6:54 pm

I wish everyone would stop calling me a russian agent !

#41 Mrs Hubris on 01.14.19 at 6:57 pm

/:2″It would seem cruel to tell this fellow that the only renters left are the deadbeats who couldn’t buy”
____________________________________________
“Deadbeat renter” here with another point of view. We have opted not to buy in lower BC, or even Victoria on the Island, despite a large wad of cash which would secure a property in core areas with no debt incurred. Our reasoning follows Garth’s own, that investing the money has been a wiser option. We are well diversified and, for the past few years, have largely avoided Canadian investments on the basis of serious barriers, we perceive, are increasingly threatening the Canadian economy. Environmentalists are extremist in BC (compare Norway’s approach), First Nations rights are highly politicized and increasingly grounded in law, and there’s an inevitably grim future for an economy disproportionately based on inflated housing and debt. We view properties which cost 7 figures and up, and do not see value, when the same amount would buy a large acreage and a solid 6 bedroom house (with privacy and a view), in other parts of Europe. In BC, properties for the same amount are flimsy and often in poor condition. Why would we give away good money to someone who did little to earn it? Our answer to the question of whether we buy or rent, is rather a case of whether we ultimately leave and go elsewhere. I doubt you would find us deadbeat at all, however. We come from another country, have a wider perspective and view, and are aware of what exists elsewhere. BC, at present, has a fragile social fabric which does not make it the best place on earth. as many here claim. Those who rent now are less deadbeat, than simply young people, or even professionals in Vancouver, who cannot afford to buy at current prices. Many are leaving and one of my family is already amongst them. Educated at Canada’s second top University, this is a young couple heading back to where they can have a reasonable standard of living, outside this country. And they are certainly not deadbeat, but renting was their only option. Just another point of view from someone with a width of experience of living in other parts of the world. I like to think I know how to behave too – I’m quite sure I’m not a deadbeat.

#42 Ray on 01.14.19 at 7:08 pm

I came across the site to-day that projects which countries will have the largest economies by 2030. I was impressed by the projected growth of India and Egypt. The US will be number 3, and the combined economies of China and India will be almost 4 times the size of the US.
https://www.visualcapitalist.com/worlds-largest-10-economies-2030/

#43 Spia on 01.14.19 at 7:13 pm

Lots of chatter from the MLM World Financial Group. Can be a client and a business owner by selling financial products and insurance to people who are not financially literate. Worth it? I have not seen the fees but they claim they are just brokering existing solutions from banks, etc. Bring solutions available to millionaires to the common folk.

#44 Bullwinkle on 01.14.19 at 7:15 pm

#15 Yellow Vest on 01.14.19 at 5:38 pm

Do you think Trump is a Russian agent?
—————————————————————
I think it was Boris Badenoff that said “is good conspiracy.”

#45 Yuus bin Haad on 01.14.19 at 7:21 pm

I’ve read your blog for years, trying my best to follow your advice when making financial decisions over the last decade, and have now hit a moment where I need a specific answer to a specific question I have.

Do you like the new BMO ETF, ZZZD?

#46 AK on 01.14.19 at 7:23 pm

“A weird president is worrisome”
=====================================
LOL. Well, did you check out what the market did, during Bill Clinton’s tenure ??

#47 LS on 01.14.19 at 7:24 pm

NothingBurger #34 -…As a comparison, you will have more chance of business success in Saudi Arabia, more respect from Saudi locals, and less chance of being executed …

Are you kidding? Saudi Arabia executed 48 people for non violent drug crimes in the first four months of 2018.

https://www.hrw.org/news/2018/04/25/saudi-arabia-executions-drug-crimes

#48 Dave on 01.14.19 at 7:29 pm

Why would anyone buy in Calgary now when the prices are dropping? THere are no big megaprojects on the horizon, there is a push for clean energy projects and to wean off fossil fuels and the vacancy rate in downtown offices is about 25%. It certainly isn’t a retirement town , people don’t move here to enjoy the winters and they can build out in all directions so why would housing increase?

#49 kommykim on 01.14.19 at 7:29 pm

RE:”#30 MBA101 on 01.14.19 at 6:36 pm
I’m curious what Garth meant by CRA having “other ideas” related to deducting expenses mentioned the by poster against income (i.e. maintenance, repairs, local property taxes, mortgage interests, etc.). How could these be challenged?”

======================================

I think Garth is referring to the CRA’s insistence that your venture should turn a profit after a period of time. If you continue to operate at a loss, or break even, they will take a dim view of that and disallow the expenses.
Google “reasonable expectation of profit”

#50 Nonplused on 01.14.19 at 7:30 pm

Ok, normally I know everything, but I’m stumped on this one. Somebody out there knows.

If you have a revenue property that brings in $1700 a month but costs $2000 a month to carry, from what do you deduct expenses? Aren’t you already at a loss and therefore not paying taxes? I mean I hate income taxes, but I thought you had to have income to pay income taxes.

I’ve only had one experience as a landlord, I rented out the basement of my house. I deducted everything I could think of but in that case I was cash positive and did have to pay tax on the rental income. However when the tenant moved out I decided to reclaim the basement for my own use because the paltry amount of money I was receiving after tax wasn’t worth the number of nights her and her waitress friends kept me up after they got off work.

So, to put a finer point on the question, can you deduct losses from a rental unit from employment income? I know I can’t do that with stock market losses, I can only deduct them from gains. Or at least I think that’s how it works. If you can deduct stock market loses from employment income I missed out on a few juicy deductions. Strange that RevCan never caught it in their reassessments.

#51 Steve-0 on 01.14.19 at 7:30 pm

“you should be asking me about income-splitting and RESP investing instead of flipping houses”

Wait.. I got a stay at home wife with a little one. Any genius nuggets I should know about? Let me take a stab at it:
1) Contribute to spousal RRSP, at the very least until our porfolios are even.
2) Make sure both TFSA’s are maxed out
3) RESP… Make sure you do it and collect the free money from the government?
3b) As her RESP is growing as she gets older, involve her so she learns how to do a balance diversified portfolio?

#52 WUL on 01.14.19 at 7:33 pm

#36 Welcome to Canada and BC on 01.14.19 at 6:45 pm

I’ve been through Enderby a number of times and that is nice country. I have also vacationed at Mable Lake and it is special. Both are not to far from that red barn joint on the highway if you like goats.

The other day Calgary was ranked 20th on the 52 places to visit in 2019 by the New York Times. You can google the article. A ranking that includes a lot of exotic international places with long, long histories. I think they are wrong. But, different strokes…. Don’t come here. Traffic is bad enough for us locals as it is.

#53 Reximus on 01.14.19 at 7:36 pm

was in Calgary for xmas visiting my sister. An old friend of hers lives there too, owns a house. She lost her job and wants to move back to Victoria…carrying the house isn’t killing her, (she has 2 roomates paying enough to make it easy) but she cant sell it either without taking a hit (bought 4 years ago, not much moving there at the moment.)

anyways she tells me she looked into leasing it and found out there are already 4700 properties looking for tenants! as in homes, not rental suites…so Darrin ought to really re-think moving in the first place, let alone trying to lease his current place

#54 Italian Food on 01.14.19 at 7:36 pm

#37 Dolce Vita – Methinks you protest too much, but here is our secret. We eat all the good stuff here, because its everywhere. I actually feel sorry for you eating pizza and pasta day and night. We have a large Italian community here producing and manufacturing food product the same way that it was done in Italy.

#55 Ex-Cowtown on 01.14.19 at 7:39 pm

Garth is a Russian agent. He was once spotted tucking into a bowl of borscht at the Red Square Restaurant in the Big Smoke. The people who run the restaurant know who Putin is, so the connection is undeniable. And there is absolutely no evidence to prove that it was not an “innocent lunch” so he therefore is a Russian spy.

It starts off small; first it’s borscht, then it moves to kobasa, after that your into perogies and then mainlining caviar.

#56 not 1st on 01.14.19 at 7:40 pm

#42 Ray on 01.14.19 at 7:08 pm
I came across the site to-day that projects which countries will have the largest economies by 2030.

——

Take those with a grain of salt. GDP that translates to personal wealth is different than trying to service the daily needs of hordes of poor people. China GDP is the same as the US right now, yet the average wage is about 10% of the US. GDP and individual wealth are poorly correlated in developing countries.

Notice Canada falling into the 25th position or so. Our best days behind us and Trudeau will cement our position as a laggard. Belgium 2.0 is our destiny.

#57 akashic record on 01.14.19 at 7:41 pm

The US president denies he’s a Russian agent.

===

Hahaha… Everybody knows he is a Chinese agent.

He would not be the narcissist, the egoist who he is said to be, to agent for anyone else, but the upcoming #1 super power of the world. Only losers work for the Russians since the American elite made a deal with China.

Trade war is just for deep cover. Hillary run a fake campaign to hand over the power to him.

Everybody knows.

#58 The real Kip (Ret) on 01.14.19 at 7:45 pm

We’ll see what tomorrow brings if this Brexit vote fails. I get the feeling this isn’t over yet.

#59 Smoking Man on 01.14.19 at 7:49 pm

#35 Smoking Man on 01.14.19 at 6:44 pm
DELETED
Really?. The Gallet razor add….
Dear God..

Breitbarf. – Garth

#60 oakville sucks on 01.14.19 at 7:49 pm

A collapse in Global M1 signals a worldwide recession has arrived.

#61 Fish on 01.14.19 at 8:01 pm

@
21 Dolce Vita on 01.14.19 at 6:15 pm

# Dolce, Did even read the article?????

Please feel to elaborate your addition thought
On the reported matter

here is the link if you do, thanks

https://www.cbc.ca/news/business/oecd-canada-economy-1.4977307

#62 crowdedelevatorfartz on 01.14.19 at 8:08 pm

@#96 BillyBob
“Canadians are too accustomed to just bending over and taking it from their governments….”
+++++
True, very true.
And since you’re a pilot you dont have to worry too much.
“Last plane out of Saigon” and all that.
Can you land a chopper on the roof of the Canuck Embassy when things go “Brixton” in Jolly old Blighty?
Alas, Canada’s last aircraft carrier was chopped up for razor blades about 50 years ago.
You’ll have to land on a Canuck Grain carrier….if we even have one of those flying the flag.

#63 Godth on 01.14.19 at 8:12 pm

trump is a russian agent and i’m not a bigot at all. jill stein is a russian agent too, as is bernie sanders. those evil russians are behind black lives matter, the yellow vests, #metoo, and my itchy back. those sneaky slavs are running everything, they want to take over the world. it was a plot hatched in ancient Arkaim, with their swastika shaped town. first they took over the north of europe about 4000 yrs. ago, displacing the celts that came from turkey and displaced the blue-eyed black hunter gatherers 7000 yrs. ago. now they want world domination. the only thing standing in their way is the saintly global hegemon called the USA.

thank G_d we changed yule to christmas even though that makes no sense but those sneaky russians and their Lapland reindeer herders still infected our celebrations with their Yggdrasil tree and stories about getting high on mushrooms with elves, flying reindeer, and who knows what. it’s a global conspiracy.

#64 akashic record on 01.14.19 at 8:15 pm

#9 Ken M. on 01.14.19 at 5:12 pm

Good, back to finance – too many cancer and diet “experts” the other day

You can always wait for the War on Cancer. Victory is said to be just around the corner. In the past several decades. Too bad, cancer doesn’t get the memo. Keeps increasing, not declining. Faster in regions where the most money is thrown at it by the experts.

At least the “experts” don’t spend any public money on their research, and their recommended medicine is no more expensive than food and plants, available to most can be.

#65 KLNR on 01.14.19 at 8:16 pm

@#37 Dolce Vita on 01.14.19 at 6:47 pm
On a positive note here in Italia, I can now buy top shelf Canadian Maple Syrup AND it’s €0,10 cheaper than the “poser” Vermont Maple Syrup (and has better labeling too, good ‘ole Canada).

I say that since Canadian’s rough it with the watered down stuff or Aunt Jemima Corn Syrup substitute. GRAZIE Canada for having to do without for our sake here in Italia.

AND we are your biggest EU Glyphosate (Roundup) tainted grain purchaser.

It’s not for us.

It’s for all you German, English, Cdn. and US tourists that all you order here is pasta and pizza, as if that’s the only 2 things we know how to make.

See WHAT WE THINK ABOUT YOUR CUISINES in the link below (note the West & East facing “Fake” arrows, consider “West” includes Canada, and Mexico).

We won’t buy your steroid juice pig beef despite what CETA says or your GMO veggies (no fruit your too cold Canada, or drenched La La Land).

Still love making pancakes with my Glyphosate tainted flour and drenching it in sirop d’érable from La Belle Province.

For THAT ALONE, Long Live Canada!

https://brilliantmaps.com/italian-food/
______________________________________

haha, love your posts. Epic complaining at it’s best.
Love authentic italian cuisine, it’s a close second to what the french offer.

#66 Long-Time Lurker on 01.14.19 at 8:32 pm

#60 CF on 01.13.19 at 11:20 pm
Garth and everyone else, I have to admit I’m kind of embarrassed at all the attention but I appreciate it anyway. I showed my wife too. And for those that figure we’ve given up fighting, we’re still doing what we can but at this point it’s about delaying the inevitable.

#65 tccontrarian on 01.14.19 at 12:06 am

An book I found insightful related to the powers of the mind:

You Are the Placebo, by Dr. Joe Dispenza

>That reminds me of Dr. Carl Simonton’s studies on psychoneuromimmunology:

Dr. Carl Simonton’s Getting Well: A Step-by Step, Self Help Guide to Overcoming Cancer for Patients and their Families Audio, Cassette – Abridged, Audiobook
by O. Carl Simonton (Author, Reader)

https://www.amazon.com/Carl-Simontons-Getting-Well-Step/dp/0940687127

#67 millmech on 01.14.19 at 8:36 pm

#36
There are a lot of places for under $300k, a couple even less than $200k, these are 2-3bdrm/2bth house with basements and nice yards.
Seeing houses being relisted after not selling with a 20%+price reductions from their previous listing price.
I have also noticed that some of these houses have been vacant for over a year in some cases.

#68 crowdedelevatorfartz on 01.14.19 at 8:38 pm

@#36
Enderby….Pfffft….no elevators there…whats the appeal?

Enderby. Where men are men and sheep are nervous…

#69 akashic record on 01.14.19 at 8:40 pm

Breitbarf. – Garth

Hm… Finally, a convincing line of argument. It’s not even the middle of January yet. This shapes up to be a promising year.

#70 Basil Fawlty on 01.14.19 at 8:48 pm

Well, I guess if no one here believes we are riding the biggest asset bubble in world history, it can’t be true. I would like to say that stocks bonds and real estate have been pumped to extreme valuations by the lowest interest rates in history, the easiest credit and mountains of QE (monetary inflation), but people know only a fool would say that.

So, let’s just all agree, this will end well.

#71 Godth on 01.14.19 at 8:50 pm

look at what those sneaky slavs have done now:
The polar vortex split apart. Here’s what to expect.
You’ll want a winter coat.
https://www.popsci.com/polar-vortex-fractured
https://earth.nullschool.net/#2019/01/13/0000Z/wind/isobaric/250hPa/orthographic=-124.67,92.54,296

Global Oceans Rapidly Warming, Accelerating Marine Extinctions, Superstorms and Sea Level Rise
https://www.patreon.com/posts/23911198

Murray-Darling fish kill: authority shelved fish health strategy in 2013
Plan called for 50-year commitment to restoring native fish numbers, but was canned after NSW pulled funding
https://www.theguardian.com/australia-news/2019/jan/14/murray-darling-fish-kill-authority-shelved-fish-health-strategy-in-2013

#72 Long-Time Lurker on 01.14.19 at 8:52 pm

#32 Welcome to Slurrey on 01.14.19 at 6:39 pm
Hey Garth quick question ( and to anyone else on the blog) . I plan on moving, is it better to list and sell your place first before buying another place, put a subject to sale clause in your offer if you find a place, or buy another place first before selling.

I know the last option doesn’t seem wise, but the issue becomes that if your looking for a specific type of property and find it, waiting for your place to sell might remove your opportunity to acquire that property -> now your stuck with no home, renting and house hunting……..

>That’s been covered on The Greater Fool but you have to search for it. There might be more on your question than this:

https://www.greaterfool.ca/2018/06/05/choices-14/

Choices
June 5th, 2018 | Book Updates | E-mail this blog post to a friend

Poor Abram. I read his note and felt the panic.

I recently deposited 5% for a town house ($860,000) at the end of April. Stupid, I didn’t have subject to selling my condo first. I have until Aug 14, 2018 for closing date. I wasn’t looking to flip or anything just having a baby being born soon will make a family of 5 in a 2 bed, 2 bath 747 sq ft a bit tough. Hence I deposited on the future home to grow the family in.

Unfortunately now it has turned into sleepless nights and endless worries right before the new born baby is born that we cannot afford. Condo has not sold. No buyers.

My question is: Is it possible to back out and just lose deposit or will the owners sue us for the difference of what they sell for if we do back out? Or is all terms and conditions of backing out dependent on seller? Most worried…

…The conclusion is obvious. Don’t offer to buy a property without conditions unless you have the cash in the bank, the mortgage arranged and your affairs totally in order. These days, with sales eroding in many areas and sellers willing to give hugs, you can easily include a condition requiring a satisfactory home inspection or financing approval. Don’t expect the same leniency if you try to make the offer conditional upon the sale of an existing property – since you’ll be tying up the home for a few months with no guarantee to the sellers. Also expect to pay more in return for that flexibility. So, sell first, then shop….

#73 acdel on 01.14.19 at 9:25 pm

I think that I will have a vodka this evening.

здоровье or something like that! :)

#74 Herb on 01.14.19 at 9:27 pm

I’m surprised that the media did not ask Trump the much more revealing question “Have you stopped beating your wife?”

They could have flogged that for a few days and adduced more “evidence” of wrongdoing.

#75 Shawn Allen on 01.14.19 at 9:31 pm

Why were Alberta Home Prices Ever High?

#48 Dave on 01.14.19 at 7:29 pm asked:

Why would anyone buy in Calgary now when the prices are dropping? THere are no big megaprojects on the horizon, there is a push for clean energy projects and to wean off fossil fuels and the vacancy rate in downtown offices is about 25%. It certainly isn’t a retirement town , people don’t move here to enjoy the winters and they can build out in all directions so why would housing increase?

**************************************
The last sentence is a good point. But that’s always been the case and yet new home prices did rise dramatically from about 1997 to 2007.

Drive five minutes outside of most Alberta suburbs where new homes are built and you are in farmland. Tons of land.

So why did the cost of a building lot rise from about $35,000 around 1990 to closer to $200,000?

We would need to have a full breakout of the costs of the lot as they were in 1990 and as they are now. Exactly how much of that increase was due to raw land costs? to land servicing costs, to various city levies, to profit to the land developer?

And what explains the increase in the cost to construct a house which at least doubled in 15 years? What was the percent increase in concrete, in lumber, in labour, in drywall, in builder profit, in all the other items?

How much of the increase is simply because the typical house was bigger and had more bathrooms and hardwood instead of carpet and better appliances and granite instead of the old traditional countertop material and more windows and on it goes?

Which of the factors that go into the cost of a new home are likely to fall in a weaker economy? (raw land?, labour?, home builder profit? anything else?) So far new home prices are down only very marginally in Alberta.

#76 NoName on 01.14.19 at 9:41 pm

@DolceVita

Italian food, pfft… It took “croatian” (marko polo) to go to china and steel noodles so you guys can have spaghetti, And pizza was traced all the way back to Greeks but who cares. As for GMO steroids and cant remember did you mention antibiotics, you are correct 100%.

Although “Italian” food is ok, but it does not come nowhere close to stuffed peppers, cabbage rolls, beans with smoked sausage and smoked meat or cevapi. You can print this an put it on a fridge, :)

And here is a proof, i kook them all.
https://imgur.com/a/NOdm7er

#77 Barb on 01.14.19 at 9:49 pm

Darrin and spouse:

Maybe the now-miserable owners of the foreclosure you want to buy faced the same question you now have…albeit a few years earlier.

And they made the wrong choice.

#78 paracho on 01.14.19 at 9:59 pm

Response to #76 “NoName”

You are correct about that ! Without Croatian Marko Polo from Korčula , the people of the Italian region [ which was not unified yet ], would have starved to death .
Croatian cuisine is amongst the most under appreciated and under represented cuisines in the world . Goes much farther than Turkish influences čevapi , or cabbage rolls . Unique by town and region .
As a Croat born and raised in Toronto and now living in Woodbridge …. I still enjoy Canadianized Italian dishes .

#79 the ryguy on 01.14.19 at 10:13 pm

There’s more evidence of Obama being born in Kenya than of President Trump being a russian agent..wow the left just never gives up!!

#80 45north on 01.14.19 at 10:21 pm

Hilliard MacBeth points to an interesting chart by the St. Louis Fed

https://www.howestreet.com/2019/01/11/the-boc-goes-on-pause-for-now/

Since the start of the global financial crisis the two countries have diverged completely regarding household debt.

There is a huge irony here. The St. Louis Fed is a member of the US Federal Reserve which is raising interest rates. The chart shows that Canadian household debt is much higher than American which means that Americans are in a much better position to withstand higher interest rates. Which is what the US Fed is doing.

I’m free to speculate what the St. Louis Fed is thinking. It’s thinking that Canada has to accept the rising interest rates that it gives it. I’m also free to speculate what the Canadian banks are thinking. They’re thinking that Canadians have to accept the financial conditions they give them. That’s what they’re thinking but they’re not saying anything.

but Garth is: And poor, wet, delusional Vancouver. Compared to the GTA’s 16% sales plunk, YVR’s in freefall. Last month’s action was a stunning 47% below that of December, 2017 and a 33% drop from the previous month. For the entire year, it’s the worst performance since 2000 – when you thought Donald Trump was funny. Detached houses shed 8% of their value. The culprits: “high home prices, new mortgage requirements and taxes all contributed to the market conditions.”

This spring, people are going to see what everybody is thinking.

#81 45north on 01.14.19 at 10:30 pm

Brian Ripley: So if you are going to buy, get your present unit sold first and get a large non-refundable deposit on that contract before you enter a new one. The time you need to sell your present unit will give you a better idea of what’s going on before you commit to setting a price for the new purchase.

that’s worth repeating:

sell before you buy

get a large non-refundable deposit

the whole process of selling will give you a better idea – you don’t have a clue

#82 millmech on 01.14.19 at 10:41 pm

Something to keep in mind https://www.huffingtonpost.ca/2019/01/13/housing-oversupply-canada_a_23641374/

#83 PastThePeak on 01.14.19 at 10:58 pm

#14 Terry on 01.14.19 at 5:37 pm
Canadian and U.S. companies…………Get out of China now! We cannot trust the Communists! Travelers also beware………….never ever travel to China again!
+++++++++++++++++++++++++++++++++

This is at least the type of news that Canadians should be more interested in, rather than the endless debate about the American President (from either side).

While I don’t expect that any (many) CAD companies will leave, this is certainly a wakeup call for Canadians (especially the “arrogant…white racism” comments from the Chinese ambassador). He can kiss my &^%***!!!

China is a brutal dictatorship, that will kill whomever they want, whenever they want. Never forget it.

I have never been to China, and while it was a place I was mildly curious to visit (most likely on business), you can strike that off the list.

China might be Justin Trudeau’s most favoured country, and the recent events do not seem to have him very concerned, but IMO China has slipped well past Russia as the greatest threat to the West. Invest, travel, befriend, and work accordingly…

#84 45north on 01.14.19 at 11:02 pm

Slurrey: Hey Garth quick question ( and to anyone else on the blog) . I plan on moving, is it better to list and sell your place first before buying another place, put a subject to sale clause in your offer if you find a place, or buy another place first before selling?

you’re an idiot

let me explain. Slurrey sounds like you’re making a joke out of Surrey, a place just outside of Vancouver.

Here’s Garth: And poor, wet, delusional Vancouver. Compared to the GTA’s 16% sales plunk, YVR’s in free fall. Last month’s action was a stunning 47% below that of December, 2017 and a 33% drop from the previous month. For the entire year, it’s the worst performance since 2000 – when you thought Donald Trump was funny. Detached houses shed 8% of their value. The culprits: “high home prices, new mortgage requirements and taxes all contributed to the market conditions.”

You’re an idiot because you believe the above quote doesn’t apply to you.

#85 Paul on 01.14.19 at 11:36 pm

14 Terry on 01.14.19 at 5:37 pm
Canadian and U.S. companies…………Get out of China now! We cannot trust the Communists! Travelers also beware………….never ever travel to China
https://www.cbc.ca/news/politics/schellenberg-death-sentence-china-1.4976959
————————————————————————————————
Not to worry our little potato Justin will fix things.

Ancient Chinese Secret.,

https://www.theglobeandmail.com/news/politics/trudeau-attended-cash-for-access-fundraiser-with-chinese-billionaires/article32971362/

#86 Elcheapo on 01.15.19 at 7:20 am

Well, Dolce Vita has now jumped the shark and has joined Smoking Man in the ranks of most boring, repetitive poster. More exercise for my thumb as I scroll past and ignore their comments.

#87 Mohammad on 01.15.19 at 7:49 am

Hey Garth,

Do you think the liberals will increase the Home Buyers Plan anytime in the future. When the HBP was first introduced in 1992 homes were a fraction of what they cost. They should increase it to at least $60,000 and allow twenty years to pay back.

No they shouldn’t. – Garth

#88 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 01.15.19 at 8:10 am

Pathetic Make Believes choke again!

Colorado 6, Losers 3.

The Avalanche is a middling team, just lost 9 of 10 matches. But they destroyed the Toronturds.

And now (Finally, LOL!) Leafs fans are booing their own players!!

Too late!

Pathetic supporters like Gerry Dee are calling everyone out.

” I have been a Leafs fan my whole life. I often hear, “we have the best fans in the world”. Not a chance. First of all, we have the quietest rink in the league. Now we are booing our players. “Best fans in the world” are loud at home games. And they don’t boo players on a whim.”

https://twitter.com/gerrydee

Yep. The team sucks. The fans suck. The whole GTA sucks.

Why are the deluded Leaf fanatics so quiet at the games?

They’re too busy texting their TNLTB to beg for an increase on their HELOCS as their investment shacks start to crash in value. Plus they’re filled with fear about which route to take home, to reduce their chances of getting murdered in the 6.

Who can cheer on a team when you’ve got all that on your mind?

Canada is a great country. Almost everywhere except the GTA is livable and has high quality of life and people.

Let’s vote them out. And demote the Make Believes to the minor leagues.

Enjoy your real estate orgy then, Toronturds :)

#89 crowdedelevatorfartz on 01.15.19 at 8:12 am

@#86’ed El Cheapo
“….the ranks of most boring, repetitive poster. More exercise for my thumb as I scroll past and ignore their comments.”
+++++

And I thought I was worthy of an “honorable mention” in that category.
I just have one question.
You use your thumb to scroll?

#90 Remembrancer on 01.15.19 at 8:13 am

#50 Nonplused on 01.14.19 at 7:30 pm
Ok, normally I know everything, but I’m stumped on this one. Somebody out there knows.

If you have a revenue property that brings in $1700 a month but costs $2000 a month to carry, from what do you deduct expenses? Aren’t you already at a loss and therefore not paying taxes? I mean I hate income taxes, but I thought you had to have income to pay income taxes.
————————————————————-
Its simple: as rental income goes into the income bucket (along with T4 salary income etc), rental expenses goes into expenses bucket. You subtract one from the other and voila! there’s your total taxable income. As others have stated here, the CRA expects at some point they get their share and you aren’t at a perpetual loss, but their tolerance will likely vary based on the #s…

Renting out a portion of your primary residence opens up a whole other set of issues though around length of residency after you stop renting out, if you have stopped, before time of sale and how much of the proceeds are capital gains tax exempt…

Simple answer to your example is your net for 12 months is -$3600 on your taxable income, assuming all claimed expenses meet requirements…

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals/rental-expenses-you-deduct.html

#91 TurnerNation on 01.15.19 at 8:18 am

Anyone else notice a huge hit against their first paycheque this year? What inflation…the govt just took another 3-4% vs last year’s, off my after tax income.
This country hates hard working people .

Our governmental actors host one media op after another. Another one is staged for today, following the last UN stunt. They even wore the blue hat telling us so.

No worries I’ll be hard at work today. It’s what I do. Handing over my paycheque.

The moisters want more CPP when they retire. So pay up now. – Garth

#92 Unhinged Trader on 01.15.19 at 8:24 am

Anyone who subscribes to the hysterical, contrived Russian hoax peddled by the media tentacles of the Ownership Class/Deep State, really doesn’t know anything, about anything.

It’s a nice piece of theatre, a way to hold hostage the civilian government in the White House.

#93 Remembrancer on 01.15.19 at 8:25 am

#50 Nonplused on 01.14.19 at 7:30 pm
So, to put a finer point on the question, can you deduct losses from a rental unit from employment income? I know I can’t do that with stock market losses, I can only deduct them from gains. Or at least I think that’s how it works. If you can deduct stock market loses from employment income I missed out on a few juicy deductions. Strange that RevCan never caught it in their reassessments.
—————————————————————-
Part 2…

First they are rental expenses, not rental losses, they offset rental income which is part of taxable income.

Realized stock market gains (or losses) are capital gains and losses, different beasties and not deductible from income, so no, the CRA is not cheating you in this case.

They do have a lot of good information on the CRA web site and a walkthrough of an entire return line-by-line is informative and necessary reading if you are even just dabbling in this stuff. Or hire an accountant, that expense is deductible too :-)

#94 TurnerNation on 01.15.19 at 8:33 am

#88 50 YEARS OF MAPLE LEAF INCOMPETENCE! on

Somehow you managed to nail it – well done. Fake culture, fake money, fake government. We got it all – bread and circuses.

#95 Remembrancer on 01.15.19 at 8:41 am

#91 TurnerNation on 01.15.19 at 8:18 am
The moisters want more CPP when they retire. So pay up now. – Garth
—————————————————————
and not just this year…

https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-enhancement.html

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/employment-insurance-ei/ei-premium-rates-maximums.html

#96 Hamsterwheelie on 01.15.19 at 8:43 am

Honestly – the number of condo owners and ‘investment property’ folks taking a loss is astounding – consider that on top of all the other things that can go wrong you won’t always have 100% occupancy. Consider that every bank looks down their nose at you even harder thus reducing your ability to qualify for the best rate in your home purchase etc.
Thinking that getting a tenant is a quick an easy fix has bankrupted a buncha folks – newsflash! Being a landlord is a job – surprise! There are terrible tenants and some absolutely useless landlords.
People in TO and surrounding cities have bought single family homes here as investments – whined about driving out to deal with unfamiliar contractors etc and low rents (hint – the house must be a duplex at least to generate enough money to pay for itself)
Especially abhorrent are the absentee landlords who never visit their property and stuff the first renters that sell them a sob story, in to a full size house expecting …not what they get. (Sucks for everyone else on the street too)
I am a landlord and I’m happy to say I have amazing tenants, I work to keep them safe and secure in the knowledge that we are invested in our properties and the people in them. They pay the rent without fail and are assets to the community. Also, because we paid very little for these houses (but constantly are at work improving them ourselves) we have a positive return. We do it because its what we know and understand now, it was an opportune market 7 years ago when we jumped in, we don’t have high income jobs but as we age we will sell and invest …that’s why I read this blog :-)

#97 Kurt Eby on 01.15.19 at 8:49 am

I really wish everyone (financial advisers in particular) would stop saying “push you into a higher bracket”. Is there any more overused and misleading phrase? I guarantee a large segment of the population believes that all of your income is taxed at the rate of your top bracket.

Maybe so, but that’s their problem. This is a valid concern for people who do not realize, for example, that RRSPs turn into RRIFs and can, indeed, totally mess up retirement funding. Ditto for rental income which is added to all other income and taxed then at your marginal rate. – Garth

#98 KLNR on 01.15.19 at 9:08 am

@#94 TurnerNation on 01.15.19 at 8:33 am
#88 50 YEARS OF MAPLE LEAF INCOMPETENCE! on

Somehow you managed to nail it – well done. Fake culture, fake money, fake government. We got it all – bread and circuses.
_______________________________________

haha, what happened to you guys in life to become so bitter?

#99 dharma bum on 01.15.19 at 9:21 am

#41 Mrs. Hubris

BC, at present, has a fragile social fabric which does not make it the best place on earth.
——————————————————————–

That’s putting it mildly.

Nice place to visit, but who the hell would wanna live there?

Get in, ski your ass off for a week or two, then get outta town. Like, VAMOOSE!

Bunch of commie, SJW, Dipper, druggie, tree-hugging whack jobs. Great skiing, though.

Nothing beats the Bugaboos.

Never go to BC without a round trip ticket.

#100 Gravy Train on 01.15.19 at 9:23 am

The US president denies he’s a Russian agent. — Garth
Garth, there’s an excellent article by Max Boot in The Washington Post: “Here are 18 reasons Trump could be a Russian asset.” The last sentence reads: “If Trump isn’t actually a Russian agent, he is doing a pretty good imitation of one.”

#101 Remembrancer on 01.15.19 at 9:36 am

#97 Kurt Eby on 01.15.19 at 8:49 am
I really wish everyone (financial advisers in particular) would stop saying “push you into a higher bracket”. Is there any more overused and misleading phrase? I guarantee a large segment of the population believes that all of your income is taxed at the rate of your top bracket.
—————————————————————
Anyone that uninformed needs help, for the rest of us those magic # lines matter when deciding how to appropriate to minimize tax impacts…

And its not like its a huge secret…

https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html#federal
Federal tax rates for 2018

•15% on the first $46,605 of taxable income

•20.5% on the next $46,603 of taxable income
portion of taxable income over 46,605 up to $93,208

•26% on the next $51,281 of taxable income
portion of taxable income over $93,208 up to $144,489

•29% on the next $61,353 of taxable income
portion of taxable income over $144,489 up to $205,842

•33% of taxable income over $205,842

and… for instance Ontario…
5.05% on the first $42,960 of taxable income, +
9.15% on the next $42,963, +
11.16% on the next $64,077, +
12.16% on the next $70,000, +
13.16 % on the amount over $220,000

#102 Ubul on 01.15.19 at 9:56 am

#100 Gravy Train

Garth, there’s an excellent article by Max Boot in The Washington Post: “Here are 18 reasons Trump could be a Russian asset.” The last sentence reads: “If Trump isn’t actually a Russian agent, he is doing a pretty good imitation of one.”

=====

The much more interesting find would be any link to any single instance where Max Boot does not trash Trump.
I could not manage to find one. Can you? To paraphrase his own words: If Max Boot is an objective analyst, he is doing a pretty good job to hide it.

#103 Lee on 01.15.19 at 10:27 am

You don’t want to have too much of your retirement money in an RRSP. I say 10% of your retirement investments max.

#104 IHCTD9 on 01.15.19 at 10:41 am

@#37 Dolce Vita on 01.14.19 at 6:47 pm

…I say that since Canadian’s rough it with the watered down stuff or Aunt Jemima Corn Syrup substitute.
_____

Good old Aunt Jemima – it’s not so bad (whatever it is).

I’ve put that stuff on my pancakes and french toast since Auntie J still sported her red and white slave kerchief on the bottle in the 70’s/80’s :).

#105 technical analysis?? on 01.15.19 at 10:42 am

“And how do stocks markets react? Yawn, basically. Small moves in the last couple of days following big advances provide more evidence a bottom was formed …”
_________________________________

after all these years, you don’t know what a market bottom looks like? 20% corrections never make spike lows. no bottom has formed. bottoms take weeks maybe even months. not just a few days. wow

#106 Adele on 01.15.19 at 10:46 am

Re: #45 ZZZD

Life used to be so simple. Some of the best investment adldcice that I ever read wa in the Financial Post about 30 years ago. An advisor, who I can’t remember recommended retail invests to stick to “TIPs and Strips”.

TIPS, in the Canadian context, meant TSX index participation units, the precursor to index etfs. Since then we have seen welcome changes such as competitors in the index space which have driven down cost, international exposure and fixed income etfs. However we also have a bewildering array of complex products that even a smartass savant can not understand. ZZZD is a wrap etf that uses fancy risk calculations to rebalance a basket of component etf. At a cost of 70 bps, it is comparable to the robo advisors and getting close to Garth’s fees.

My advice is to either,
1. Roll your own with a small basket of low cost etfs.
2. Go the ZBAL/VBAL route
3. If you want active management, hire Garth.

btw Kudos to the robo people for their tv ads this year. The wealth simpletons that they used last year were even more annoying than me.

#107 Tater on 01.15.19 at 10:49 am

#103 Lee on 01.15.19 at 10:27 am
You don’t want to have too much of your retirement money in an RRSP. I say 10% of your retirement investments max.
——————————————————————
What?? Unless that 10% of your nest egg will cause you to be in a higher tax bracket than you were when you made the contributions, no.

#108 Deplorable Dude on 01.15.19 at 10:54 am

Trump is doing a pretty crappy job of being a Russian proxy.

Just today…..news that The US Ambassador in Germany Richard Grenell is threatening sanctions against German companies (BASF and Uniper energy). If they work on Putin’s new Gas pipeline they may not be allowed to work on US projects.

Oh and Trump chose Grenell….who is openly gay….so more evidence Trump is homophobic….

#109 Mattl on 01.15.19 at 10:55 am

“I really wish everyone (financial advisers in particular) would stop saying “push you into a higher bracket”. Is there any more overused and misleading phrase? I guarantee a large segment of the population believes that all of your income is taxed at the rate of your top bracket.”

When I used to work labour jobs as a kid, colleagues would always say they wouldn’t work extra time because it would “push them into a new bracket”. People actually believe that every dollar will be taxed at the higher rate. Further, at the rates were were making, the extra percent paid on that last dollar was pretty marginal, these guys were willing to give up an extra 10-15 bucks an hour because over an extra 2-4% tax on those dollars.

#110 KLNR on 01.15.19 at 10:57 am

@#99 dharma bum on 01.15.19 at 9:21 am
#41 Mrs. Hubris

BC, at present, has a fragile social fabric which does not make it the best place on earth.
——————————————————————–

That’s putting it mildly.

Nice place to visit, but who the hell would wanna live there?

Get in, ski your ass off for a week or two, then get outta town. Like, VAMOOSE!

Bunch of commie, SJW, Dipper, druggie, tree-hugging whack jobs. Great skiing, though.

Nothing beats the Bugaboos.

Never go to BC without a round trip ticket.
____________________________

seems like some huge generalizations.
I wouldn’t mind living in BC, maybe not vancouver.
Hear the amount of rain can effect your mood in a bad way if you’re not from there

#111 Gravy Train on 01.15.19 at 11:09 am

#102 Ubul on 01.15.19 at 9:56 am
“The much more interesting find would be any link to any single instance where Max Boot does not trash Trump. I could not manage to find one. Can you?” Did you read his article? Can you point to any factual errors in it? If you can’t, then you should reconsider your position! :)

Oh!—and I hope you’ve been brushing up your Russian! I still haven’t mastered the Cyrillic alphabet! :)

#112 Ronaldo on 01.15.19 at 11:13 am

#103 Lee on 01.15.19 at 10:27 am
You don’t want to have too much of your retirement money in an RRSP. I say 10% of your retirement investments max.
——————————————————————-
Every persons situation is different. Some people should likely have none especially those people on low income who expect to be collecting the GIC at retirement. In their case it becomes a major tax trap. For these people the TFSA is the place to be as it does not affect the means tested benefits such as GIC when they withdraw the funds from the TFSA. This is why you need to talk to a financial advisor in this regard and not the [email protected] who will put anyone and their dog if they could into an RSP.

https://www.theglobeandmail.com/globe-investor/retirement/unravelling-rrsp-myths/article16902315/

#113 Doug in London on 01.15.19 at 11:14 am

Every correction is the end of the world. Correction, what correction? I check my investments regularly and my stocks and equity ETFs keep going up, up, up, and up. The only ETF that’s dropped, and only slightly, is TLT-NY. That so called “correction” will go one record as being the shortest in the world. It was like, during a thunderstorm when the breaker that supplies power to your street trips, then closes a second later causing a momentary power interruption.

#114 IHCTD9 on 01.15.19 at 11:16 am

#103 Lee on 01.15.19 at 10:27 am
You don’t want to have too much of your retirement money in an RRSP. I say 10% of your retirement investments max.
___

I think 10% might be a bit light. Especially folks who were working on investments before the TFSA existed, and also those who want to invest more than the 6K per year max for the TFSA.

Our investments are way too heavy on RRSP’s – but our inputs into these significantly contributed to the 76K+ in combined tax returns we have received over the last 11 years. That’s not chump change, and I consider these taxes returned to us as a “return” on investment just like I would the tax free part of the gains inside a TFSA. So it’s not all bad – were’re going to do what we can from here on in to minimize the tax implications later on – but that 76K did a lot of good in the here and now – and all of it was essentially “free money”.

At the end of the day – most folks who are serious about investing are going to max out their TFSA, so the RRSP is choice #2, and you’re going to get over 10% worth just as a matter of course.

#115 PastThePeak on 01.15.19 at 11:30 am

#103 Lee on 01.15.19 at 10:27 am
You don’t want to have too much of your retirement money in an RRSP. I say 10% of your retirement investments max.
+++++++++++++++++++++++++++++++++

Difficult for me as the only retirement benefit from my company is a 50% RRSP match (capped) (I put in $1, they put in 50c kind of deal). So you have to do the RRSP vehicle to get that. Most I companies I know in the tech field do this.

I also have a TFSA, which is my retirement investment vehicle for the long haul, and whatever else I can save goes non-reg (CAD divvy stocks and preferreds). I plan on doing a partial retirement before 60 (work say 50% of time), and will utilize some of my RRSP during this time to bridge the gap. TFSA is to pay for most of withdrawals when OAS and CPP are kicking in, to avoid clawback.

#116 Remembrancer on 01.15.19 at 12:20 pm

#107 Deplorable Dude on 01.15.19 at 10:54 am

Really? The “I’m not X, I have friends who are Y” defense? Really?

#117 not 1st on 01.15.19 at 12:23 pm

#97 Kurt Eby on 01.15.19 at 8:49 am
I really wish everyone (financial advisers in particular) would stop saying “push you into a higher bracket”

—–

Rich people are in the business tax brackets (10-12%)and personally in the poverty zone, or living on the dividend gross up. They don’t pay for Trudeaus idiotic ideas. Morneau sits right beside the guy everyday. Think he is going to give more? Not a chance. Every nickel is protected from socialist stupidity.

#118 Welcome to Slurrey on 01.15.19 at 12:32 pm

Thanks for the link #72 long time lurker…

#119 James on 01.15.19 at 12:32 pm

#83 PastThePeak on 01.14.19 at 10:58 pm

#14 Terry on 01.14.19 at 5:37 pm
Canadian and U.S. companies…………Get out of China now! We cannot trust the Communists! Travelers also beware………….never ever travel to China again!
+++++++++++++++++++++++++++++++++

This is at least the type of news that Canadians should be more interested in, rather than the endless debate about the American President (from either side).

While I don’t expect that any (many) CAD companies will leave, this is certainly a wakeup call for Canadians (especially the “arrogant…white racism” comments from the Chinese ambassador). He can kiss my &^%***!!!

China is a brutal dictatorship, that will kill whomever they want, whenever they want. Never forget it.

I have never been to China, and while it was a place I was mildly curious to visit (most likely on business), you can strike that off the list.

China might be Justin Trudeau’s most favoured country, and the recent events do not seem to have him very concerned, but IMO China has slipped well past Russia as the greatest threat to the West. Invest, travel, befriend, and work accordingly…
__________________________________________
Justin Trudeau bombed in China and the Chinese showed him the door. The only way to deal with the Chinese is to block them every way you can from selling their cheapo knockoff products on the world market. That is where it will hurt them. The other method is to destabilize their money Renminbi or Yuan what ever you want to call it. Either don’t accept orders in it or try to avoid it at all costs. They are not people you can ever trust. They are absolutely dedicated to stealing intellectual property and re-branding it for their market first then flogging it to the rest of the world. The Chinese have no ethics and unfortunately it is learned from the top down as they have experienced their own distrust of the Chinese dictatorship. My advice is don’t deal with them at all if possible.

https://www.eetimes.com/author.asp?section_id=36&doc_id=1286390

#120 Iconoclast on 01.15.19 at 12:43 pm

#10 PastThePeak: re: the debt

If something can’t go on forever, it will end.
So what will it look like when it ends? That’s the question.

My guess is, a Black Swan, leading to a cascading
Jubilee of biblical proportions.

A volcano, an earthquake, a small war, a large war,
a terrorist nuke.
Something will trigger a Lehman-sized default.
This will crash a bank.
That bank will crash other banks. Game over.
They barely stopped it in 2008 – now the debt numbers
are much, much higher.

Another trigger could be that some nation declares
default to get out from under the crushing yoke of debt.
If they get away with it, this will give them a huge
advantage – so other countries will follow.
Depending on who owes what to whom – that could
easily trigger a military response. War.
Why do you think they went to such lengths to ensure
little Greece didn’t default?

What if Russia declares they will have no further
dealings in US dollars? Euros, rubles, yuan, gold only.
What if China gets pissed off enough to follow?

The game is up for the USD at that point, and they would
happily use that as an excuse to effectively default.
That would force everyone else to do it.

And that’s it. Jubilee. A fresh start.

#121 Ubul on 01.15.19 at 12:59 pm

#110 Gravy Train on 01.15.19 at 11:09 am

#102 Ubul on 01.15.19 at 9:56 am
“The much more interesting find would be any link to any single instance where Max Boot does not trash Trump. I could not manage to find one. Can you?” Did you read his article? Can you point to any factual errors in it? If you can’t, then you should reconsider your position! :)

Oh!—and I hope you’ve been brushing up your Russian! I still haven’t mastered the Cyrillic alphabet! :)

====

So you didn’t find any.
Your excuse is that you haven’t mastered the Cyrillic alphabet? Max was 7 when he left the USSR with his parents. Safe to assume his more substantial body of work was authored in English.

If you insist on factual error you can start Max’s reason #2 — “The Russians interfered in the 2016 U.S. election to help elect Trump president.”

Max could be more generous, before stating this as a fact, he could simply wait for the end of the Mueller investigation. As they say: “no comment on an ongoing investigation”?

Could he be blindsided, by his obvious bias? Boot said he would “sooner vote for Josef Stalin than he would vote for Donald Trump.”

That’s a bold statement. Could it be a reason and proof that Max is a neo-Stalinist? Absolutely, if you apply Max’s own logic on display, why Trump could be a Russian asset.

His preference of Joseph Stalin over Trump is a strange choice, no matter what.

“The American historian Timothy D. Snyder summarizes modern data, made after the opening of the Soviet archives in the 1990s, and concludes that Stalin was directly responsible for 6 million deaths along with three million indirect deaths. He notes that the estimate is far lower than the estimates of 20 million or above which were made before access to the archives. He also compares this number to the estimate of 11–12 million non-combatants killed by the Nazi regime, thereby negating claims that Stalin killed more than Hitler.”

Max is also no stranger of the ideological flagship principle in the Stalin regime: self-criticism.

“In December 2017, also in Foreign Policy, Boot wrote that recent events—particularly since the 2016 election of Donald Trump as president—had caused him to rethink some of his previous views concerning the existence of white privilege and male privilege. “In the last few years, in particular, it has become impossible for me to deny the reality of discrimination, harassment, even violence that people of color and women continue to experience in modern-day America from a power structure that remains for the most part in the hands of straight, white males. People like me, in other words. Whether I realize it or not, I have benefitted from my skin color and my gender—and those of a different gender or sexuality or skin color have suffered because of it.”

Maybe that tips the scale for Max’s morality to “sooner vote for Josef Stalin than he would vote for Donald Trump”. Max is a historian, history will judge his choice.

#122 Capt. Serious on 01.15.19 at 12:59 pm

#114 PastThePeak on 01.15.19 at 11:30 am
Difficult for me as the only retirement benefit from my company is a 50% RRSP match (capped) (I put in $1, they put in 50c kind of deal). So you have to do the RRSP vehicle to get that. Most I companies I know in the tech field do this.

Depending on your other accounts, you can put the low growthy stuff in the RRSP (i.e. bonds) so that portion doesn’t grow too big.

I always think the concerns about OAS clawback are overblown. I’d like to be in the position where I have enough income that it’s being clawed back. OAS is supposed to help ensure seniors are not subsisting on cat food, it’s not meant to fund a good retirement, IMHO.

#123 Lee on 01.15.19 at 1:15 pm

#106, #111, #113, #114,

All good points. I guess the point is RRSPs limit flexibility so if you expect/hope to have a large retirement portfolio you’d want the RRSP component as low as possible, especially if you have good jeans. I always hear teachers moan that at 60 the government takes too much in tax from their pensions and they’d be better off it they’d invested the money in a non registered account. Flexibility is good. Everyone will have to run their own spreadsheets.

#124 Deplorable Dude on 01.15.19 at 1:41 pm

#115 Rememberancer..

Ya got absolutely nothing…..except 2 years of innuendo, repeated lies from anonymous sources, and deliberate obfuscation from the MSN.

Multiple Trump policies have gone against the Russians.

Oh but Bill Clinton received $500K for a speech in Russia, while his wife was Secretary of State…..hmmmmm?

Nothing wrong with that….

Really…Really?

#125 PastThePeak on 01.15.19 at 2:22 pm

#122 Lee on 01.15.19 at 1:15 pm
#106, #111, #113, #114,

All good points. I guess the point is RRSPs limit flexibility so if you expect/hope to have a large retirement portfolio you’d want the RRSP component as low as possible, especially if you have good jeans.
++++++++++++++++++++++++++++++++++

An RRSP is one investment vehicle, and it has its pros and cons. It is the only registered product that allows “truly tax free” growth for US investments with dividends (US withholding tax on divvy & the like still apply in a TFSA). But regardless of what you invested in, all withdrawals are taxed as earned income. And you lose flexibility on withdrawals when it is turned into a RRIF.

If your employment income will be higher than your (planned) retirement income, then overall the tax shift is beneficial, even with full taxation upon withdrawals. The opposite is true for lower income earners (RRSP not that useful).

I have no complaints, but just to note that if I was younger when the TFSA was introduced, I would’ve done more balancing between that and RRSP.

Everything (RRSP, TFSA, CPP amounts, OAS clawback thresholds, dividend credit, capital gains allowance) is subject to an unknown future of changes to government regulation and taxation. You can’t know what will change, so you just invest with the rules you know.

#126 jess on 01.15.19 at 3:10 pm

“Plainly said: There is state-sponsored espionage in Canada,” CSIS director David Vigneault warned in a speech last month. “In the blink of an eye, the company’s technology is accessed, its products are reverse engineered, and a foreign competitor starts selling the same technology worldwide at a much cheaper price,” he went on. “We have to be mindful that hostile states will use any means to recruit people, project their influence, and gain access to our proprietary information.”

Welcome to the new Cold War, where the weapons are technology and information instead of tanks. As Prof. Stein predicts, “The United States and China are competing to reborder the world.” Technology platforms will be drawing the borders.

https://www.canada.ca/en/security-intelligence-service/news/2018/12/remarks-by-director-david-vigneault-at-the-economic-club-of-canada.html

#127 LivinLarge on 01.15.19 at 3:21 pm

OK, I have read Darin’s scenario twice now and I am confused. Where would the downpayment be coming from for the new $360K house if not from the equity in their first house? Darin does seem concerned with “taking a loss” on their existing house and wouldn’t that just pump the ammount of the downpayment required on the new house?

There just seems to be some critically important facts missing to even contemplate holding a property that may be under water and buying a new higher priced property. The new qualifying rules for mortgages seem IMO to make this practically an impossible task.

#128 LivinLarge on 01.15.19 at 3:34 pm

I was a landlord only once in the late 80s so I haven’t kept up with the CRA rules regarding depreciating rental properties but I seem to recall that CCA can’t be used to increase an already existing operating loss. Have things changed and you can now?

#129 LivinLarge on 01.15.19 at 3:44 pm

“There’s more evidence of Obama being born in Kenya than of President Trump being a russian agent..wow the left just never gives up!!”…do you think that maybe this is simply because The Don and Cohen have done everything in their collective powers to bury any possible evidence?

It’s not like the Don isn’t known to buy and bury any evidence of his personal activities like not releasing his tax returns or buying off Playboy playmates and strippers? I can’t see someone like the Don who has been hiding everything about his personal finances for over 40 years, leaving any incriminating evidence just sitting around for a NY Times or Washington Post reporter to get their hands on. Even the playmate and stripper cases would still be totally hidden if they hadn’t chosen to breach their NDAs and I certainly can’t see Putin coming clean about what hooks he has in the Don.

#130 mike from mtl on 01.15.19 at 4:44 pm

#122 Lee on 01.15.19 at 1:15 pm

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

Personally the majority of my portfolio is in non-reg, then TFSA and finally RSP.

Yes you have to be very careful about cap gains (don’t ever sell only buy) and have to pay every year off T5. But the flexibility and tax efficiency for me I prefer it over RRSP then RIF with all the withdrawal rules..

#131 LivinLarge on 01.15.19 at 4:49 pm

“If your employment income will be higher than your (planned) retirement income, then overall the tax shift is beneficial, even with full taxation upon withdrawals.”…I’m not certain that I can get on board with this broad conclusion and this has to do with consumer inflation’s impact on required income for retirement.

When you put the coin into the RSP decades ago you almost certainly were at a much lower tax bracket with significantly higher deductions available to you. So, unless the RSP has maintained a much higher compound rate of return than consumer price inflation over those years, when you take it out of the RSP then you’re bound to have trouble with excess taxes on retirement.

I may be unique but no one I know has transitioned to retirement requiring less income per year than they did a couple of decades ago and as far as I can see, that’s what you need for an RSP to a real benefit.

The price of just about anything you care to name has been inflating over %3 per year and while there certainly are things I can choose to go without in retirement, there are a lot of things that weren’t even in my budget 20-30 years ago at any price. Wireless bills are one of those things and how many of us are going to just give up our wireless? There’s maybe $150 per month that wasn’t in the budget when I started putting money into an RSP (not now though).

As Fearless Leader mentioned in a post a few days ago, using “best case scenario” mathematical arguments that ignore real life is bad.

If I need a little less to retire on than I earned, say 5-10 years earlier then I’m still going to be paying taxes at virtually the same rate as then. Marginal rates keep creeping up over the years and when the Feds shifted from tax deductions to non refundable credits back in the late 80s everything changed on a dime. Those credits now are at the lowest marginal rate whereas deductions were off your top personal rate. That rate difference made a huge difference in my net net net one year and ever since.

So, if you take ALL the real life factors into account, I’m betting almost no one is coming out truly ahead by putting money into an RSP unless late in your working life.

Also, as far as I understand, those “best case scenario” mathematical projections for RSPs all presume that you immediately reinvest your increased tax refund back into the RSP and history shows that is hardly the universal case. Many many people spend that refund almost as soon as they get it and that totally defeats the purpose of the enhanced refund.

#132 will on 01.15.19 at 7:25 pm

“Sure you can deduct expenses related to the rental property from your income, but not forever. The CRA has other ideas about that.”

Please explain Garth. Otherwise one of the best posts ever. Darrin’s question seems to have brought out the solution/criticism with the most clarity. Gonna save this page.

#133 Gravy Train on 01.15.19 at 8:33 pm

#120 Ubul on 01.15.19 at 12:59 pm
“So you didn’t find any. Your excuse is that you haven’t mastered the Cyrillic alphabet?” You’re as thick as Russian borscht! :)

#134 MBA101 on 01.16.19 at 1:44 am

#127 LivinLarge on 01.15.19 at 3:34 pm

You are correct in that you cannot use CCA to produce a loss. However, the third point assumes a profit was being made if it is being added as income and taxed at the marginal rate. It seems the OP was referring to their cash flow and likely included principle payments in their cost evaluation. While I believe prospective landlords are likely not very good at forecasting actual expenses, if a profit is earned, then CCA can be used to defer tax and improve cash flow. There is something called recapture which must be paid back eventually, so it really depends on the situation and is best analyzed by a professional.

#135 LivinLarge on 01.16.19 at 8:19 am

Thanks MBA101, this still leaves the question about how a 2nd house buyer could even contemplate buying a a second house w/o using the equity (presuming there is any) to qualify for the mortgage on the new purchase.

And then there’s the issue of a lender changing the original mortgage to an investment property mortgage especially when there’s a likelihood that the first property is or is even close to being under water.

#136 LivinLarge on 01.16.19 at 8:56 am

Back to Darin and even qualifying for the mortgage on the rental property with change of usage.

My recollection is that lenders don’t base credit decisions on 100% of rental income 100% of the time. They discount the projected income flow significantly knowing the risk of not renting the place out every single month of every year.

Me thinks Darin and Mrs are just naive and haven’t even consulted their mortgage lender about the idea. Boy that would be an eye opener for them.

As I mentioned, I was a landlord only once and that soured me on that idea quickly…less than 2 years. One a single family dwelling the time to actually make a real profit is years.

#137 SunShowers on 01.16.19 at 9:21 am

“Wage growth over the last year was less than the inflation rate.”

Hey Garth, I was wondering how many blog posts you’re going to say these exact words (we’re well into the double digits now) before you feel the need to point out that this is actually a problem, and that maybe the reason many people don’t have any money to invest has less to do with issues of personal responsibility, and more to do with not being paid enough to keep their heads above water?

#138 Gotta Get Out of Calgary on 01.17.19 at 12:34 am

Mr. Turner is 100% on the mark with everything stated in this post.

Why would anyone hold an asset whose costs are greater than its benefits?

Darrin is already in a negative cash flow since the anticipated rental income is already less than the known costs.

Many other factors in this situation leave Darrin and his family standing on quicksand — what if they can’t get a renter and the unit sits empty for a time? What if a renter trashes the house causing costly damage? What if some serious plumbing, roof or emergency occurs with either house requiring a costly repair? What if unemployment occurs?

Plus costs to raise two children are only going to increase as they get older. Equity levels are uncertain and will not be climbing if the market keep dropping.

And Calgary city council just voted in a 3.45% property tax hike for 2019. That’s 3.45% payable on both houses.

The choice seems obvious here.