Buying a flip? Budget for taxes.

As you’re probably aware, flipping real estate is a business and the Canada Revenue Agency is going to want their cut whether you’re a Canadian citizen or not. But what if they can’t track down the foreign seller? Then they’ll get it from the buyer. That’s right, if you’re buying property from a foreign seller there’s a small but important detail you should be aware of:

Under section 116 of the Income Tax Act, when a non-resident disposes of taxable Canadian property, the purchaser “is required to withhold 25 per cent of the purchase price…until such time as a certificate of compliance is obtained by the non-resident vendor.”

The non-resident vendor is required to notify Canada Revenue of the disposition either prior to the sale or 10 days after the disposition date.

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Keeping An Eye On Th
Guest
Keeping An Eye On Th

Hey Best place on meth, do you get the feeling we know "Dave"?

vreaa
Member

The realtor twitter chat session was mentioned here yesterday.

We have archived an account of it.

For those of you who haven't yet seen it:

"Twitter Vancouver RE Chat ['YVRREChat'] –

Three Realtors, Four Mortgage Brokers, One Home-Stager, and Three Civilians Discuss The Market"

http://wp.me/pcq1o-1Tb

Watch as professionals swap Vancouver RE memes.

Ed
Guest
Ed

Seriously, what is a realtor good for?????!!!

All this proves to show that if you're going to buy from a realtor, may as well get a realtor for yourself and force the realtor to split the comission.

——————————————————

Alban Wang, a realtor for Amex Sunrich Realty, said it’s not his responsibility to tell the final buyer that he or she could be on the hook for paying the capital gains tax should the middle-man default.

“It’s nothing with me,” Wang said. “I cannot say something to you. I’m only a realtor. I cannot tell you much.

Best place on meth
Member
Best place on meth

@vreaa:

Jason Krist: Renting may be cheaper but it doesn’t mean it’ll get them further ahead

Conrad De Jong: That’s why homeowners are rich and renters are poor; FACT.

—————————————————————

Echh, I feel dirty after reading this crap.

It's like listening to the 11 stooges.

Kosta
Guest
Kosta

@Best place on meth:

Me too, it sounds like a mental gang rape done buy impotent minds. Bloody scary…

scoop
Member
scoop
The 25% withholding applies if the property is capital property of the vendor, i.e. held for the purpose of producing income. If it is inventory (the vendor buys and sells properties for profit) then the withholding rate is 50%. If the vendor's mortgage balance is more than 50% of the value of the property, this makes closing a bit of a challenge. The purchaser withholds 50% of the purchase price as he is required to pending receipt of the clearance certificate, which can take months to receive. In the meantime, the vendor has to come up with the cash required to pay out the mortgage. Also consider that it's not uncommon for a Canadian resident to be registered on title when the property is beneficially owned by a non-resident. If as purchaser you didn't ask, and didn't require the vendor… Read more »
Anonymous
Guest
Anonymous

Did anyone else notice that the Twitter RE chat is a regular event?
http://twebevent.com/YVRREChat

..As they say "It’s important to have a wide range of opinions…otherwise, there is no discussion."

So hopefully they get more than 1 non-salesperson to show up for the next one..

Devore
Member
Devore

@Ed: These "full service" professionals have long been providing very little service. They're just gatekeepers to MLS data the public cannot see to make informed decisions. This is fake scarcity. Zillow (and others) in the US seem to be doing just fine.

Danny
Guest
Danny

"Nearly 20 per cent of Canadians don't know if they'll be able to make their mortgage payments if interest rates increase, according to a poll released Thursday by Bank of Montreal"

Stress test your mortgage for peace of mind

http://www.vancouversun.com/business/Stress+test+

Anonymous
Guest
Anonymous

Condo buyers beware

A lawyer warns that it is unclear who would be on the hook for any problems at the former Olympic Village, the CBC's Eric Rankin reports

http://ca.news.yahoo.com/video/canews-22424922/co

Dan in Calgary
Guest
Dan in Calgary

@vreaa, Thanks for that. I kept expecting Rod Serling to step in and tell me I was listening to another episode of The Twilight Zone.

Anonymous
Guest
Anonymous

Looks like Rennie is going for the kill … one final emotion push to sell off the rest of the village??

' Ad hoc Olympic party on Granville Street planned for Saturday draws city's ire '

http://www.theprovince.com/Olympic+party+Granvill

Anonymous
Guest
Anonymous

Stress test your mortgage for peace of mind

Nearly 20 per cent of Canadians don't know if they'll be able to make their mortgage payments if interest rates increase, according to a poll released Thursday by Bank of Montreal — disturbing findings given that BMO expects the Bank of Canada to raise its benchmark rate by at least one per cent by the end of the year

Rest of story:
http://www.theprovince.com/business/Stress+test+y

N
Guest
N

@Anonymous:

"Canadians who are worried about impending interest rate hikes should look for ways to reduce their overall housing costs, including shorter amortization periods, which can reduce the amount of interest paid over the life of the mortgage, says Archdekin."

Pardon?

Devore
Member
Devore

@N: Why, yes. Don't you see it? You reduce your housing costs… by increasing them. Makes perfect sense to me, in the world where up is down, black is white, and cashflow negative assets are great investments, because it always goes up.

God forbid someone ACTUALLY reduce their housing costs, either by downsizing or renting.

scullboy
Member
"Buyers are rich, renters are poor; FACT" And there you have it. That's the big reason I finally left Vancouver. I got tired of this kind of insulting attitude. It's insulting because (1) It's breathtakingly arrogant and yet ubiquitous in Van and (2) It's ass backwards. In any other industry in any other part of the world sellers realize they have to treat buyers (otherwise known as customers) with respect. Sellers work to earn the business of buyers. Most sellers in Vancouver use any dirty trick in the book to wring every last red cent from a buyer. When I look back at all the places I've ever lived and all the transactions I ever entered, it's only in Vancouver and the real estate industry that I've ever seen that kind of pure, naked greed. It's nauseating. Also, I love… Read more »
Boombust
Guest
Boombust

"Watch as professionals swap Vancouver RE memes."

Not one of them explained how it got so far out of hand in the first place. (or the second and thrid place!)

CHEAP money, honey.

Keeping An Eye On Th
Guest
Keeping An Eye On Th

@scullboy:

"I have to say that exchange just reminded me that I don’t miss Vancouver life *at* *all*, “most liveable city” or not."

And yes, whose Vancouver:

The one the rich lawyer who lives across the street from Locarno Beach, and practices law from his home, which he inherited?

Or the working stiff couple who commute from Abbotsford to Clark and Venables for $18.00/hr who has maxed out the credit cards?

Dave
Member

Average Canadian wages up 4.5% year over year. WOW! That goes a long ways to improving affordability.

LY
Guest
LY

I am enjoying life in Toronto and don't miss super expensive Vancouver a bit too. I don't have to pay 114 dollars monthly for family medicare which we never use. The dreaded winter isn't that bad at all so far. Only a few weeks left and it's spring.

AG Sage
Member

@Dave: What'd the median do? What's the distribution look like?

If bill gates moved north of the border and shifted the average, how would that help anyone's housing affordability?

Dave
Member

@AG Sage:

If everybody stopped building tomorrow, what would that do to housing prices? Both this and your hypothetical are silly.

Medians and averages are definitely important. The calculation for affordability is based on average, not median. The divergence between the two has grown over the last decade and some suggest that medians are better. Fair enough. But, I bet the income of buyers is closer to the average than the median because a large chunk of the people who don't buy are low income, present company excluded of course.

AG Sage
Member

@Dave: The median multiple is not based on the average. That's the one markets have a nasty habit of reverting to. And you didn't answer the question, so good day.

Anonymous
Guest
Anonymous

How many times have I been a part of or overheard this conversation? Pretty funny stuff, when cartoons are involved in the vancouver bubble it makes it seem even more ridiculous.
http://www.youtube.com/watch?v=7bSb-V-tCqY

Dave
Member

@AG Sage:

I thought it was clear why I didn't answer the hypothetical. Do you really think an extreme hypothetical invalidates the rapid YOY growth in wages?

As to your hypothetical, it would have far less impact than you are assuming. BIll Gates has massive wealth because of his ownership position in MSFT. His income is less spectacular because he doesn't actually need that much to get buy in a relative sense. Let's say he pulls out $30M for income. Divide that by 30M Canadians, and our average only goes up by $1.

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