Rabidoux in Vancouver / HK property tax

A couple of news tidbits today:

First off Ben Rabidoux will be putting on a seminar in Vancouver about how to get rich flipping presales condo contracts.

At least I assume that’s what he’ll be talking about, what else could you talk about at a Vancouver real estate seminar?

Ben will be joined by David LePoidevin and they’ll actually be talking about the current state of the market, what comes next and what a ‘hard landing’ would look like for the economy and your investments.

Could Canada be facing a housing crash similar to what the US experienced?  As Canada’s most expensive real estate market, how will Vancouver fare?  What are the broader implications of a significant housing correction on the Canadian economy and job market?  What would a housing crash mean to your investment portfolio, and how can you protect yourself?

The event is at the Westin Bayshore on Wednesday November 28th at 7pm.  Registration is free, but first come first served.  There will be a Q&A session and a speculator dunk tank.  (Sorry, made that last one up.)

Also in the news, Mike sent in this note about a new property tax imposed in Hong Kong for non-resident buyers. Non-local and corporate buyers will now pay an extra 15% tax on purchase of property.  Hong Kong joins similar moves by Singapore and Australia to squeeze extra money out of foreign investors and give local buyers a market advantage to housing.

The 15 percent tax “will be effective in curbing foreign demand – mostly from mainland buyers – and avoiding ‘hot money’ influx into the property market,” Alfred Lau, a Hong Kong-based analyst at Bocom International Holdings Co., wrote in a report today. “However, local demand is not affected.”

The new property tax doesn’t apply to Hong Kong permanent residents. Inhabitants need to live in the city for seven straight years to be eligible for permanent residency, according to immigration rules, while Chinese citizens born in the city are automatically granted that status.

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YLTNboomerang
Member

@pricedoutfornow: If you go for one of these, make sure you get a lease for as long as you hope to stay there as these guys are going to freak out when they find that prices are in fact lower in the spring and will knee-jerk list.

kansai92
Guest
kansai92

This is just brutal… factoring in inheritance and/or lottery winnings to contribute to your retirement.
Buying overpriced RE won’t help.

http://www.vancouversun.com/news/national/Many+Canadians+rely+winning+lottery+inheritance+financial/7471603/story.html

patriotz
Member

@Anonymous:
” Don’t use taxes to punish suspected criminals. ”

Governments regularly collect withholding taxes on all sorts of transactions – like your pay cheque. Also Canada already collects a withholding tax on sales of RE which is owned by non-residents. The US collects withholding taxes on proceeds of all kinds of assets owned by non-residents. It’s not like I suggested something completely new.

It’s not about punishing suspected criminals, but about trying to keep people from evading taxes.

Makaya
Member
Makaya

Some tidbits from RE Talks, where bulls usually hang out and are not so happy these days…

3441 W33rd – Sold for $1.933. Purchased for $1.958 in Feb/12.

Not only are homes selling for less than assessed, less than what their neighbours paid for them…but now recent homeowners/speculators are selling for less than they paid.

That’s a nice $100K+ loss in a matter of 9 months.

And this one gotta hurt!

another guy selling for a loss

3475 w26th dunbar 33×130
2944sq house
2003 built
guy paid 2410 jun 2011
sold 2185 oct 2012.
(he tried to sell 2.448M since sept 2012).

lost 225 + commission 66 + ptt 46k
337k in 16 months.

Ouch indeed… Renters, you’re losers lol!

Not much of a name...
Member
Not much of a name...

@shriller: Where did price appreciation enter the discussion?

patriotz
Member

Family income and income of individuals, related variables: Sub-provincial data, 2010

In 2010, Ottawa–Gatineau had the highest median total family income (before tax) of all the census metropolitan areas (CMAs), at $90,790, according to data derived from personal income tax returns.

Ottawa–Gatineau was followed by Calgary ($89,490) and Edmonton ($87,930). This ranking was unchanged from 2009…

For couple families (with or without children), the largest increase occurred in Guelph (+2.6%) and the largest decrease was in Vancouver (-2.4%). Among lone-parent families, the largest increase in median total family income was in Thunder Bay (+6.6%), and the largest decline was in Calgary (-3.2%).

For people not in census families, the largest increase was in St. John’s (+2.3%), and the largest decline was in Vancouver (-5.6%).

Once again, Vancouver has the smallest median income ($68,790) of any large CMA outside Quebec, except Abbotsford.

VMD
Member

“Motivated” Seller Index hitting new highs:

Date       "Motivated" 
10/30/2012   361   
10/05/2012   324   
08/15/2012   331
06/07/2012   286
03/23/2012   271
01/20/2012   224
01/03/2012   184
10/16/2011   282 (YoY +28%)
Many Franks
Guest
Active Member
Many Franks

Mark Carney says only a couple more years of ZIRP. Probably. Maybe.

Anonymous
Guest
Anonymous
@shriller: “But it is plausible that taxing property would work just fine for your senior if the tax was applied to transactions.” So, by inference, you’d be at ease with the Senior getting a tax credit if thy sold a property as a loss? How would maintenance deductions (i.e. expenses) work? In any case, you’re referring to taxing income realized as a result of the sale of a property that has increased in Value. Well, I actually agree with you on that, but I don’t think it’s fair to tax someone on on the notion that they may be wealthy because they’re sitting on a Asset that may be expensive today ( and expensive to maintain) but which may be worth less tomorrow. I’m also unconformable with the notion that an asset that rises due to a broad inflation has… Read more »
patriotz
Member

@Anonymous:
” What if he doesn’t have a record of his earnings back in the 80′s? ”

CRA or IRS in the US does.

patriotz
Member
@Dave: “For any of you ‘money to your mouth’ types, I found a new market where you can trade futures based on Vancouver’s Home Price Index.” And what’s the consensus of this market? Monthly House Price Index for Vancouver to be 121 or less before the end of 2013 55.0% CHANCE Teranet HPI for Vancouver is now 168. That is, the “bearish” side of this bet wins if prices fall 25% in little over a year. I’m certainly not predicting that and I don’t think any of the regulars on this board are either. Which means I would be on the “bullish” side of it. I’ve already pointed out the problem with this kind of futures market – it’s not like actual short selling, where any fall in price is a win for the bearish side of the trade. Everyone… Read more »
Manna from heaven
Guest
Manna from heaven

From the Wall Street Journal

In Vancouver, Home Sales Hit the Brakes

http://online.wsj.com/article/SB10001424052970203335504578088821389676846.html?mod=WSJ_hps_MIDDLENexttoWhatsNewsForth

Hey, if any govt. f$#%t@rds monitor this blog, bring in measures to restrict foreign ownership now!

I truly believe this city could erupt one day and the Vancouver Canucks won’t be to blame.

shriller
Guest
shriller
The point, anonymous, is that the senior should be expected to consume from his or her savings in retirement. That is the point of savings after all. If his or her savings is in property then he or she should be expected to arrange some way of extracting consumption from it. I fail to see why these savings should be protected in some way via the tax code. But it is plausible that taxing property would work just fine for your senior if the tax was applied to transactions. Simply put the tax on the purchaser. She or he could sell and rent and never pay it. Or it could come from their estate at death. I fail to see why ensuring via the tax code that any heirs inherit wealth is socially beneficial if I might privately gain from… Read more »
Anonymous
Guest
Anonymous

@patriotz: Still a dumb idea. What if he doesn’t have a record of his earnings back in the 80’s? I, for one, don’t keep records that long.

Also, tax law and criminal law are separate beasts for a good reason. Don’t use taxes to punish suspected criminals. People should be punished for crime only when the crime has been proven beyond a reasonable doubt in a fair trial. People should not be put in a position to have to prove their innocence every time they invest in real estate.

Conrad
Guest
Conrad

Another big sales day. Not sure why, but the market has come back to life in a big way

market stats
Guest
market stats

Hotel Georgia

This is great news. I wonder when the first crane will stop due to the bank cutting off the money?

shriller
Guest
shriller

@ not much of a name.

That strawman, huh. Labour income is generated by labour. Wealth is “generated” by lots of things. Suppose that your claim that wealth is generated by after-tax income were true. Then wealth should be correlated with the level of the savings rate. It is not historically not well related to wealth (see for instance the 00’s decade). Ergo, no, wealth is not past savings of after tax income.
Wealth is a collection of assets whose price can vary without any input from after-tax income. That is why it can be inherited. I don’t see any reason why implicit income gained from price appreciation should be untaxed if we tax income from labour effort.

patriotz
Member

@Not much of a name…:
“The government would sit on millions, if not billions, of taxpayer money just waiting to refund it back to purchasers.”

The government does not “sit on” any appreciable amount of money. It’s running a deficit you know, which means that’s it’s always borrowing. In times when it isn’t, extra cash is used to retire bonds, which are always coming up for renewal.

patriotz
Member

@Anonymous:
” In the year he bought his place he did not have income commensurate with even his modest condo.”

But he does have a legal record of his income and savings in past years. As do seniors. I didn’t mean the the declared income had to be solely in the year of purchase – that makes no sense.

Anonymous
Guest
Anonymous

@shriller: “It is possible, indeed probable, that our current tax code takes income away from a hard working family living in a rental in East Vancouver in order to provide income assistance to a retired senior living in a mortgage-free house on West 37th. ”

Certainly possible, but then while the Senior was accumulating all that ‘wealth’, he may very well have been providing income assistance to the working family in a rental in East Vancouver. So are you suggesting the Senor should be taxed twice – once for generating a high income and once for holding on to it?

More Data Please
Guest
More Data Please

@shriller: See Australian documentary:

http://topdocumentaryfilms.com/real-estate-4-ransom/

Your sentiments are discussed in some detail in the above 40 minute online documentary.

I would be very interested to read any critiques of the supply side tax reform proposed in the documentary. The basic but radical idea is to change the tax base from income to land.

One criticism: The documentary reveals that HK uses a land based tax revenue system. Remarkably, we just learned that HK authorities apparently needed to apply still more tax to bring prices under control.

Mick Murphy
Guest
Mick Murphy

Here we go again…

Hotel Georgia condo buyers sue to opt out of presale contracts as Vancouver real estate market sags

http://www.biv.com/article/20121030/BIV0111/310309943/hotel-georgia-condo-buyers-sue-to-opt-out-of-presale-contracts-as

Not much of a name...
Member
Not much of a name...

@shriller:

Why do we tax income proportionately more than wealth?

Isn’t wealth generated with after tax income?

shriller
Guest
shriller

There is an interesting subtext to Patriotz’s suggestion. Why do we tax income proportionately more than wealth? It is possible, indeed probable, that our current tax code takes income away from a hard working family living in a rental in East Vancouver in order to provide income assistance to a retired senior living in a mortgage-free house on West 37th. This seems a poor system of redistribution to me. It also penalizes people who have high earnings for a short period of time (like professional athletes). It is not clear that it is social optimal to discourage risk taking in this way.
Frankly, a higher tax on property (or property transfers I suppose) would implicitly tax wealth and this might be better than our current income taxation system, regardless of the ill-gotten gains perspective.

More Data Please
Guest
More Data Please
@Victoria: re: “summary about corruption laws in Canada” Thank you for posting that! Quote: The Corruption of Foreign Public Officials Act is drafted broadly. Unlike the US’ Foreign Corrupt Practices Act, its scope is not limited to public companies listed in Canada. Canada’s rules regarding jurisdiction and service of process operate to limit the Act’s application to individuals and businesses that have a presence in Canada. Similar to the FCPA, but unlike the UK’s Bribery Act, the Corruption of Foreign Public Officials Act only applies to brides[sic] to officials of foreign states or public international organisations. It does not prohibit bribes paid to other companies. It would be interesting know if bribes or other considerations payed to executives (or state officials) of state owned firms in China (SOE’s) holding Canadian assets, could be reached by Canadian law. If some siphoning… Read more »