Canada, economy, presales

CRA going after condo flippers

73
73 Comments

If you’ve made money by flipping condos or selling assignments for presales projects you probably already know that’s income.

If not the Canada Revenue Agency would like to remind you:

“We do from time to time target some sectors more closely than others,” he said. “We look at the real estate market in general. Of course, [there is more focus], it’s a hot market.”

Thats Sam Papadopoulous, senior public affairs advisor-manager with CRA’s Ontario region quoted in this Financial Post article.

“If you keep [assigning property] then it is not capital gains, that’s trade and that’s income,” said Mr. Papadopoulous, adding you do it a “couple of times” and it’s income. “Of course, that’s part of [what they are investigating].”

“We live in the information technology age,” said Mr. Papadopoulous, who wouldn’t get into how CRA is tracking down the tax evaders. “We are putting our resources to work and following the trail where we can.”

Read the full article over at the Financial Post.

Sort by:   newest | oldest | most voted
MrBear
Member
MrBear
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

All I can say is:

About. Bloody. Time.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
Short'em High
Guest
Short'em High
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

@jesse, Re: Why sticky Teranet prices in Vancouver vs Victoria?

Consider this handy graph which measures relative ease of rental income for Vancouver and Victoria. I simply took the rental survey price for a 2BR and divided by a weighted vacancy rate, WVR. WVR is something I cooked up and is calculated by dividing the city’s vacancy rate by the sum of vacancy rates for both cities.

http://postimg.org/image/u1it7ssxr/

Notice how similar the ease of rental income was in 2008 for both Vancouver and Victoria compared to 2012. Since 2008 Vancouver landlords have accumulated a financial cushion compared to Victoria from higher rents. This cushion won’t last long though. Rental vacancy rate is going to climb very quickly as people leave town. It has already begun.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
jesse
Member
jesse
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

Victoria has seen declining population growth compared to Vancouver, I think there has been intraprovincial migration to Vancouver over the past while. That aligns somewhat with rental strength. The data I have are from mid 2012, unfortunately the series is only updated annually.

Adding to the fire, Short, is increased completions through the next year at least, and more acutely some commodity price pressures on Vancouver’s other backbone industry: pumping and dumping of mining juniors hahahahahaha

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
Guy Smiley
Member
Guy Smiley
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

canadians-still-pay-62-more-for-a-home-than-in-us

“The good news is that we believe that most of this yawning gap will be closed by a rebound in U.S. home prices. After all, it’s U.S. affordability that’s off the charts now.”

How far below historic norms are US prices? I’m pretty sure it’s Canada that needs to revert farther to reach the norm….

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
patriotz
Member
patriotz
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

“How far below historic norms are US prices?”

US prices (adjusted for inflation) are above historic norms.

Affordability is high because of historically low interest rates, not historically low prices. And it will remain high only as long as rates stay low.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
Minnie
Guest
Minnie
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

Well, just audit those presale marketing companies such as rennie, MAC Marketing, they should get all the purchasers info if they resell before completion. It’s not hard to trace…..

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
patriotz
Member
patriotz
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

Developers should be required to report assignments to CRA just as stock brokers are required to report stock trades, without an audit.

This seems to have escaped the new “get tough” policy for some reason.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
900kCrackHouse
Guest
900kCrackHouse
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.
Some interesting anecdotes from the trenches regarding construction employment. – a good friend of mine just shut down his electrical business to be a stay at home dad – turns out that over the last year the hourly rates have been dropping and competitors have been undercutting him (he is not very expensive), so it has become very difficult to make money – other people I know owned a siding company – employed between 10 – 20 guys. They shut down in December and the owners moved to Alberta, now looking for work. Turns out they can’t compete with the East Indian builders whose employees work for $10-$15 / hour and can swarm a site getting things done in record time – friends Dad is moving to the praries and trying to sell their house. works in construction – but… Read more »
You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
@900kCrackHouse
Guest
@900kCrackHouse
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

we’ve been hearing stories like that for 7 fucking years, and no crash, no crash, no crash, no crash.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
victoria
Member
victoria
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

I also wonder about illegal suites.

That is income too. We are not allowed to rent out suites in our neighbourhood and there are so many of them.

When we first moved in neighbours showed up (I thought to welcome us to the hood) but one of the first things they said is you can’t rent out your suite. Only a family member or domestic can live there.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
Democrass
Guest
Democrass
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

“we’ve been hearing stories like that for 7 fucking years, and no crash, no crash, no crash, no crash”

Wake up, the crash is almost one year old. Where have you been?

Are you foolish enough to think that real estate prices fall 40% overnight? In the US the crash was five years long. Before you start spouting about real estate crashes, go find out what a real estate crash looks like. Let me help you. It looks like this:

http://vancouverpricedrop.wordpress.com/2013/04/19/drop-from-peak-chart-march-2013/

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
900kCrackHouse
Guest
900kCrackHouse
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

@900kCrackHouse Says:
April 23rd, 2013 at 9:22 am 9

we’ve been hearing stories like that for 7 fucking years, and no crash, no crash, no crash, no crash.

—————————————–

1) Get your own name.
2) Get your head out of the sand and look around. You have demonstrated you have no idea what is going on right now. Zero…

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
Crikey
Guest
Crikey
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

Nevermind that the market is already falling…
Nevermind that prices have a long way to fall before they reach the levels of sanity…
But now, a bunch of tax-dodging condo flipper have just been scared away from the market indefinitely.
Yup, the market market is *done*.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
bon jovi
Guest
bon jovi
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

@900kCrackHous

yup,i can confirm someof your anacdotes. Friend of mine lost job as technical writer in oil and gas firm when i left Van 4 yr ago. still without job. The thing is he lost even a hope of finding a job. Until there was a hope he was not thinking of moving out of the province. But once the hope is crushed everything is on the table. even splitting with wife while he go east to search for a job.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
patriotz
Member
patriotz
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

“I also wonder about illegal suites. That is income too.”

Income only if rent exceeds expenses (which include proportion of mortgage interest, property taxes, etc.)

CRA knows this of course, which is why I think they are going after flippers. Much more return of tax on investigative cost.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
Patsan
Guest
Patsan
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

900kCrackHouse #8
Good observations and I’m hearing quite similar stories. Methinks that it is just a reversion to the mean. 10-15 dollars is a very reasonable pay for unskilled labor (well, it may require 1 week of training) and it should be this way. These folks who are complaining now about fierce competition were able to get larger hourly rate comparing to engineers and nurses only few years ago. Now they are facing normalization of their salaries.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
900kCrackHouse
Guest
900kCrackHouse
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.
@Patsan Excellent point. These guys were raking in far more than they would get traditionally. It is going to take a serious readjustment of expectations. The thing that is scaring me is that moderately skilled workers shouldn’t be making over 100k either. I would consider transit cops, standard police officers, firefighters, etc. moderately skilled workers. Because they are protected by unions and as government employees they have been able to negotiate large pay raises when the private sector hasn’t received much, and starting wages have even been in a decline. I would love to see the normalization of the wages for these types of jobs as we are the ones paying for them out of our hard earned tax dollars. Thankfully teachers in BC don’t receive the same wages as Ontario or they would be in the 100k+ category as… Read more »
You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
Madashell
Guest
Madashell
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

“I also wonder about illegal suites. That is income too.”

Most new Vancouver Specials are build with 2 suites and brings around $2000/month of undeclared income. On my block, 90% of the houses have an illegal suite on it. I would like to see CRA go after these people.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
900kCrackHouse
Guest
900kCrackHouse
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.
Vancouver’s main industries and my view on their near term potential: – Weed – NEGATIVE – going to be facing increased pricing pressure due to legalization south of the border – shipping – STATUS QUO – going strong and will likely continue to go strong – tourism – STATUS QUO to NEGATIVE – likely doing ok although business from the US has been suffering – Construction – NEGATIVE to VERY NEGATIVE – that is what this blog is all about, need I say more – Real Estate / FIRE industry – NEGATIVE to VERY NEGATIVE – housing sales way below 10 year averages – Mining – NEGATIVE – Juniors are *screwed*, the big guys are suffering, going to be impossible to permit anything with the NDP in power – Oil and Gas – NEGATIVE – no pipelines anytime soon and… Read more »
You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
bioscene
Guest
bioscene
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

When the markets hot the Tax Man a coming. I’m all for doing whatever it takes to keep more of what you earn, and those angry about the flippers are probably more jealous they are not involved with making money the flippers or assignors earned. If you made money you could hide and not pay tax on I’m sure you would.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
@Democrass
Guest
@Democrass
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

we’re tracking Seattle. HEY GUYS GET READY FOR THE 30% DECLINE IN REAL ESTATE! you idiots still won’t be able to afford a place, and you’ll probably miss the bottom waiting for the crash.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
@900kCrackHouse
Guest
@900kCrackHouse
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

1) shut up.
2) and you do? you’ve been wrong for 7 years at least. you’ve probably been wrong since 2001, which is 12 years. think about that, 12 FUCKING YEARS OF BEING WRONG. but you know what you’re talking about. enjoy the 30% ‘crash’.

900kCrackHouse Says:
April 23rd, 2013 at 9:32 am 12

1) Get your own name.
2) Get your head out of the sand and look around. You have demonstrated you have no idea what is going on right now. Zero…

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
900kCrackHouse
Guest
900kCrackHouse
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

@bioscene

Are you out of your mind? When I invest in stocks – I pay capital gains taxes. If we let people invest in condos, flip them, and pay no tax, this skews the market and screws everybody.

How much saner would this market have been if flippers knew that they would have to pay taxes on their flip? I’m guessing it would have made a difference.

And with regards to paying taxes – I’d rather flippers were taxed more rather than hard working Canadians who do work that creates real value.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
Anonymous1
Guest
Anonymous1
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

Basement suite income won’t ever be taxed. Local Municipal Politicians who get elected pander to that landlord vote. Surrey is looking into legalizing 2 suites per house now. The homeowners of the mega houses seem to be winning lottery after lottery.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago
b5baxter
Member
b5baxter
Click to flag and open «Comment Reporting» form. You can choose reporting category and send message to website administrator. Admins may or may not choose to remove the comment or block the author. And please don't worry, your report will be anonymous.

Sending out this email today:

Dear Vancity Board Candidates,

As you may know the Economist magazine has estimated that Canadian real estate is overvalue by as much as 70%. Given the inevitable declines that we can expect in Vancouver’s real estate how do you plan to maintain the financial health of Vancity’s mortgage portfolio if elected director? Would you make any changes to how Vancity evaluates the risk of mortgages (under the current conditions all 5% down mortgages would be considered risky)? If you are incumbent director what have you done to insure that Vancity’s mortgage portfolio has remained healthy during the real estate bubble in Vancouver?

I look forward to hearing your ideas on how Vancity can remain financially healthy so it can continue to support the many progressive programs that make Vancity such a great institution.

You Must Be Logged In To Vote00You Must Be Logged In To Vote
6 years 2 months ago