Housing Bust 2016

Leveraging, renting vs owning, making an investment or buying a home?
Locked
twa2w
Veteran Contributor
Veteran Contributor
Posts: 2054
Joined: 22 Feb 2005 13:08

Re: Housing Bust 2016

Post by twa2w »

patriot1 wrote:. Note that anyone with dependent family in Canada is considered a tax resident in Canada regardless of where they are.
Any references to back that up. If I live and work in the USA and my wife and family live in Canada, you are saying I am a tax resident of Canada?
I have never heard of this and it is certainly not true in my experience or my clients experience. How in the h*** would Canada ever collect taxes. Especially if it was a country other than the USA. If I had a large family, I could potentially have dependants in more than I country as sometimes happens with rich families in third world countries.
User avatar
newguy
Veteran Contributor
Veteran Contributor
Posts: 8088
Joined: 10 May 2009 18:24
Location: Montreal

Re: Housing Bust 2016

Post by newguy »

twa2w wrote:
patriot1 wrote:. Note that anyone with dependent family in Canada is considered a tax resident in Canada regardless of where they are.
Any references to back that up.
It's just one criteria (albeit an important one) in determining residency.

http://www.cra-arc.gc.ca/tx/tchncl/ncmt ... 1-eng.html
Significant residential ties

1.11 The residential ties of an individual that will almost always be significant residential ties for the purpose of determining residence status are the individual's:

dwelling place (or places);
spouse or common-law partner; and
dependants.
Flaccidsteele
Veteran Contributor
Veteran Contributor
Posts: 4523
Joined: 06 Mar 2014 12:52
Location: Retired Gen Xer somewhere on the planet earth

Re: Housing Bust 2016

Post by Flaccidsteele »

gobsmack wrote:Question: So the claim is that these wealthy Chinese foreigners are distorting prices in Vancouver. I imagine no bank in Canada would offer them a mortgage given that these "astronaut families" have little income and history to show in their tax files. Since they are wealthy, I imagine they are buying these houses with cash. Has anybody tried to track cash transactions in these purchases? Is the number of cash transactions significantly higher in Vancouver?
Andy Yan did a study that looked at 172 Westside SFH transactions in the West Point Grey, Dunbar, and Unversity Endowment Land neighbourhoods.

Total Study Dwelling Value: $525m
Average Study Sale Price: $3.05m
Median Study Sale Price: $2.64m

13/16 of homes over $5m held a mortgage
13/16 of homes between $4m and $5m held a mortgage
19/23 of homes between $3m and $4m held a mortgage
61/73 of homes between $2m and $3m held a mortgage
34/44 of homes between $1.25m and $2m held a mortgage

This "study" showed that 82% of properties sold at a price above $1.25m hold a mortgage.

69% of mortgages were held by CIBC, HSBC or BoM.

They could focus their attention on the 18% of homes in this study to find the "all cash transactions" and go from there.
User avatar
patriot1
Veteran Contributor
Veteran Contributor
Posts: 4883
Joined: 28 Feb 2005 03:53

Re: Housing Bust 2016

Post by patriot1 »

The same study indicates that most of the "Asian big money" types are in fact buying with mortgages, with the lenders waiving income verification:
Routledge said he is “almost certain (the banks) are not (reckless). They are being ‘safer’ by requiring higher down payments. Someone from mainland China with no documented income, but who has a high asset base, will be subjected to more stringent requirements and a higher down payment. This is automated.” In banking, he says, it’s called “KYC: knowing your customer. Instead of asking for a 20 per cent down payment, they would likely be asking (such buyers) for between 40 to 50 per cent.”
http://www.vancouversun.com/business/ba ... story.html
twa2w
Veteran Contributor
Veteran Contributor
Posts: 2054
Joined: 22 Feb 2005 13:08

Re: Housing Bust 2016

Post by twa2w »

newguy wrote:
twa2w wrote:
patriot1 wrote:. Note that anyone with dependent family in Canada is considered a tax resident in Canada regardless of where they are.
Any references to back that up.
It's just one criteria (albeit an important one) in determining residency.

http://www.cra-arc.gc.ca/tx/tchncl/ncmt ... 1-eng.html
Significant residential ties

1.11 The residential ties of an individual that will almost always be significant residential ties for the purpose of determining residence status are the individual's:

dwelling place (or places);
spouse or common-law partner; and
dependants.
I think you had better read that again. The passage you quote applies more to a resident of Canada who leaves to live in another country.
If I live and work in China or Iraq and have never been resident in Canada and send my spouse and kids to Canada and buy a house for them, there is no way I am a tax resident of Canada.
The majority of my ties are to my home country. Ie job, factual residence, assets etc. The tie breakerrules will almost always go in favour of the home country.
How in the world would CRA track and tax me?
There is a lot more to it than that passage you quote.
ig17
Veteran Contributor
Veteran Contributor
Posts: 3418
Joined: 21 Feb 2005 20:54

Re: Housing Bust 2016

Post by ig17 »

There is another angle to the residency debate. Some (many?) breadwinners in the "astronaut families" claim foreign residency for tax purposes, but Canadian residency for citizenship purposes. When the time comes to get their Canadian passports, the entire family shows up (including the main breadwinner who never paid Canadian taxes). This is fraud but they easily get away with it because CRA and Immigration Canada are not comparing notes.
User avatar
newguy
Veteran Contributor
Veteran Contributor
Posts: 8088
Joined: 10 May 2009 18:24
Location: Montreal

Re: Housing Bust 2016

Post by newguy »

twa2w wrote:I think you had better read that again. The passage you quote applies more to a resident of Canada who leaves to live in another country.
Well if you read the entering Canada section, it says go read the leaving Canada section.

I'm not saying it's definitive, I just said it was one criteria they look at. The CRA said it was a significant tie.

newguy
User avatar
patriot1
Veteran Contributor
Veteran Contributor
Posts: 4883
Joined: 28 Feb 2005 03:53

Re: Housing Bust 2016

Post by patriot1 »

twa2w wrote:he passage you quote applies more to a resident of Canada who leaves to live in another country.
That is exactly who we are talking about. The whole family immigrates to Canada and then the father returns to China/HK to work. That's why they are called "astronauts".
ig17
Veteran Contributor
Veteran Contributor
Posts: 3418
Joined: 21 Feb 2005 20:54

Re: Housing Bust 2016

Post by ig17 »

CBC News, British Columbia

Accusations of racism stifling Vancouver's housing debate, say activists
Foreign money, mostly from China, matters when it comes to the Lower Mainland real estate market — so why can't we talk about that openly?

That's the question two community activists grappling with the housing affordability crisis say people are avoiding for fear of being accused of racism.

Fenella Sung, a former Fairchild Radio host and coordinator of Friends of Hong Kong, says an open discussion is needed to get real answers.

"Why can't we talk about where the source of money is and how they are impacting our real estate market right now? I just don't understand," she told On The Coast host Stephen Quinn.
Justin Fung, a member of Housing Action for Local Taxpayers, says accusations of racism are being used as a "smokescreen" to bring difficult conversation to a halt.

"There's a lot of folks making a lot of money off of Chinese money," he said. "These are primarily people in the real estate industry: the realtors, the property developers. They certainly want to continue seeing this happen."

"In the time I've been following this, the race card's been pulled multiple times ... and it's not the Chinese folks that are saying it."

Fung says "we have to separate the colour of the people from the colour of the money" to keep the debate healthy.

He does feel inequity is causing racism to be more pronounced and because he is Chinese-Canadian, he fears he could be taken as part of the problem

Sung agrees, and blames government inaction for over a decade for making Asian-Canadians feel less safe.
Flaccid, fyi

1. accusations of racism are being used as a "smokescreen"
2. the race card's been pulled multiple times ... and it's not the Chinese folks that are saying it
gobsmack
Contributor
Contributor
Posts: 447
Joined: 04 Sep 2015 13:16

Re: Housing Bust 2016

Post by gobsmack »

ig17 wrote:There is another angle to the residency debate. Some (many?) breadwinners in the "astronaut families" claim foreign residency for tax purposes, but Canadian residency for citizenship purposes. When the time comes to get their Canadian passports, the entire family shows up (including the main breadwinner who never paid Canadian taxes). This is fraud but they easily get away with it because CRA and Immigration Canada are not comparing notes.
I would be very surprised if this were true. In order to become a citizen, you must have been physically present in Canada for a considerable amount of time. I believe this rule does get enforced because the PR card does get scanned every time the holder enters Canada. I would be very surprised if these records were not getting checked when someone applies to become a citizen.

There is no need to commit fraud though. If we are really talking about very wealthy individuals, there is a simpler way in. They can simply send their children to study in Canada, buy property and run businesses here through them, and later ask their children to sponsor them in. In this case, their children would need to prove a certain level of income in Canada, which forces them to submit their taxes for assessment.

Honestly, if I were a very wealthy Chinese, I would also be looking for a way out. Who can blame them? I just don't see why they would need to go through so many illegal and fraudulent hoops in order to do so. Why do all of that and risk being caught? If they are so wealthy, there should be easier ways of getting a ticket out.
User avatar
patriot1
Veteran Contributor
Veteran Contributor
Posts: 4883
Joined: 28 Feb 2005 03:53

Re: Housing Bust 2016

Post by patriot1 »

I agree with you that there are unlikely to be many people who are claiming non-resident tax status at the same time they are permanent residents. The former means abandoning Canadian residence which is grounds for revoking the latter. Rather I think they simply are not reporting foreign income.

Canada Revenue Agency launches Vancouver housing probe
The document states that the agency is conducting audits in an attempt to detect flipping, to identify builders who don’t comply with filing regulations or who under-report GST, and to measure compliance with non-resident filing requirements. It also indicates that the CRA is collaborating with FinTRAC on “lifestyle audits....”

The CRA document also identifies as a topic of interest “individuals living in high-value areas in British Columbia who are reporting minimal income not supporting their lifestyle; individuals purchasing high-end homes with minimal income being reported [and] individuals who are not reporting all of their worldwide income.”
A "lifestyle audit" means CRA will assess someone's income based on their spending without direct evidence of source of income.
gobsmack
Contributor
Contributor
Posts: 447
Joined: 04 Sep 2015 13:16

Re: Housing Bust 2016

Post by gobsmack »

patriot1 wrote:I agree with you that there are unlikely to be many people who are claiming non-resident tax status at the same time they are permanent residents. The former means abandoning Canadian residence which is grounds for revoking the latter. Rather I think they simply are not reporting foreign income.
Yes, that seems more plausible - particularly if it is very difficult for the CRA to get any help from Chinese tax authorities, which may very well be the case.
User avatar
patriot1
Veteran Contributor
Veteran Contributor
Posts: 4883
Joined: 28 Feb 2005 03:53

Re: Housing Bust 2016

Post by patriot1 »

Tax evasion is rampant in China, which means help from the tax authorities would be of little use even if they were willing.

http://www.nytimes.com/2015/09/11/opini ... china.html
ig17
Veteran Contributor
Veteran Contributor
Posts: 3418
Joined: 21 Feb 2005 20:54

Re: Housing Bust 2016

Post by ig17 »

gobsmack wrote:
ig17 wrote:There is another angle to the residency debate. Some (many?) breadwinners in the "astronaut families" claim foreign residency for tax purposes, but Canadian residency for citizenship purposes. When the time comes to get their Canadian passports, the entire family shows up (including the main breadwinner who never paid Canadian taxes). This is fraud but they easily get away with it because CRA and Immigration Canada are not comparing notes.
I would be very surprised if this were true. In order to become a citizen, you must have been physically present in Canada for a considerable amount of time. I believe this rule does get enforced because the PR card does get scanned every time the holder enters Canada. I would be very surprised if these records were not getting checked when someone applies to become a citizen.
fyi...

Immigration mega-fraud: the rich Chinese immigrants to Canada who don’t really want to live there
The case of Xun “Sunny” Wang, a Vancouver-area consultant jailed for masterminding the biggest immigration fraud in Canadian history, is startling in scope.

Wang, 46, who was sentenced on October 23 to seven years in prison, conducted his fraud on an almost industrial scale, as he helped rich Chinese clients maintain Canadian permanent-resident status and later obtain citizenship.

Chinese passports both real and fake were shipped in bulk to the mainland, where professional forgers would doctor them to make it look like their owners had been present in Canada when they had actually been in China. Wang would set up his clients in fake jobs at his firms, printing business cards for them and issuing pay slips - adding insult to injury, their fake salaries were so low his wealthy clients were able to file tax returns that allowed them to claim from Canadian coffers tax benefits intended for the working poor.

Letters from schools and lawyers were also forged, as well as lease agreements. Fake mailing addresses and phone numbers were set up.

From 2006 until his arrest in 2014, Wang and his employees at his unlicenced New Can and Wellong immigration consultancies in Richmond are known to have helped 1,200 clients cheat immigration rules. In all, they paid Wang C$10 million (HK$59 million) for his illegal services, the Provincial Court of British Columbia found.
Wang’s clients wanted to be able to maintain their PR status without actually living in the Great White North, since their jobs and businesses were back in China. And by faking their presence in Canada they would eventually be able to claim Canadian citizenship, with all the privileges it confers, including the right to live in Canada – eventually.
User avatar
Descartes
Veteran Contributor
Veteran Contributor
Posts: 1856
Joined: 03 Nov 2008 09:59

Re: Housing Bust 2016

Post by Descartes »

Canadian house prices surge: ‘Your home made more than you did last year’
“Instead of unleashing a string of superlatives about how extraordinarily strong Vancouver and Toronto home prices remain, consider this single statistic from the Canadian June home sales results today: The average price for a resale home in Canada rose to $503,301 last month,” said BMO’s Mr. Porter.

“That is up 11.2 per cent from year-ago levels, or up $50,610 from June 2015,” he added.

“In contrast, average weekly earnings among all industries, including overtime, over the past year were $953.16. That translates into annual pay of $49,565. In otherj words, for the typical Canadian, your home made more than you did last year. And that pile of bricks (or lumber, or plaster, or glass) just sat there, while you had to grind it out every weekday and maybe more.”
Get a better job, you lazy bastards. :P
"A dividend is a dictate of management. A capital gain is a whim of the market."
schmuck
Veteran Contributor
Veteran Contributor
Posts: 1706
Joined: 21 Sep 2006 20:06
Location: Vancouver area

Re: Housing Bust 2016

Post by schmuck »

Descartes wrote: “In contrast, average weekly earnings among all industries, including overtime, over the past year were $953.16.
Yabut, that's only "declared" income, earned in Canada. :(
Flaccidsteele
Veteran Contributor
Veteran Contributor
Posts: 4523
Joined: 06 Mar 2014 12:52
Location: Retired Gen Xer somewhere on the planet earth

Re: Housing Bust 2016

Post by Flaccidsteele »

Foreign money, mostly from China...

...

"Why can't we talk about where the source of money is and how they are impacting our real estate market right now? I just don't understand," she told On The Coast host Stephen Quinn.
This is incongruent to me and is virtually the same argument and horse-before-the-cart rationale that all pro-foreign/foreign-buyer individuals make.

First, the conclusion is made.... "Foreign money, mostly from China..."

then the question is asked, "Why can't we talk about where the source of money is..."

and finally, data is sought (none yet).

Seems backwards to me.
"In the time I've been following this, the race card's been pulled multiple times ... "
I'm not sure if this person is clueless or biased. Perhaps a bit of both.

The reason the race card is being pulled is because the 1) the race is mentioned first, 2) the question of foreign-buyers/foreign-money is asked second and 3) the data is last

The irony is that the race card is being pulled first by the individuals first accusing the Chinese of foreign-buying/foreign-money.

Because they're the first people who mention the Chinese.

Irony.

Besides, we're just talking about Richmond, BC right? :rofl:
schmuck
Veteran Contributor
Veteran Contributor
Posts: 1706
Joined: 21 Sep 2006 20:06
Location: Vancouver area

Re: Housing Bust 2016

Post by schmuck »

Flaccidsteele wrote: Yawn
Don't let us keep you awake.
twa2w
Veteran Contributor
Veteran Contributor
Posts: 2054
Joined: 22 Feb 2005 13:08

Re: Housing Bust 2016

Post by twa2w »

I really don't understand why people think it racist to talk about money coming from Chinese sources.
If this was money coming from Australia as the result of a new and fearsome government or people fleeing devastation of global warming, we would say it was the Australian money flooding the market and no one would think of it as racist.
Come on folks. China is a country, if the money is coming from that country it is Chinese money. No one is saying the Chinese are bad, ugly, terrorists or causing crime.
People from Calgary and Edmonton have driven up prices in the Okanagan and Invermere area for years. People referred to the money as oil money or albertamoney. Not reacist, just the source of the money. Although the BC locals didnt like us Calgreedians very much. :D
User avatar
kcowan
Veteran Contributor
Veteran Contributor
Posts: 16033
Joined: 18 Apr 2006 20:33
Location: Pacific latitude 20/49

Re: Housing Bust 2016

Post by kcowan »

When I lived on an acreage north of Toronto, a German developer built a round bungalow across the road. After living in it for 2 years, he started a 2-storey round house and sold the original place in 1988. Chinese Grandma and 2 school kids. Two Mercedes in the garage. Grandma on welfare. Kids getting assistance.

Here we are almost 30 years later and the government has not caught on to all the aspects of the scam.
For the fun of it...Keith
Flaccidsteele
Veteran Contributor
Veteran Contributor
Posts: 4523
Joined: 06 Mar 2014 12:52
Location: Retired Gen Xer somewhere on the planet earth

Re: Housing Bust 2016

Post by Flaccidsteele »

twa2w wrote:I really don't understand why people think it racist to talk about money coming from Chinese sources.
Simple.

1) There's no data and people are pointing at one race.

2) Any data that doesn't point to this one race is considered false/fraudulent/incomplete.

Seems pretty obvious why it's considered racist.

Life is hard.
Last edited by Flaccidsteele on 15 Jul 2016 19:05, edited 1 time in total.
OnlyMyOpinion
Veteran Contributor
Veteran Contributor
Posts: 4231
Joined: 24 Jan 2014 23:17

Re: Housing Bust 2016

Post by OnlyMyOpinion »

Rac·ist (noun): A person who believes that a particular race is superior to another.

If wealthy Chinese are really gaming the system, who are we considering the superior race :)
Flaccidsteele
Veteran Contributor
Veteran Contributor
Posts: 4523
Joined: 06 Mar 2014 12:52
Location: Retired Gen Xer somewhere on the planet earth

Re: Housing Bust 2016

Post by Flaccidsteele »

OnlyMyOpinion wrote:If wealthy Chinese are really gaming the system, who are we considering the superior race :)
Canadian homeowners are allegedly making out like bandits! Selling shacks for millions! I nominate Canadians to be in the running too! :thumbsup:
ig17
Veteran Contributor
Veteran Contributor
Posts: 3418
Joined: 21 Feb 2005 20:54

Re: Housing Bust 2016

Post by ig17 »

Flaccidsteele wrote:1) There's no data ...
This is not true. We have plenty of numbers and an overwhelming circumstantial evidence. You brush them aside because of your own biases.
Flaccidsteele wrote:... and people are pointing at one race.
Race is irrelevant. The real issues are:

a. Real estate affordability crisis
b. Tax fraud
c. Immigration fraud
Flaccidsteele wrote:2) Any data that doesn't point to this one race is considered false/fraudulent/incomplete.
What exactly are you referring to? 19 days worth of data released in haste by BC government? It's not false/fraudulent, but the sample is tiny and the scope of data is too narrow. Many experts agreed on that, including the head of CMHC.
User avatar
ghariton
Veteran Contributor
Veteran Contributor
Posts: 15954
Joined: 18 Feb 2005 18:59
Location: Ottawa

Re: Housing Bust 2016

Post by ghariton »

Why Land and Homes Actually Tend to Be Disappointing Investments
Buy land: They’re not making it anymore. That often repeated adage sounds like good financial advice.


But over the long run, it hasn’t been. Despite solid price increases over the last few years, land and homes have actually been disappointing investments. It’s worth considering why.

<snip>

Over the century from 1915 to 2015, though, the real value of American farmland (deflated by the Consumer Price Index) increased only 3.1 times, according to the Department of Agriculture. That comes to an average increase of only 1.1 percent a year — and with a growing population, that’s barely enough to keep per capita real land value unchanged.


According to my own data (relying on the S&P/Case-Shiller U.S. National Home Price Index, which I helped create), real home prices rose even more slowly over the same period — a total increase of 1.8 times, which comes to an average of only 0.6 percent a year.

<snip>

A more extreme outcome is also quite plausible. In a hundred years, we might even see much of our former farmland converted back to wildlife preserves. In fact, it’s far from inconceivable that the real price of land could be even lower than it is right now.
The juice is worth the squeeze
Locked