Housing Bust 2016

Leveraging, renting vs owning, making an investment or buying a home?
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Re: Housing Bust 2016

Post by squid » 04 Oct 2016 11:18

gobsmack wrote: It does not look like the announced changes will make the task any easier so I don't see how they can be effective.
I believe I read that home sales were now to be reported on the annual tax return regardless of tax status, and that the provinces would submit sales info to CRA for cross-reference.

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Re: Housing Bust 2016

Post by Flaccidsteele » 04 Oct 2016 19:07

Canadian Mortgage Trends is uncharacteristically doomy:
One big non-bank lender didn’t mince words when describing today’s DoF’s announcement. “This is a crisis,” the executive told CMT. The lender estimates that up to 40% of its insured volume could vaporize near-term because of these rules. Even if it’s half that among non-banks industry-wide, this appears to be a devastating blow to mortgage competition in Canada.

Housing prices will tumble as a sizable minority of first-time buyers and those with higher GDS/TDS ratios no longer qualify for the mortgage amount they want.

Non-deposit-taking lenders could be forced to sell a wide array of loans to balance sheet lenders at a premium. They’ll be forced to pass those funding cost hikes directly through to consumers. These include refinances, amortizations over 25 years, non-owner-occupied properties and mortgages over $1 million—all the stuff that can no longer be insured and securitized.

...
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Re: Housing Bust 2016

Post by AltaRed » 04 Oct 2016 19:25

Cry me a river.....

Too many people forget that housing is primarily for people wanting/needing a place to live, to perhaps raise a family, to have a nest, to build memories. It shouldn't be f**ked up by speculators, money washing and flippers.
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Re: Housing Bust 2016

Post by Insomniac » 04 Oct 2016 20:09

squid wrote:
gobsmack wrote: It does not look like the announced changes will make the task any easier so I don't see how they can be effective.
I believe I read that home sales were now to be reported on the annual tax return regardless of tax status, and that the provinces would submit sales info to CRA for cross-reference.
BC has been supplying property sales data to CRA for as long as I can remember. I remember data tapes and microfiche.

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Re: Housing Bust 2016

Post by patriot1 » 05 Oct 2016 10:10

Makes the data mining easier. Any property sale that has not been reported on a tax return can be flagged for an audit. If principal residence sales aren't required to be reported on the tax return, it's more complicated.

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Re: Housing Bust 2016

Post by SkaSka » 05 Oct 2016 11:17

AltaRed wrote:Cry me a river.....

Too many people forget that housing is primarily for people wanting/needing a place to live, to perhaps raise a family, to have a nest, to build memories. It shouldn't be f**ked up by speculators, money washing and flippers.
+1

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Re: Housing Bust 2016

Post by twa2w » 05 Oct 2016 19:52

patriot1 wrote:Makes the data mining easier. Any property sale that has not been reported on a tax return can be flagged for an audit. If principal residence sales aren't required to be reported on the tax return, it's more complicated.
But with box numbers, rural routes for addresses and common names etc this could prove a pain.
I can see that the provincial governments will begin requiring purchasers and sellers to provide SIN and for the feds to maintain a data base so eventually they will know how many properties you own and with whom. Trusts owning properties will also likely have to provide the names snd sin of beneficiaries althpugh this would be a pretty small % of properties.

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Re: Housing Bust 2016

Post by patriot1 » 05 Oct 2016 21:06

twa2w wrote:But with box numbers, rural routes for addresses and common names etc this could prove a pain.
I would say this describes the former situation where the mailing address of the taxpayer may not match up with the property. Requiring an explicit statement of the property sold makes matching easy even without SIN in the property title.

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Re: Housing Bust 2016

Post by twa2w » 06 Oct 2016 10:43

patriot1 wrote:
twa2w wrote:But with box numbers, rural routes for addresses and common names etc this could prove a pain.
I would say this describes the former situation where the mailing address of the taxpayer may not match up with the property. Requiring an explicit statement of the property sold makes matching easy even without SIN in the property title.
Yes but when the seller does not declare it is where the matching becomes problematic, which is what my comment refers to.
If I live in Alberta and sell a property in BC which may or may not have a Street address and my mailing address for the cottage is a box number in BC, how does CRA track me.

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Re: Housing Bust 2016

Post by Rysto » 06 Oct 2016 11:22

Is that really such a big issue? The hot markets where all of the speculators are buying and selling are urban.

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Re: Housing Bust 2016

Post by pmj » 06 Oct 2016 12:03

Don't most places have unique IDs at the Land Registry?
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Re: Housing Bust 2016

Post by twa2w » 06 Oct 2016 12:48

pmj wrote:Don't most places have unique IDs at the Land Registry?
Sure all properties have a unique identifier. How does that connect it to a person?

If I own six properties in Toronto and live elsewhere, I could sell all the properties and without some way to track those properties to me, how does CRA claim their due if I don't declare them.
For the record, my name is Li Wang and my address on title is box 157, mailboxes R us. Toronto. Or the address of the property. But I actually live in Vancouver. My lawyer wires the proceeds of sale off shore.

Hence my comment about the requirement for sellers to provide SIN , and or a physical residential address surviving the sale.
If a non- resident would there / should there be a witholding tax?

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Re: Housing Bust 2016

Post by patriot1 » 06 Oct 2016 14:50

twa2w wrote:If a non- resident would there / should there be a witholding tax?
The purchaser of any property sold by a non-resident is required to submit a withholding tax unless the seller has requested and been granted a clearance. This is a long standing requirement. Note the onus is on the purchaser.

http://www.thecoastgroup.ca/faq/non-res ... -canada-2/

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Re: Housing Bust 2016

Post by squid » 06 Oct 2016 15:44

I could sell all the properties and without some way to track those properties to me, how does CRA claim their due if I don't declare them.
Wouldn't CRA just cross reference their list of sold properties with the properties declared on tax returns (now that it is mandatory). Any property sale not declared on tax returns can now be more easily audited.

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Re: Housing Bust 2016

Post by brucecohen » 07 Oct 2016 14:28

squid wrote:
I could sell all the properties and without some way to track those properties to me, how does CRA claim their due if I don't declare them.
Wouldn't CRA just cross reference their list of sold properties with the properties declared on tax returns (now that it is mandatory). Any property sale not declared on tax returns can now be more easily audited.
Yes. If the taxpayer is required to provide the property tax roll number it'd be easy for CRA computers to identify unreported sales. FWIW, in today's Globe, tax accountant Tim Cestnick suggests that many people with city homes have not been bothering to report the taxable sale of cottages or they've been improperly doubling up on allocating the principal residence exemption between the two properties. This is not necessarily intentional, Cestnick suggests, but due at least partly to the complexity of the PRE rules.

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Re: Housing Bust 2016

Post by twa2w » 07 Oct 2016 16:59

squid wrote:
I could sell all the properties and without some way to track those properties to me, how does CRA claim their due if I don't declare them.
Wouldn't CRA just cross reference their list of sold properties with the properties declared on tax returns (now that it is mandatory). Any property sale not declared on tax returns can now be more easily audited.
Sure that is obvious,but with common names and old or misleading addresses how do they track down the owners.
My point being is that if someone choose not to declare it, how easy is it for CRA to audit and catch the culprit. They can come up with a list of properties sold and not declared on tax returns but how easy is it to track down the owners. This is why I suggested they may, in the future, require the provision of SIN on any sale.
Also, I am not sure CRA has the manpower to handle the potential audits required, or the ability to keep track of multiple property sales over the long term. ie If I have owned 2 properties for 20 years and sell one today and declare it as my PR no problem. If I sell the second property in another 20years, I can declare 1/2 of my gain as PR time but will CRA keep records of my first sale if in 20 years if I declare the whole time as PR. What about properties with multiple owners and being the PR of one person - I guess this would be on the taxpayer to declare it was a PR but it could complicate things for the other owners if they also have PRs depending on the tracking.

Of course no system is perfect and it will take CRA a while to bring their systems and audits in line.

And I do generally agree with the changes but think there are going to be a lot of issues for the first year or so.

Like Tim, I know a few folks who have not declared the sale of second properties as well as non-residents who maintain a Canadian address to maintain their Canadian property and have paid no tax on the sale.

I also think based on what I have seen, if audited correctly, there could be a surprising amount of additional tax revenue.

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Re: Housing Bust 2016

Post by squid » 08 Oct 2016 02:16

Well, form T2091(IND) (Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust)) does have a space for SIN. Just that you never had to fill it out if you thought the house was fully tax exempt. Now everyone has to fill it out, including date of acquisition, price, etc.

It won't be so easy to feign ignorance, and you will be signing for its veracity. Maybe this will need to be filled at the lawyers so that proper withholding tax can be retained (it is the duty of the purchaser to withhold proper tax)?

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Re: Housing Bust 2016

Post by zeno » 17 Oct 2016 19:29

Raising Babies in Apartments...oh the humanity!

http://www.cbc.ca/news/canada/toronto/m ... -1.3808642

Ridiculous tone in the headline and reporting for what is a very reasonable expectation.

"Her advice to millennials, of which she is one, is accept their plight, don't overdo it on rent, stay in an apartment with affordable rent for three to five years, start your family, pay for day care and come out the other side with savings. "

I love how renting an apartment and saving up for a downpayment is somehow a "plight."

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Re: Housing Bust 2016

Post by nisser » 18 Oct 2016 12:57

North American people are a different kind of race. How can someone possibly raise babies in an apartment??? :shock:

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Re: Housing Bust 2016

Post by nisser » 18 Oct 2016 17:12

We're thinking about buying a duplex in Calgary and moving up from our condo. We're looking at a bunch in the ~900k range but they all went for something like 950k at the peak in 2014. Considering our condo has dropped by about 10%, I think there's still room for those to drop even more given all the new changes recently and the fact that it's the worst recession in AB history. People are just really stubborn with prices.

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Re: Housing Bust 2016

Post by Just a Guy » 19 Oct 2016 10:16

Prices won't actually fall much until people HAVE to sell. If you can remain liquid sitting still, no one can force the market to take a loss. Real estate is a big game of chicken, whomever blinks first determines the "winner".

Outside things like interest rates, market conditions, jobs, etc. Can all influence the game, but in the end you can still overpay or underpay despite the realities around you.

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Re: Housing Bust 2016

Post by patriot1 » 19 Oct 2016 10:50

Just a Guy wrote:Prices won't actually fall much until people HAVE to sell.
Some people always have to sell. Most don't, but almost all discretionary sellers of their own residence are planning to buy another property, so the effect on the market is neutral whether they sell or not.

A drop off in buyers is more important in causing price declines than an increase in people who have to sell. So is people with 2nd properties deciding to get out.

You will find that in any RE crash most owners weren't in the market at all.

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Re: Housing Bust 2016

Post by Just a Guy » 20 Oct 2016 01:03

patriot1 wrote:almost all discretionary sellers of their own residence are planning to buy another property, so the effect on the market is neutral whether they sell or not.
Not at all. If you need to sell your house in a down market, your buyer won't be willing to pay more, so you take a loss and the property value of your house has decreased.

The house you buy as a replacement is cheaper, but you still took a capital loss, if you're lucky and aren't on the hook for the unpaid difference on your mortgage.

The only thing that remains neutral are the number of houses on the market.

If you decide not to sell, and continue to make your payments, chances are the losses will only be on paper. You can pretend your house is still worth what you paid for it. If no one sells, then the "average" price of housing won't fall that much. If however many places sell cheap, and the bank runs into trouble and decides not to renew your mortgage without a pay down to fix the ltv, you may find the crisis gets ugly.

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Re: Housing Bust 2016

Post by Quebec » 21 Oct 2016 16:52

AltaRed wrote:... What Canadians need to wake up more to is to accept multi-purpose residential housing, i.e mixed with light commercial/retail and stop insisting on their own personal outdoor space with environmentally unacceptable lawns and the white picket fence. My involvement the last 10 years has been to foster denser urban growth for affordability while at the same time preserving and creating usable public spaces...
I live in the suburbs, I have a rater large lawn with a sandbox for the kids, etc. but I agree with you 100%. What changed my view this year was spending six months in Australia where rent in the city was outrageous, so we could only afford a townhouse with no lawn. I was apprehensive, on account of the children and their need to play outdoors every day. We ended up spending 30-60 mins at the park on most days on the way back from school. There, the children could play with class mates, including soccer. They had free public electrical bbqs so occasionally we'd end up frying sausages and sometimes opening a beer with the other parents while the kids ran around. I did not miss my Canadian lawn, with the associated work, whatsoever. The key was that this park was large, clean, safe, well equiped and located between the school and the townhouse.
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Re: Housing Bust 2016

Post by Flaccidsteele » 24 Oct 2016 00:34

I grew up in a house with the backyard and all that jazz. Personally I preferred to play in the park with the other kids. Much more exciting. But nobody asked me. As I grew up I noticed that parents who say they did such-and-such 'for the kids' really meant they wanted it for themselves and used the kids as justification for their decision.
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