Housing Market 2018

Leveraging, renting vs owning, making an investment or buying a home?
ig17
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Re: Housing Market 2018

Post by ig17 »

gobsmack wrote: 30 Jan 2018 08:51 My understanding is that the number of applications accepted every year is small: http://www.immigration-quebec.gouv.qc.c ... dures.html. If the article claims that 46,000 of them have left QC, a lot these people could have immigrated a long time ago. Perhaps they even became citizens before moving out of Quebec. We cannot deny Canadian citizens the right to move within the country.

In the case of people who are truly wealthy, there is very little reason to break the law. They have so many options to legally immigrate to North America and Europe. I just do not understand why anyone in this position would break the law given that they would be risking a lot for very little reward. Why would they risk their legal status for the privilege of living in Vancouver, for instance? Is Vancouver that much better than Montreal?
No one questions the right of these people to move within Canada. That's not the issue.

This is the real issue:
Gordon described the QIIP as a “farce,” saying that Quebec benefits from the program while other jurisdictions incur the costs of hosting wealthy immigrants in their provinces.

“The Quebec government receives an interest-free loan, while the house price pressures and the social service costs of supporting investor immigrant families, who have historically paid low amounts of tax, falls on British Columbia and Ontario,” he said.
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Re: Housing Market 2018

Post by kcowan »

ig17 wrote: 30 Jan 2018 10:21...I just do not understand why anyone in this position would break the law given that they would be risking a lot for very little reward. Why would they risk their legal status for the privilege of living in Vancouver, for instance? Is Vancouver that much better than Montreal?
No one questions the right of these people to move within Canada. That's not the issue.
This is the real issue:
Gordon described the QIIP as a “farce,” saying that Quebec benefits from the program while other jurisdictions incur the costs of hosting wealthy immigrants in their provinces.

“The Quebec government receives an interest-free loan, while the house price pressures and the social service costs of supporting investor immigrant families, who have historically paid low amounts of tax, falls on British Columbia and Ontario,” he said.
[/quote]I think the fundamental issue is that such well-to-do immigrants do not report their worldwide income to the CRA.
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Re: Housing Market 2018

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Further, that in BC at least, buyers of RE do not have to disclose who the beneficial owner is with Land Titles. Indeed, they can buy RE with a trust or numbered company with nominee shareholders, e.g. an adult child. To add insult to injury, they can then actually sell the shares to someone else any time they wish and totally escape land transfer taxes. This huge barn door has been open a long time. It is only now that the NDP is considering closing that door.

Apparently, Ontario had a similar situation until recently. It seems now the actual beneficial owners must be registered with Land Titles. Hard to believe such stupid 'open barn doors' actually was permitted to occur.
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Re: Housing Market 2018

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kcowan wrote: 30 Jan 2018 17:15 I think the fundamental issue is that such well-to-do immigrants do not report their worldwide income to the CRA.
Yes, that too. Also, immigration fraud (applying for citizenship without fulfilling residency requirements).

But let's pretend that both tax fraud and immigration fraud are solved. The pressure on the housing market would still be an issue.
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Re: Housing Market 2018

Post by Norbert Schlenker »

Solving the tax fraud issue will reduce demand at the margin, perhaps substantially so. Unchanged supply + less demand = lower prices.
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Re: Housing Market 2018

Post by Peculiar_Investor »

Our tax authority's current viewpoint on the matter is covered in How does the Canada Revenue Agency address non-compliance in the real estate sector? - Canada.ca
CRA wrote:What are the key areas of compliance risk in the real estate sector?
There are five main areas of concern:
  • questionable source of funds
  • property flipping
  • unreported goods and services tax/harmonized sales tax (GST/HST) on the sale of a new or substantially-renovated property / GST/HST new housing rebate
  • unreported capital gains
  • unreported worldwide income
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Re: Housing Market 2018

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Peculiar_Investor wrote: 31 Jan 2018 09:42 Our tax authority's current viewpoint on the matter is covered in How does the Canada Revenue Agency address non-compliance in the real estate sector? - Canada.ca
CRA wrote:What are the key areas of compliance risk in the real estate sector?
There are five main areas of concern:
  • questionable source of funds
  • property flipping
  • unreported goods and services tax/harmonized sales tax (GST/HST) on the sale of a new or substantially-renovated property / GST/HST new housing rebate
  • unreported capital gains
  • unreported worldwide income
Yeah but how many resources are devoted to this and what can they prove. AFAIK they have not had much success.
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Re: Housing Market 2018

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A lot of things could be fixed for the CRA if Provincial land titles offices had to report changes in title to the CRA and that beneficial owners had to be registered on title. Why employ dozens of CRA staff when simple reporting measures by others could solve half the problem?
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Re: Housing Market 2018

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AltaRed wrote: 31 Jan 2018 13:17 A lot of things could be fixed for the CRA if Provincial land titles offices had to report changes in title to the CRA and that beneficial owners had to be registered on title. Why employ dozens of CRA staff when simple reporting measures by others could solve half the problem?
I have always been of the opinion that CRA should make it manditory to report each year on your tax return, the address of your PR, the year purchased, price, how title held and if joint PR. If not declared, no PR deduction. Would take a few years to work out the kinks but once set up, easy to track.
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Re: Housing Market 2018

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Chinese millionaires 'lined up' to buy Montreal real estate: expert

Immigration lawyer and policy analyst Richard Kurland:
“I expect to see Vancouver investments slide sideways, but that money’s got to go somewhere,” said Kurland. “It makes it more logical to consider other destinations like Montreal.”

Kurland, a former Montrealer now based in Vancouver, has advised the federal government on immigration issues since the 1990s. He said it is all but inevitable that Montreal will see increasing interest from Chinese buyers, thanks to an exponential increase in millionaires in China, and a commitment to immigration that all but guarantees a flow of up to 2,000 new millionaires per year arriving in Quebec from overseas.

Under Quebec’s investor program, immigrants with more than $1.6 million in net assets can settle in Quebec if they agree to invest a minimum of $800,000 over a five-year term. Between May 2017 and February 2018, the province planned to accept up to 1,900 applications through this program, with as many as 1,330 to come from China, Hong Kong and Macau.

“The number of millionaires who want to escape Chinese pollution is so big that they are willing to pay big bucks to access Canadian status,” Kurland said. “They are not bad people, and their source of funds is legitimate. They just want a better life for their kids.”

Now that Quebec has tightened up regulations to prevent millionaires from coming here and rapidly trampolining to Vancouver or Toronto, Kurland said the wealthy immigrants who land here are even more likely to invest in high-end residential property.

“It doesn’t matter to them if they pay $1.7 million or $2.3 million for a home,” Kurland said. “Folks from Hong Kong see the prices here as a joke. It’s so much cheaper here.”

According to Kurland, accepting 1,000 millionaires a year into Quebec from China barely makes a dent in the millionaire supply, because there are many, many more families in the queue waiting for their applications to be reviewed.

“There’s a supply of buyers — millionaire buyers — lined up,” Kurland said. “It’s the golden heart of the demand for Montreal property.”
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Re: Housing Market 2018

Post by milton »

Does the situation remind anyone of the fur trade? Settlers would exchange beads, blankets, guns and tools for land. Of course now it's not beads, blankets, guns, and tools but rather iPhones, iPads, clothing, sneakers, lightbulbs, A/C units, etc.,

But it's the same idea: land is being exchanged for disposable goods.
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Re: Housing Market 2018

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twa2w wrote: 31 Jan 2018 13:58 I have always been of the opinion that CRA should make it manditory to report each year on your tax return, the address of your PR, the year purchased, price, how title held and if joint PR. If not declared, no PR deduction. Would take a few years to work out the kinks but once set up, easy to track.
Fine intent but don't like the mechanism. IMHO, yearly declaration of PR and other real estate values would be the first step on the slippery slope to having to declare yearly all your assets to CRA.

Which would lead to mandatory means testing. Which would eventually lead to taxation by net worth instead of by income.

Laugh if you want to.. lots of crazy promises and overspending will have to be paid for in the next decades and with demographics the way they are I doubt that income taxation is going to be enough to pay the bills.
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Re: Housing Market 2018

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Koogie wrote: 02 Feb 2018 09:47 IMHO, yearly declaration of PR and other real estate values would be the first step on the slippery slope to having to declare yearly all your assets to CRA.
They already know about our assets in banks and brokerages. Also all foreign assets above $100K must be declared. Treating RE as somehow too sacred for this treatment is an open invitation to use it as a vehicle for tax evasion, which of course is just what has happened. It should also be noted that property titles are public domain in all provinces, so there's no privacy argument.

Also your attempt to connect this to means testing makes no sense.
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Re: Housing Market 2018

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patriot1 wrote: 02 Feb 2018 13:21
Koogie wrote: 02 Feb 2018 09:47 IMHO, yearly declaration of PR and other real estate values would be the first step on the slippery slope to having to declare yearly all your assets to CRA.
They already know about our assets in banks and brokerages.
Do they? I've thought only the income from those assets is reported to the CRA.
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Re: Housing Market 2018

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And as I mentioned above, it should be mandatory to disclose the beneficial owners, if not actual RE values. Folks who have issues with this sort of thing should read Panama Papers by Bastian Obermayer and Frederik Obermaier regarding bad behaviours when beneficial owners can be obscured.
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Re: Housing Market 2018

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patriot1 wrote: 02 Feb 2018 13:21
Koogie wrote: 02 Feb 2018 09:47 IMHO, yearly declaration of PR and other real estate values would be the first step on the slippery slope to having to declare yearly all your assets to CRA.
They already know about our assets in banks and brokerages. Also all foreign assets above $100K must be declared. Treating RE as somehow too sacred for this treatment is an open invitation to use it as a vehicle for tax evasion, which of course is just what has happened. It should also be noted that property titles are public domain in all provinces, so there's no privacy argument.
I said the intent was fine. Perhaps you missed that in your rush to judgement. I would just prefer to see a different mechanism used than a yearly mandatory declaration of assets to CRA.
patriot1 wrote: 02 Feb 2018 13:21 Also your attempt to connect this to means testing makes no sense.
Again, your opinion. Others, such as myself, will come to a different conclusion.
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Re: Housing Market 2018

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adrian2 wrote: 02 Feb 2018 13:26 Do they? I've thought only the income from those assets is reported to the CRA.
My T5008 says "Securities transactions are disclosed to the Canada Revenue Agency and Revenu Quebec (for residents of Quebec only) on a yearly basis." Perhaps they just mean sales, perhaps they do mean any transaction.
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Re: Housing Market 2018

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Whatever is on the T5008 is my understanding.
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Re: Housing Market 2018

Post by twa2w »

adrian2 wrote: 02 Feb 2018 13:26
patriot1 wrote: 02 Feb 2018 13:21
Koogie wrote: 02 Feb 2018 09:47 IMHO, yearly declaration of PR and other real estate values would be the first step on the slippery slope to having to declare yearly all your assets to CRA.
They already know about our assets in banks and brokerages.
Do they? I've thought only the income from those assets is reported to the CRA.
Sure true, but for most taxpayers it would not be hard to figure out assets from their tax returns and public records.
You declare interest on deposits, dividends, contributions/ withdrawals to rsp, tfsa etc. Then there is the homebuyers plan and in some provinces, house taxes are shown for a credit. You also have to show sales of shares,capital property etc. Also real estate records are a matter of public record.
Not hard to work backward from these and approximate a net worth. Not highly accurate for some assets or individuals but with a good algorythm you could approximate it.
Since you now have to declare the sale of a prin res, why not report it annually or at least when aquired to avoid some of the issues we have today.

Very simple example. My wife has a small savings account that she thinks I don't know what the balance is. I do the taxes. Her t5 shows interest of 200 from RBC. Ok in a savings account at 1% interest, it is not hard to figure out the avrage balance.
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Re: Housing Market 2018

Post by ig17 »

twa2w wrote: 03 Feb 2018 14:23 Sure true, but for most taxpayers it would not be hard to figure out assets from their tax returns and public records.
You declare interest on deposits, dividends, contributions/ withdrawals to rsp, tfsa etc. Then there is the homebuyers plan and in some provinces, house taxes are shown for a credit. You also have to show sales of shares,capital property etc. Also real estate records are a matter of public record.
Not hard to work backward from these and approximate a net worth. Not highly accurate for some assets or individuals but with a good algorythm you could approximate it.
Since you now have to declare the sale of a prin res, why not report it annually or at least when aquired to avoid some of the issues we have today.

Very simple example. My wife has a small savings account that she thinks I don't know what the balance is. I do the taxes. Her t5 shows interest of 200 from RBC. Ok in a savings account at 1% interest, it is not hard to figure out the avrage balance.
Tax evaders don't arrange their affairs the same way you and I do.

Try reading this Ontario court decision:

https://www.canlii.org/en/on/onsc/doc/2 ... pletePos=1

Husband and wife came to Canada through investor immigration program. They later divorced but remained together in business, flipping million dollar houses. Husband sued wife and her associates. The court decision is about 130 paragraphs. I got totally lost around 50-th paragraph. And that's just a high level summary of their messy dealings.

BTW, the court case is not about fraud or tax evasion. CRA is not involved. But imagine for a moment that CRA decides to audit them. From reading the court case, it's clear that it would be a lengthy and expensive undertaking. That's one couple out of how many? CRA doesn't have the resources to deal with a systematic evasion on a large scale.

EDIT: I'm not saying that this particular couple committed fraud or evaded taxes (although the judge did note some questionable transactions). My point is, it's a good example of a messy case that would be expensive to audit.
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Re: Housing Market 2018

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ig17 wrote: 03 Feb 2018 16:45 BTW, the court case is not about fraud or tax evasion. CRA is not involved. But imagine for a moment that CRA decides to audit them. From reading the court case, it's clear that it would be a lengthy and expensive undertaking. That's one couple out of how many? CRA doesn't have the resources to deal with a systematic evasion on a large scale.
That is the main issue I have with the CRA. Effectively they are saying if you are to large and to good of a criminal they won't bother with you.
They prefer the low hanging fruit of law abiding taxpayers who are stupid enough to be honest, obey the rules and file their taxes every year.

If that isn't a broken system I don't know what is.
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Re: Housing Market 2018

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patriot1 wrote: 02 Feb 2018 19:30
adrian2 wrote: 02 Feb 2018 13:26 Do they? I've thought only the income from those assets is reported to the CRA.
My T5008 says "Securities transactions are disclosed to the Canada Revenue Agency and Revenu Quebec (for residents of Quebec only) on a yearly basis." Perhaps they just mean sales, perhaps they do mean any transaction.
AltaRed wrote: 02 Feb 2018 22:24 Whatever is on the T5008 is my understanding.
Brokerages don't always report acquisition transactions, even though they almost always report disposal transactions as required by law. RFD had a thread where a poster asking for help on dealing with that kind of situation. He did some relatively frequent tradings some 10 years ago, stopped, got on with work and life. Some years later received reassessment, due to brokerage reporting large amount of proceeds from disposal transactions. The burden seemed to be on him to prove he had actually paid for the stock, even though it's common sense.
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Re: Housing Market 2018

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twa2w wrote: 03 Feb 2018 14:23 a good algorythm
That is an awesome spelling!! It's how you make numbers dance! :D
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Re: Housing Market 2018

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Koogie wrote: 03 Feb 2018 18:15
ig17 wrote: 03 Feb 2018 16:45 BTW, the court case is not about fraud or tax evasion. CRA is not involved. But imagine for a moment that CRA decides to audit them. From reading the court case, it's clear that it would be a lengthy and expensive undertaking. That's one couple out of how many? CRA doesn't have the resources to deal with a systematic evasion on a large scale.
That is the main issue I have with the CRA. Effectively they are saying if you are to large and to good of a criminal they won't bother with you.
They prefer the low hanging fruit of law abiding taxpayers who are stupid enough to be honest, obey the rules and file their taxes every year.

If that isn't a broken system I don't know what is.
I share these sentiments.

It's extremely frustrating to think that there is a higher chance of an audit because I file an error on an item not amounting to more than a few hundred dollars vs. brazen real estate cheats who buy multi-million dollar houses and report <$100 in worldwide income.
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Re: Housing Market 2018

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fireseeker wrote: 04 Feb 2018 00:46
twa2w wrote: 03 Feb 2018 14:23 a good algorythm
That is an awesome spelling!! It's how you make numbers dance! :D
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