Tag Archives: Tax

Westside Owner – “I am grateful for what I have, I take care of my property and live frugally so I am able to pay mortgage and property tax. I am paying tax on an over-valued asset.”

notsellingyet at VREAA 25 June 2011 at 1:01 pm-
“In his movie, ‘Everything’s Gone Green,’ Douglas Coupland introduced a couple other means of livelihood in Vancouver–lottery scams and internet porn. Don’t know anybody involved in those ‘industries’ so not sure how much $$ those ‘jobs’ bring in. My husband and I bought a fixer-upper in westside Vancouver in 2000 (market still depressed) with down payment from our own savings and a gift from generous relatives. We diligently paid the mortgage over the years with hard-earned $$ from our respective white-collar jobs (medical research, computers). He passed away recently– I used his life insurance proceeds to gut the house and put in a rental basement suite. My total square footage increased 14.5%, while my property tax increased 33.3%, thanks to yearly tax increases, increase in my property assessment and property tax shifting (from business to residential properties) started by the NPA and continued by Gregor’s gov’t. In BC, property assessment values are based on market value (therefore influenced by skewed prices) and not replacement value. In this scenario, banks and municipal governments always win. Banks will keep enticing home owners with home equity loans they can’t afford based on unrealistically high property assessment values, and municipal gov’ts collect ever-increasing property taxes based on unsustainable, hyper-inflated market values. As far as I am concerned, market value is irrelevant as long as I don’t sell my house, but under the current property taxation system, I am paying for an over-valued asset which is clearly on paper only or, as poster DM has called it, ‘illusion of wealth.’
I am grateful for what I have, I take care of my property and live frugally so I am able to pay mortgage and property tax, but there may come a time when I may have to consider lottery scams — internet porn and drug peddling aren’t my thing. I also know I’ll keep buying goods via the internet (started during reno), and pick up from a relative’s place in WA state, or a mail receiving business in Blaine. I’ll bulk-buy to minimize cross-border travel. I hope as long as I am upfront with Canada Customs border agents, they’ll continue to wave me through without collecting sales taxes. Sorry, local businesses, I can’t support you much anymore–wanna join my future lottery ‘business?’
PS. The house across the street from mine has changed hands 2x in the last 18 months. A young family (from somewhere in the Far East, they did not venture out much) lived in it for approx 1 yr, then put the house up for sale in March this year. Sold in April, the house has been reno’d cosmetically since then, and will be back on the market soon. I’d like to see how much this one goes for.”

Liberals Offer Homeowners $13.5K Bribe For Their Votes – Cost To Taxpayers: $400M

From thestar.com 3 Apr 2011 ‘Liberals unveil $8 billion campaign platform’ -
“The platform promises a “green” home renovation tax break … a permanent $400 million tax credit to help Canadians pay for energy-saving home renovations. Individuals will be allowed to deduct up to $13,500 from their payable federal tax, and the credit is refundable, meaning those who do not have enough income to pay taxes will receive a cheque equal to their tax credit.”

This stinks. Buying votes, and planning another false injection of liquidity into the economy; care of the taxpayer. Contractors, Home Depot, and maxxed out owners will love this. Labeling the bribe ‘green’ is puke-worthy.
For the record, we at VREAA are socially progressive and fiscally prudent. Given that, there isn’t a party we can vote for. – vreaa

“I lived in Houston for 5 years, and it is indeed amazing what you can buy there compared to pretty much anywhere in Canada.”

Krazy Kanuk at vancouvercondo.info March 8th, 2011 at 12:28 pm-
“Texas is a subject near and dear to my heart. I lived in Houston for 5 years (left about 6 years ago), and it is indeed amazing what you can buy there compared to pretty much anywhere in Canada.
I agree with
[previous VCI poster] patriotz regarding property tax keeping a lid on prices. It’s roughly 3.25% a year in Texas. There do exist million dollar houses there, but it’s rare. You would pay almost $3K a month in taxes on it. I think it’s a better system. The high (percentage wise) property tax rates help keep prices stable. You can get a nice house there for $150K, and pay about the same taxes (in dollar amounts) as here in Vancouver. You can get a very liveable small older house for $70 to $80K. Oh, and you could rent out that house for $1200 to $1500 a month.
Having said this, I guess nothing can completely fix stupid. During the early 80′s, even Texas had a property bubble because “we have oil” (sound familiar??). If I remember correct, real prices still haven’t recovered.”

Illegal Tax Evasion Adds Fuel To Bubbles – “I know a lot of flippers using their family members to buy and qualify as a first time buyer to take advantage of the system. They sell a year later and claim the capital gains.”

Criminal tax evasion exaggerates already large profits from RE speculation, and  adds extra momentum to RE bubble markets. Honest, hard-working citizens, labouring under substantial tax burdens, trust that our revenue services are vigorously pursuing fair taxes on real estate profits. -vreaa

averagejoe at vancouvercondo.info 17 Mar 2010 10:58 am“I know a lot of flippers using their family members (such as sons, daughters and even grandparents) to buy and qualify as a first time buyer to take advantage of the system. They will sell a year later for $100,000 (or more) [profit] and claim the capital gains.”

taylor192 17 Mar 2010 12:05 pm & 2:48 pm – “I’d like to see Mr Flaherty curb speculation. Remove the capital gains exemption for flippers, ie those selling within 5 years of taking possession. The only exemption is for those who move XX kms for work and can prove it.” … “CRA assesses professional flippers and rightfully so. My comment concerns the amateur flipper. For example the FTB who buys a property pre-sale with the expectation to sell it 1 day after it is built for a huge profit. This flipper had no intention of living in the property and should not be able to claim capital gains exemption for their principal residence. Since this flipper only does it once, they fly under the CRA radar. … I have a friend in Toronto that is on his 3th condo over 5 years with this approach. He buys one, lives in it while putting down a deposit on another building. Once complete he sells the current condo, moves into the built condo, and repeats. All legal, all his principal residence, and isn’t flipping often enough to raise CRA eyebrows.”

Alternative Investments To RE – Canadians Know Less Than Monkeys About TFSAs

For many Canadians, real estate is their best investment. There are three reasons for that:  (1.) We’ve just been through an extraordinary bull-become-bubble up-leg in RE, (2.) there is forced leverage inherent in RE ownership (which works spectacularly well through up-legs) and, (3.) for many, RE is their only investment of any consequence.  As a group, ‘Boomers’ are outrageously overdependent on their RE holdings, and there is a dire need for the entire population to become more savvy with regard to other options for saving and investing. Tax-free savings accounts (TFSAs) were introduced more than a year ago and very widely publicized. A survey conducted in December 2009 shows Canadians woefully ignorant of this useful instrument. A group of monkeys throwing darts at the answer-sheet would have scored an average of 50% on this true/false quiz. A group of 1,506 Canadians scored an average of 41%. -vreaa

The Monkey Huts

Excerpts from ‘Canadians fail TFSA test’, The Globe and Mail, 18 Feb 2010 -

A Mackenzie Investments TFSA test, conducted in December by Leger Marketing, asked 1,506 adult Canadians five basic true or false questions about Canada’s newest investment account. Of those polled, 44 per cent answered three or more correctly, 8 per cent answered all five questions correctly and 28 per cent got them all wrong. … 68 per cent of respondents haven’t opened a TFSA. When asked why, 59 per cent cited a lack of money while 42 per cent said it’s because they don’t know enough about them.

Here are the five true or false questions in the Mackenzie survey. [% indicates how many respondents answered correctly]

1. Like an RRSP, contributions to a TFSA are tax-deductible. [43%]
2. The TFSA contribution limit is currently $5,000 per year. If you don’t contribute the full $5,000 in a year, the remaining contribution room is lost. [
36%]
3. TFSA contribution room does not depend on earned income. Regardless of income level, all Canadians age 18 or older will receive $5,000 of TFSA contribution room each year. [
63%]
4. A broad range of investment options are available within a TFSA including stocks, bonds and mutual funds. [
41%]
5. An individual can own multiple tax-free savings accounts. [
22%]

See here for the answers.

[Our post headline is intentionally waggish: This is a classic case of a little bit of knowledge being a bad thing. -vreaa]

“The very people who are crying about the increase in property taxes are the same people who had a part in generating the statistics for the appraiser to raise taxes in the first place.”

This from grumpy at greaterfool.ca 30 Jan 2010 at 6:15 pm -

“I just got my property tax assessment. Its up by 21% over last year. This is hell of a way for the governments to engineer another tax grab eh? Don’t tell me that the BOC and Flaherty don’t know exactly what’s going on here. Several ‘New Canadian’ neighbours who are mortgaged to the hilt after of buying at the very top of the market (Vancouver) have asked me to help them appeal the assessments. I suspect that the reason is that they are now facing additional expenditures that they hadn’t calculated into their monthly budgets. Many of these people have no obvious source of income, so where does the money come from? I don’t ask. Nor do a majority speak a word of English, or work. But it is becoming obvious they are not paying cash, and are only ‘in the game’ on spec, with huge mortgages that eat their lunches for them every day, and it’s getting uncomfortable to be so hungry. As an ex-analyst I know how the appraisal process works, and I know I would be wasting my time appealing the assessments. The very people who are crying about the increase in taxes are the same people who had a part in generating the statistics for the appraiser in the first place. I suspect they have only purchased these properties because of the free money offered to people with no credit record and no job, to wait for a big payoff before selling. If I am right the bubble is about to burst based on unaffordable costs of ownership finally becoming a factor for the many who have ‘no skin in the game’.”