Economic Drivers of Real Estate in Vancouver – DELOITTE

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Real estate market overview and current challenges

October, 2016
Stepping into 2017

Come join me as we learn from Jennifer Podmore-Russell of Deloitte, and her take on where is Vancouver’s real estate marketing heading as we step into 2017. This presentation brought to us courtesy of Wealthminds!

Click here for the full presentation.

I’ve also highlighted below some notable changes in our market which may affect you! Give us a call at (604) 629-7515 or fill out the form below if you’d like to learn more.

Changes in the market – BC’s Foreign Buyer Property Transfer Tax

On July 25, 2016, the BC government introduced legislative changes directed at BC’s residential housing market. The key changes include the introduction of an additional 15% property transfer tax (PTT), effective August 2, 2016, on transfers of residential properties within the Greater Vancouver Regional District (GVRD) to foreign entities or taxable trustees

Government Responses – Preventative Measures for a “Healthy, Competitive and Stable Housing Market”

Legislation release on October 3, 2016 included a “Mortgage rate stress test” for all insured borrowers and closing loopholes for the Principal Residence Exemption.

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Questions for Property Transfer Tax (BC)

20140219-224133.jpgIf you are like me, then you probably have tons of questions about Property Transfer Tax. Do I have to pay it? What happens when I sell my house? What if I want to give my house to my children? Are there any rebates, discounts or first-time homebuyer benefits?  I’ve come across a nice article from David Simon – which is quite helpful in some of the odd particulars of Property Transfer Tax, like adding someone’s name to title – does that constitute a sale subject to property transfer tax? I’m by no means an expert nor a lawyer – should you consult your own lawyer if you have a particular situation or question? Yes. If you want to shoot me over a quick question, or get some recommendations on who you should really be speaking to, please hit up the comment section below or on my contact form.

For all you lucky Albertan’s, you’ve probably never encountered nor will you ever hear about this strange thing we call property transfer tax.

“I am often asked how a person can add someone to a title without paying property transfer tax. Usually that person contributed to the acquisition and has been helping paying the mortgage. Unless the person is a “related individual” as defined in the Property Transfer Tax Act and the transferor or the transferee has been living there as his/her principal residence for at least 6 months, then property transfer tax has to be paid. A related individual under the Act is a direct relative, e.g. son, daughter, parent grandparent. Siblings and aunts and uncles do not fall within the definition and the transfer tax has to be paid for transfers to them.

 I have been asked if a company can transfer its property free of property transfer tax to its shareholders. The answer is no as the company is a separate legal entity from its shareholders. Only if the company was holding the property in trust and the trust declaration was registered when the transfer to the company was registered, can the transfer be done free of property transfer tax.

 From an income tax point of view, the law is that on any disposition, or deemed disposition, of capital property, tax is payable on any capital gains. The main exception to this is for dispositions of a primary residence. There is no tax payable on the capital gains from a disposition of a primary residence.  A deemed disposition occurs when a person dies, there is a gift of property or there is a change of use of the property, e g. it goes from being your primary residence to a rental property, or from a rental property to being your primary residence. The gain has to be determined at that time and any applicable tax paid. So before anyone takes title to, or transfers title to, all or part of a primary residence or any other property, even if a family member is involved, they should consult with their tax advisor as to possible tax consequences. Once you do something it is difficult and potentially costly to undo it.”

Joe Oliver, expected to be named Canada’s next finance minister

We’ve been following Jim Flaherty quite a bit here on theresashaw.ca as his monetary policy has had such a drastic effect on housing, affordability, real estate market, financing, mortgages and more in Canada. News yesterday of his resignation quite sudden for some, but somewhat expected by others. His replacement is expected to be Joe Oliver, read more about him below:

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Reblogged from National Post

Joe Oliver, the relatively new Toronto-area MP who has spent the past three years as Natural Resources Minister, is expected to be named Wednesday as the successor to Finance Minister Jim Flaherty

News broke of the appointment Tuesday night.

Mr. Oliver, 73, is a relative newcomer to the ranks of the Conservative caucus, having first been elected to his Eglinton-Lawrence riding in 2011.

Nevertheless, whereas Mr. Flaherty brought more than a decade of political skills to the post, Mr. Oliver boasts more than 40 years’ experience in the financial sector.

Originally from Montreal, Mr. Oliver obtained an MBA from the Harvard Graduate School of Business in 1970, and just before his 30th birthday had entered the investment sector with Merrill Lynch Canada.

The 1980s and 1990s saw him take up portfolios at Nesbitt Burns and First Marathon Securities Ltd., as well as serving as the executive director of the Ontario Securities Commission from 1991 to 1993.
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Tax tips for investors: Clearing up real estate confusion

Real estate has been a hot investment area in Canada for quite some time now due to favorable economic conditions, immigration, and historically low interest rates. Canadians who have taken advantage of these conditions are sometimes confused about the measures they can take to reduce their tax burden.

Here are some tax tips addressing several typical areas of confusion:

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Reblogged from Financial Post | Fabiola Campanella

To depreciate or not to depreciate

Depreciation, or for income tax purposes Capital Cost Allowance (CCA) can be an effective way to shelter your real-estate income from current taxes by transferring your obligation to future tax years. CCA works by amortizing a portion of the cost of your rental property against your rental income, generally 4% of your building’s cost on a declining basis year over year.

CCA is an election, meaning that it is the taxpayer’s choice whether or not to use it. The drawback to CCA is that it is recaptured in the year you sell your property, meaning that the historical CCA you’ve taken will be added back on income account to your tax return if you sell the property for anything more than your current un-depreciated capital cost (i.e. the cost of your property less the CCA claimed on prior tax returns.

This recapture can have a negative impact on your taxes in the year of sale so some planning around this election is required. Generally, if you plan on holding the income property for a very long period of time then taking CCA to reduce your rental profits to zero will almost always be advisable.

However, if you plan on selling your property in the near future you should attempt to estimate if your potential recapture will push you into a higher tax bracket, thereby reducing the current effectiveness of the CCA claim. You may also want to consider forfeiting CCA in years where your overall taxable income is low thereby allowing you to claim higher CCA in subsequent years when your marginal tax rate is higher. For more information on CCA see the CRA’s Guide T4036, Rental Income.

Documents, documents, documents
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Tax Tips – First-Time Donor’s Super Credit

“If you’re among the almost 75% of Canadians that hasn’t been giving anything to charity or at least haven’t in some time, you can take advantage of the new First-Time Donor’s Super Credit (FDSC). Under the general rules, individuals can claim a non-refundable tax credit of 15% for the first $200 of annual charitable donations. That tax credit rate jumps to 29% for any donations above $200.”

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Reblogged from Jamie Golombek

There might be more than a few of us hanging our heads as we skulk past the Salvation Army kettles, hands in our pockets and eyes averted, after a survey this week pointed out that we are donating not only fewer dollars but also a declining percentage of our income to charity than in prior years.

According to the Fraser Institute’s annual “Generosity Index” released earlier this week, a lower percentage of tax filers donated to charity in Canada (22.9%) than in the United States (26.0%). Similarly, Canadians (at 0.64%) gave a lower percentage of their aggregate income to charity than did Americans (at 1.33%).

So, if your lack of giving during this holiday season is causing you some guilty pangs, there are actually a couple of ways to make giving a bit less unsettling by using the tax rules to decrease your after-tax cost of donating.

But to encourage “new” donors to give to charity, the 2013 federal budget introduced the temporary FDSC which provides an additional 25% non-refundable tax credit for a “first-time donor” on up to $1,000 of donations. A first-time donor is someone who hasn’t claimed a donation credit after 2007. If you’re married or living common law, neither you nor your spouse qualify if either of you has made a donation after 2007. While first-time donor couples can share the FDSC in a particular year, the total amount claimed can’t exceed the maximum allowable credit.

As a result, a first-time donor will be entitled to a 40% federal credit for donations of $200 or less and a 54% credit for donations over $200 up to $1,000. Only cash donations will qualify for the FDSC as opposed to donations of property or donations “in-kind.”

The FDSC is available for donations made on or after March 21, 2013 and the credit can only be claimed once in either 2013 or any year until 2017.

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Does your home office qualify for deductions against household bills?

If you were self-employed this past year, now is a good time to start gathering your paperwork to file your 2013 tax return. And remember some of the expenses you incur for your home may be deductible from business income if you have an office or other work space there.

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Reblogged from KPMG Enterprise

Your home office expenses may be deductible in two situations: First, if your home is your principal place of business — that is, you do not have an office elsewhere. Second, if you have an office outside your home, your home office must be used exclusively for your business, and must be used on a “regular and continuous basis” for meeting clients, customers or patients.

It’s not always clear how many meetings you need to have in your home office to meet the “regular and continuous” requirement, but it will depend on the nature of your business and your situation.

The Canada Revenue Agency provides an example of a doctor who has offices both outside and inside his home. He uses his home office to meet one or two patients a week. The CRA says this work space would not be considered used on a regular and continuous basis for meeting patients. However, a work space used to meet an average of five patients a day for five days each week clearly meets the requirements. This example clearly shows there is a large grey area in what the CRA considers to be regular and continuous.

If you have offices inside and outside your home and you want to deduct home office expenses, be prepared with enough information to support your claim that you use your home office on a regular and continuous basis for your business.

If your home office meets the requirements, the portion of your house expenses that can be claimed as business expenses will normally be based on the fraction of your home used. You can usually exclude common areas such as hallways, kitchen and washrooms when making the calculation.

For example, if your home office is a 200 square foot room (or 18.5 square metres) and the total area of living space in your house (bedrooms, living room, dining room and the office) is 2,000 square feet (186 square metres). As long as your home office qualifies, you can claim 10% of your eligible costs.

The expenses you can claim include rent, if you are a tenant, mortgage interest if you own your home (but not the principal portion of blended mortgage payments), property taxes and home insurance. You can also claim expenses for utilities such as electricity, heat, water and gas.

But there are also some less obvious expenses that can be claimed, such as garden service, driveway snowplowing and minor repairs. You will need to keep receipts on file; do not simply estimate your expenses.

You can claim capital cost allowance (CCA) on the appropriate fraction of your home, but this is often not advisable. If you do, the CRA will take the position  that fraction of your home is not part of your principal residence and it will disallow your claim for the principal residence exemption from capital gains tax for that portion of the home when you sell. Any CCA you claimed can also be “recaptured” into income when you sell your home.

Keep in mind home office expenses can only be claimed against income from your business. As such, you cannot use home office expenses to produce an overall business loss that is applied against other income. However, losses disallowed because of this rule can be carried forward and used against income generated from the same business in another year.

Of course, supplies that relate exclusively to your home office are fully deductible and not subject to these restrictions. Those expenses would normally include a separate business phone and Internet connection, printer paper, printer or photocopier toner cartridges, computer repairs (assuming your computer is used only for your business), and so on.

Since many of the requirements for deducting home office expenses depend on your individual circumstances, it’s important to carefully document your claims so you can back them up if the CRA asks you to.

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