Bob Rennie says "Tax Real Estate Speculators!"

Following a plethora of attention grabbing headlines I find this;

Condo king calls for tax on flipping homes

Bob Rennie, the ‘condo king’ of Vancouver says that there should be a new tax on those who speculate on the property market....

http://www.canadianrealestatemagazine.ca/market-update/condo-king-calls-for-tax-on-flipping-homes-191626.aspx

UMMMM...   Hello...

Toronto and Ontario have land transfer tax, if you have previously owned property [anywhere]

http://www.torontorealestateboard.com/buying/ltt_calculator/ltt_calculator.htm

This is Payable whenever you buy anything within the land transfer tax system, amounting to $12,500 on a condo / house purchase at $500,000  [say 2.5%]

Our friends from HST  - Those Revenuers - charge you an additional 13% of the final price on any purchase where the property is NON OWNER occupied at closing. (you sign a declaration to that effect)

http://www.cra-arc.gc.ca/E/pub/gm/19-2-1/19-2-1-e.html

Let's wave the flag and TAX THOSE FOREIGNERS!

Well,  as a non resident purchasing units for rental [and/or flipping] the Owner must declare and pay income tax. If you are a non resident selling real estate there is a with holding tax of 25% pending your filing a tax return.  NOTWITHSTANDING that you have a challenge to obtain financing (foreigners need higher if not half down payments) the CRA wants a 25% payment on sale.

https://www.youtube.com/watch?v=VP4wlqELB5g

Very Disappointing to hear advice from Bob Rennie to TAX speculators for we all are speculating on the future of the real estate market in both Vancouver and Toronto. Pensions funds, OMERS and just plain home owners on a pension are betting on their nest egg.

Banks release [stats of] lower levels of deposits and its no wonder with interest yields of .08% on savings and 2.00% long term investments that people are turning towards the 10 - 15% gains made in real estate. The BMO Wealthy investor reports that 27% of high net worth individuals own income property.
https://www.bmo.com/pdf/Changing%20Face%20of%20Wealth%20Summary.pdf

Building wealth in real estate and rental units is purchasing and HOLDING LONG TERM whereby a tenant pays off your mortgage over 25 years and you have a performing asset.

Simple example;

$300,000 in the bank at 2% earns you  $6,000 this year

$300,000 in a condo purchase pays you $18,000 this year, but you need to manage, pay maintenance and taxes.

I see a clear choice.


What do you think?

Rental Apartment Finance Guideline Update 5.2013

Product:  Rental financing
In addition to max. 75%LTV on a rental unit. We’ve made some changes to our policy. Here it goes:

For the purpose of confirming gross rental income, expired leases can be accepted with the addition of one of the following:

·         Signed acknowledgement from the tenant confirming rental/lease agreement is still in effect; or

·         Copies of the last 3 months of cancelled cheques; or

·         Evidence of the last 3 months of rental deposits in the account

If applicant owns 1 rental property (maximum 1 unit), either:

·         50% of the confirmed gross rental income can be included as income and full principal, interest, (property) taxes and heating (PITH) for the subject rental included in liabilities; or  Rental worksheet can be used to calculate the rental property Debt Service Ratio Owner occupied rental properties included

Opinion of Market Rent is acceptable for purchase and refinance transactions up to 65% LTV

Td economics:

·         The past week saw the TSX, most commodity prices and the Canadian dollar versus the U.S. dollar, all make up ground. However, all three still remain underwater so far in 2013. That is consistent with Canada’s economic under performance versus the United States.  

·         February’s retail sales data were consistent with a more modest performance in consumer spending north of the border, as trend sales have slowed in both real and nominal terms. Moreover, the lack of pricing power at the retail level speaks to increased competition in the face of softening demand.  

·         This difficult retailing environment is likely having an influence on small business confidence, which slipped further in April, according to the CFIB’s Business Barometer. Particularly since insufficient domestic de­mand is cited as the main limitation to small business growth.

Have a great week!

Romy Alegria | Manager, MMS | TD Canada Trust

P: 416.278.2540 | F: 1-866.222.5708

E: Romy.Alegria@td.com

W: http://mms.tdcanadatrust.com/romy.alegria

 There you have it!

New guidelines for a Rental ( Investor) Purchase of a Toronto Condo Unit.

Downpayment are firmly at 25% or at 35% with Opinion of Value Letters.

Are you looking for an investment to hold long term?

Vacancies are continuing at 1.5% or less.