HomeDiagramsDatabaseMapsForum About
     

Go Back   SkyscraperPage Forum > Regional Sections > Canada


Reply

 
Thread Tools Display Modes
     
     
  #11161  
Old Posted May 16, 2020, 2:55 PM
WarrenC12 WarrenC12 is offline
Registered User
 
Join Date: May 2007
Location: East OV!
Posts: 13,361
Quote:
Originally Posted by wave46 View Post
Unless I'm incorrect, being a landlord isn't really so much a capital gains play, right?

Unless you just want to sit on a property for awhile and let tenants pay your costs until you sell it?

I don't know.
It's both, like a dividend paying stock. Buying in anticipating of future re-zoning to eventually sell is a common strategy too.

I do agree that typically being a landlord is more of a "buy and hold" strategy.
Reply With Quote
     
     
  #11162  
Old Posted May 16, 2020, 2:56 PM
WarrenC12 WarrenC12 is offline
Registered User
 
Join Date: May 2007
Location: East OV!
Posts: 13,361
Quote:
Originally Posted by Truenorth00 View Post
That is how it is. Not how it should be. I wonder if 100% inclusion on capital gains would curb speculation.
Capital gains is currently preventing me from selling my rental property. The cap rate is pretty garbage in this market, but the gains I'd trigger would be huge.

Now if I could just get an unpaid leave for a year from work...
Reply With Quote
     
     
  #11163  
Old Posted May 16, 2020, 2:59 PM
kwoldtimer kwoldtimer is offline
Registered User
 
Join Date: Jan 2008
Location: La vraie capitale
Posts: 19,311
Quote:
Originally Posted by WarrenC12 View Post
Capital gains is currently preventing me from selling my rental property. The cap rate is pretty garbage in this market, but the gains I'd trigger would be huge.

Now if I could just get an unpaid leave for a year from work...
Doesn't that stray into "not working overtime 'cause it'll just get taxed" territory?
Reply With Quote
     
     
  #11164  
Old Posted May 16, 2020, 2:59 PM
WarrenC12 WarrenC12 is offline
Registered User
 
Join Date: May 2007
Location: East OV!
Posts: 13,361
Quote:
Originally Posted by CityTech View Post
In Canada you can deduct property taxes, utilities, management costs, and condo fees from the rental income you report on your taxes. So you're not paying taxes on the entire sum of the rent.
Don't forget the almighty mortgage interest!

You can also depreciate capital costs, like the building itself. Though this increases your tax liability later. As always, consult with an accountant.
Reply With Quote
     
     
  #11165  
Old Posted May 16, 2020, 3:02 PM
CityTech CityTech is offline
Registered User
 
Join Date: May 2016
Location: Ottawa
Posts: 2,048
Quote:
Originally Posted by WarrenC12 View Post
Don't forget the almighty mortgage interest!

You can also depreciate capital costs, like the building itself. Though this increases your tax liability later. As always, consult with an accountant.
I was under the impression you can't deduct mortgage interest as an expense from rental income in Canada.
Reply With Quote
     
     
  #11166  
Old Posted May 16, 2020, 3:03 PM
kwoldtimer kwoldtimer is offline
Registered User
 
Join Date: Jan 2008
Location: La vraie capitale
Posts: 19,311
edit
Reply With Quote
     
     
  #11167  
Old Posted May 16, 2020, 3:05 PM
Truenorth00 Truenorth00 is offline
Registered User
 
Join Date: May 2017
Posts: 5,172
Quote:
Originally Posted by CityTech View Post
I was under the impression you can't deduct mortgage interest as an expense from rental income in Canada.
Nope. You can.
Reply With Quote
     
     
  #11168  
Old Posted May 16, 2020, 3:07 PM
WarrenC12 WarrenC12 is offline
Registered User
 
Join Date: May 2007
Location: East OV!
Posts: 13,361
Quote:
Originally Posted by kwoldtimer View Post
Doesn't that stray into "not working overtime 'cause it'll just get taxed" territory?
Haha no because I'm still collecting rent.

Those people I mentioned literally thought their paychecks would decrease.
Reply With Quote
     
     
  #11169  
Old Posted May 16, 2020, 3:08 PM
WarrenC12 WarrenC12 is offline
Registered User
 
Join Date: May 2007
Location: East OV!
Posts: 13,361
Quote:
Originally Posted by CityTech View Post
I was under the impression you can't deduct mortgage interest as an expense from rental income in Canada.
Broadly speaking, you can deduct any interest from a loan you've taken out to generate income.

I can take out a giant loan and use that money to invest in the stock market, and deduct the interest. Rates are low and so is the market. Feeling brave?
Reply With Quote
     
     
  #11170  
Old Posted May 16, 2020, 5:12 PM
Truenorth00 Truenorth00 is offline
Registered User
 
Join Date: May 2017
Posts: 5,172
Now that we're seeing more reports of how irresponsible the banks have been, a pullback is inevitable. And there's no way the government can bail everyone out now. The bubble is just way too big.


This report on the the banks retroactively boosting income to boost their CMBS, shows all the different behind-the-scenes bullshit that has been inflating this market:

https://www.propublica.org/article/w...mortgage-funds

They've learned nothing. We need to start sending bankers to jail for this.
Reply With Quote
     
     
  #11171  
Old Posted May 16, 2020, 5:36 PM
scryer scryer is offline
Registered User
 
Join Date: Feb 2014
Posts: 1,400
Quote:
Originally Posted by Truenorth00 View Post
Now that we're seeing more reports of how irresponsible the banks have been, a pullback is inevitable. And there's no way the government can bail everyone out now. The bubble is just way too big.


This report on the the banks retroactively boosting income to boost their CMBS, shows all the different behind-the-scenes bullshit that has been inflating this market:

https://www.propublica.org/article/w...mortgage-funds

They've learned nothing. We need to start sending bankers to jail for this.
Lol. The sheeple are way too focused on other things to hold bankers accountable for their crimes. They'll get away with it again .
__________________
There is a housing crisis, and we simply need to speak up about it.
Reply With Quote
     
     
  #11172  
Old Posted May 16, 2020, 8:16 PM
lio45 lio45 is offline
Registered User
 
Join Date: Aug 2007
Location: Vancouver, BC
Posts: 29,302
Quote:
Originally Posted by WarrenC12 View Post
I do agree that typically being a landlord is more of a "buy and hold" strategy.
Especially in Vancouver, the land of cap rates that are approximately the same as they'd be for a stash of gold ingots (0).
Reply With Quote
     
     
  #11173  
Old Posted May 16, 2020, 8:33 PM
Xelebes's Avatar
Xelebes Xelebes is online now
Sawmill Billowtoker
 
Join Date: Nov 2006
Location: Rockin' in Edmonton
Posts: 13,389
Quote:
Originally Posted by kwoldtimer View Post
Doesn't that stray into "not working overtime 'cause it'll just get taxed" territory?
Depends. If you are planning to spend on another like asset, a capital gains tax hit might mean that you have to lower your expectations on the next property you are in. If you are pulling out, then yes your diagnosis is correct.

Quote:
Originally Posted by Truenorth00 View Post
Nope. You can.
Only as under business income.
__________________
The Colour Green
Reply With Quote
     
     
  #11174  
Old Posted May 16, 2020, 8:46 PM
lio45 lio45 is offline
Registered User
 
Join Date: Aug 2007
Location: Vancouver, BC
Posts: 29,302
Quote:
Originally Posted by Xelebes View Post
If you are planning to spend on another like asset, a capital gains tax hit might mean that you have to lower your expectations on the next property you are in.
Which is precisely why it's so financially interesting to ensure you're making the asset you want to flip "your primary residence".
Reply With Quote
     
     
  #11175  
Old Posted May 16, 2020, 8:51 PM
lio45 lio45 is offline
Registered User
 
Join Date: Aug 2007
Location: Vancouver, BC
Posts: 29,302
Quote:
Originally Posted by Xelebes View Post
If you are pulling out, then yes your diagnosis is correct.
Not really, no. I am pretty sure Warren would be pulling out in order to invest in a different class of asset.

If he could "swap" $1M of Vancouver real estate equity generating a net 2% for $1M of a stock he's bullish on that currently generates 5% in dividends, he'd do it in a heartbeat.

But that $1M would be anywhere close to $1M after this conversion... so it's kinda "frozen" in its current suboptimal form, strictly due to taxation reasons.

(edit - you and I actually agree if you mean "lower your expectations on all assets that give you a ROI" and by "pulling out", burning the money on vacations and YOLO stuff. In other words, lower your expectations on how much stock and how much dividends in absolute amounts you'll get after this asset swap.)
Reply With Quote
     
     
  #11176  
Old Posted May 16, 2020, 8:56 PM
WarrenC12 WarrenC12 is offline
Registered User
 
Join Date: May 2007
Location: East OV!
Posts: 13,361
Quote:
Originally Posted by lio45 View Post
Not really, no. I am pretty sure Warren would be pulling out in order to invest in a different class of asset.

If he could "swap" $1M of Vancouver real estate equity generating a net 2% for $1M of a stock he's bullish on that currently generates 5% in dividends, he'd do it in a heartbeat.

But that $1M would be anywhere close to $1M after this conversion... so it's kinda "frozen" in its current suboptimal form, strictly due to taxation reasons.
Yes, this exactly. I'm not arguing for lower capital gains taxes though, I think we need to tax that wealth.

I'd like to see a lifetime exemption for personal residences, similar to what the government does for selling a small business. $1M in 2020 dollars is more than fair IMO.

This would stop the flipper/builders and others who are abusing the system.
Reply With Quote
     
     
  #11177  
Old Posted May 16, 2020, 10:51 PM
misher's Avatar
misher misher is offline
BANNED
 
Join Date: Jul 2018
Posts: 4,537
Quote:
Originally Posted by lio45 View Post
Actually, I believe misher's "capital gains are [only] taxed at 50%" is merely a confusing way of phrasing the very common knowledge that "In Canada, 50% of the value of any capital gains are taxable."

https://www.wealthsimple.com/en-ca/l...ins-tax-canada
Yep.

And that’s my point, if we want investors to invest to get rentals built we have to make rentals more attractive than stock investments. We tax profits from rents at 100% but capital gains on stocks at 50%. And honestly most wealthy people will own stocks through overseas companies to avoid those taxes.

We got most rentals in Vancouver built when we offered tax incentives and despite having a massive rental crisis we refuse to offer significant incentives for rental.

A 1% vacancy rate is a crisis. Yet most Canadians seem to ignore it. It’s crazy.
Reply With Quote
     
     
  #11178  
Old Posted May 17, 2020, 3:09 AM
MolsonExport's Avatar
MolsonExport MolsonExport is offline
The Vomit Bag.
 
Join Date: Oct 2003
Location: The Tropic of Sir Galahad
Posts: 33,259
the ass gas never stops.
Reply With Quote
     
     
  #11179  
Old Posted May 17, 2020, 5:43 AM
Xelebes's Avatar
Xelebes Xelebes is online now
Sawmill Billowtoker
 
Join Date: Nov 2006
Location: Rockin' in Edmonton
Posts: 13,389
Quote:
Originally Posted by misher View Post
Yep.

And that’s my point, if we want investors to invest to get rentals built we have to make rentals more attractive than stock investments. We tax profits from rents at 100% but capital gains on stocks at 50%. And honestly most wealthy people will own stocks through overseas companies to avoid those taxes.

We got most rentals in Vancouver built when we offered tax incentives and despite having a massive rental crisis we refuse to offer significant incentives for rental.

A 1% vacancy rate is a crisis. Yet most Canadians seem to ignore it. It’s crazy.
Isn't this a more general statement on income tax policy moreso than a statement specific to rental? That is, we place tax favourability towards prices over returns and that has very general ramifications?
__________________
The Colour Green
Reply With Quote
     
     
  #11180  
Old Posted May 17, 2020, 9:26 AM
misher's Avatar
misher misher is offline
BANNED
 
Join Date: Jul 2018
Posts: 4,537
Quote:
Originally Posted by Xelebes View Post
Isn't this a more general statement on income tax policy moreso than a statement specific to rental? That is, we place tax favourability towards prices over returns and that has very general ramifications?
Yes.

I realize high taxes on investors tends to be popular among those who are not investors but in a globalized economy investors just avoid rather than pay high taxes. So our tax system dictates where people invest.

Someone just pointed out he’s not selling property due to high capital gains taxes. And he’s only being charged 50% of the normal taxes. Our system needs to be based on sound policy that directs investment where we want it and it needs to not be punishing such that people choose to hold off on transactions or avoid Canadian taxes completely. We want people making transactions and boosting economic activity.

And I saw a few comments that taxes should be higher on RE investors. But at a 1% vacancy rate this is a suicidal policy that would greatly hurt renters. Renters end up paying all taxes and costs on homeowners. It’s a shame that most don’t get that.
Reply With Quote
     
     
This discussion thread continues

Use the page links to the lower-right to go to the next page for additional posts
 
 
Reply

Go Back   SkyscraperPage Forum > Regional Sections > Canada
Forum Jump


Thread Tools
Display Modes

Forum Jump


All times are GMT. The time now is 7:46 AM.

     

Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2020, vBulletin Solutions, Inc.