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Fess up

Tuesday, February 14, 2017 14:22
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(Before It's News)

Is the government thinking about taxing houses? Of course it is. Just makes sense. Residential real estate’s the biggest pool of personal wealth in the nation. Most gains are claimed tax-free. And the law allowing that gift never, ever contemplated markets where prices would double every half-decade. Or where rental suites would be come ubiquitous. Or where people could do diddly and make a million. Or where the majority of new high-rise units are bought by amateur flippers, speckers or landlords. Or where mortgages cost hardly more than inflation and money flowed like hormones.

But here we are. The amount of wealth transferred from liquid assets into land is epic. So is the debt attached. And a spendy government has a jealous eye on all that windfall, unearned, undeserved, untaxed equity.

An eventual house tax could be facilitated by the principal residence exemption being introduced to this year’s tax return (see yesterday’s hyperventilated post). It could come as a withholding tax on the sale of a property, refunded if you qualify. It could materialize through enforcement of existing rules by the CRA – cracking down on illegal suites, for example. Or simply by including a portion of house profits in capital gains calcs.

In  Vancouver these days the best estimate is that 45% of all detached houses have suites. Could be higher. And odds are a great number of owners collect rent but fail to declare it as taxable income. After all, having a tenant doesn’t increases costs too much, yet every dollar in net rental income must be added to your earned income and taxed at your marginal rate. Ouch. How is a poor working family supposed to pay their $1.3 million mortgage?

Anyway, stats on home ownership are sketchy when compared to who has what in an RRSP or TFSA, for example. That’s why the data search has begun. It’s the rationale for the PRE form in your tax return from now on. People who flip, assign or rent houses may be future targets of a hungry, deficit-soaked bureaucracy.

So in the spirit of unvarnished disclosure always prevalent on this pathetic blog, let’s do our bit and fully disclose our personal real estate holdings to Wild Bill & his boss, Justin. It will be interesting to know how many of those who come here are mansion-owning 1%ers, who are the property-flipping moguls and how many are pale, squinty-eyed, moldy basement dwellers. What percentage of your net worth is in real estate? Or have you been frozen on the outside, looking in at a market you’ll never afford? Are you part of the hated rentier set? Do you declare all rental income?

Our last survey of readership revealed that most people here are billionaires with seven-figure incomes who just come for the dog pictures. And visitor stats continue to reveal only about 1% of those hanging around ever leave a comment, mostly from the deplorable classes.

So let’s hear from the rest of you. What do you own?

“There was an income/wealth survey here last year that had an overwhelming rate of participation,” says a familiar voice from the steerage section. “Perhaps a real estate survey would get the braggarts to respond in droves too, with questions such as:

  •  how many houses do you own, followed by these questions…
  • year of purchase and price
  • % down
  • age of house at that time
  • your age at that time
  • amount owing or number of years it took to pay off
  •  number of years owned
  • value today
  • % of your net worth in house equity

“Results of which would show just how house horny we / or Garth’s investment class groupies are, and what happens when an asset tax arrives.”

Please note that all results and revelations will be held in the strictest confidence. Bill promised.



Source: http://www.greaterfool.ca/2017/02/14/fess-up/

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