The flipper

He’s a long-time Liberal organizer. He was a co-chair of the party’s national convention a decade ago. He ran for the Libs in 2004, and lost. He ran again in 2019, and lost, this time in the Vancouver seat former justice minister Jody Wilson-Rayboult held as an independent MP after being punted by her boss, Justin Trudeau. She beat him by 3,000 votes.

And, say local sources, Taleeb Noormohamed, is also a house-flipper. In the recent past (including twice during the pandemic) he’s flipped properties in less than 12 months and pocketed $600,000 in the process.

This is not illegal activity. Not yet. But if his boss is returned to power on September 20th, flippers like Taleeb will face the wrath of the CRA with a new anti-spec tax. In fact Trudeau just said it again: “we’ll crack down on predatory speculators competing with families trying to buy their first home.”

Now to be fair, the guy defends himself saying that in each case he added value to a property or there was some family reason for the quick buy-and-sell. All were justified. Normal. Like everybody does. Also CRA rules are already in place.  If the tax cops think a property deal was for profit – rather than to establish a personal home – the gain can be taxed as regular income.

The deals here involved two condos, a loft and a townhouse, all in YVR. Since the alleged flips were exposed in Vancouver, the party and the PM have not commented. Noormohamed is still the Liberal candidate and likely to stay that way. It’s a safe seat for the Liberals now that Jody has bowed out of politics.

Is this hypocrisy? Maybe. The point of this post is not to eviscerate the guy. Rather we should think about the root causes of dumbass real estate prices instead of nibbling around the edges of a housing crisis. Nobody likes speculators. But speculation is rampant. One in five families in the GTA, for example, owns a secondary property, usually a condo rental. In fact up to 50% of all apartment sales there have been to non-resident owners. A recent survey showed a shocking proportion of Millennials also own rental properties.

During a lengthy chat with a banker this week, she asked me about her twentysomething daughter’s financial plans. The kid (with her support) wants to buy a wee condo in the burbs with a loan from the Bank of Mom and $50,000 she’s managed to save by living at home. A rental. The cash flow after condo fees, property taxes and financing would be negative by “a few hundred dollars a month.” Why? I asked. “Well, where else is she supposed to invest to move ahead if she doesn’t get into the market now?” responded TNL@TB.

How about a tax-free TFSA? Or making an RRSP contribution and earning a tax refund? How about investing in assets likely to grow instead of sustaining a continual loss? Why not invest without taking on a half million dollars in debt? How are these not valid options rather than buying something with leverage and subsidizing a tenant?

It’s not the speckers we should blame. It’s the system. It’s financial illiteracy. It’s our one-asset society – which policies like the new Liberal first-time homebuyer TFSA-RRSP Frankenaccount pander to. As we discussed here on this pathetic yet manly blog, the Liberal suite of actions with regard to home buyers announced days ago is shamelessly pro-housing and anti-landlord while doing nothing for renters and guarantees society will be cleaved further between owners and tenants. If enacted, prices will be higher. Affordability lower. Demand increased. And by creating a tax shelter only for those under 40 we’ve entered a new era of ageism and financial discrimination as we indoctrinate the young.

In short, it’s enablers like Justin who made real estate addicts like Taleeb.

Maybe he’ll be the new Minister of Housing.

About the picture: “Our rescue Jack Russell “Eddie” was a handful and he lived life in the moment,” writes Joe. “On our hikes we’d let him off leash where he would disappear until he felt like returning and not a moment sooner. Thank you Garth for your daily advise, long time reader since I found the blog link in one of your books (2008?)”