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Shuchat Group Real Estate Blog

Think back to when you were growing up.  Can you remember any of your friends moving? Moving more than once? Moving more than once in a two year period?


Things are different now.  A recent review that I conducted in Richmond over a two year period from 2014-2015 inclusive revealed that out of 160 single family properties described as having lots greater than 7000 sq ft, frontages greater than 60 feet and homes on the land older than 34 years, 42 of them, or around 25% were sold and relisted at least once during that two year period, often within a few months.

Here's the problem.  They are houses. Houses may qualify for the principal residence exemption and therefore afford a tax free gain on the price increase since purchase. If a person bought a property and sold it, they would only be required to file taxes on it by April of the following year.  That is, if they account for the gain at all.  Being that it is a house, its sale is likely to not even be reported. ...

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I have always advocated that Canadians need to be involved and interacting with their governments in between elections instead of during elections.


I am happy to say that any time I did write my elected officials, I not only received a response but I more often than not woke up one day to find that a suggested policy was actually enacted.

I am pleased that our current Liberal government through its Finance Minister finally made a policy decision regarding limiting the availability of the Principal Residency Exemption that was desperately needed and which I personally have been advocating for over the last two years, both in this blog forum of my web page, in local and national newspapers, and most recently in meetings with senior Canada Revenue Agency real estate auditing staff.

A principal problem as I explained it was that non-residents could purchase a real property and sell it shortly thereafter, regardless of whether they lived in it or not as there was no real mechanism in place to enforce...

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First published in my May 22, 2015 blogpost, I haven't given up on this concept.  The 4th suggestion (I added it a little after the original post) had to do with allowing some portion of resident Canadians' mortgage interest payment to be tax deductible. 

Thinking about this a little bit more, and weighing all of the options, I think this No 4 option has some political potential of being more acceptable that some of the others.  This is why:

1. It doesn't overtly target foreign investors and give the appearance of Canada "closing" its borders to investment as might some of the others. 
2. It focusses on increasing affordability for Canadians who have Canadian earned income and hence by implication pay taxes here.  Therefore it is self screening in nature. Foreigners would not likely benefit as they do not often pay income tax here and hence could not deduct interest expenses against their income.
3. It could assist in domestic residential debt management policy by r...
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From 2015: I just finished reading this article online at: http://www.vancitybuzz.com/2015/05/affordable-housing-rally-protest-vancouver-home-prices/ which referenced a rally downtown to voice concerns about local real estate prices.

A few years ago, the bears were on the sidelines predicting the implosion of a huge real estate bubble. Now, not having been successful in that endeavour, they are trying to manufacture one politically. No doubt, we can't have it both ways: retire with a huge cash out for our homes, but be able to afford to help our children buy property in that same expensive market. I doubt that the rally described below will be attended predominantly by property owners. The reply from City Hall, "Let them have condos", will not solve the supply problem if the housing market continues to be open and free to non-residents for investment and/or speculative purposes. Therefore empty properties should be the first target of government and a strategy in that direction...

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Every so often I get a client who wants to move out of their current home, but has such an affinity for it, and spent so much quality time there, that they would like to continue to own it as an investment. It is admirable for them to be able to own two homes if they are bullish on local real estate.  However, there are a few problems with this as a strategy and it primarilly involves taxation issues.

The first is that one can only claim a principal residence exemption for the time one has resided in the property.  If the client leaves the home, then any appreciation on that property subsequent to the move out date will involve capital gains which would be taxable.  There is an election that needs to be filed in the year that they move out, should they wish to keep it and use it for rental income purposes.  Filing such an election would add their right to continue to claim the residence as a principal residence and be exempt from capital gains tax for up to four years...
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The Principal Residence Exemption:  I get asked about this at least half a dozen times a year.  Canadians have the impression that it is a tax exemption as of right... WRONG! A dangerous trap that merits a thorough reading prior to taking this provision for granted.  The old CRA Interpretation Bulletins are being morphed into "Income Tax Folios" for better organization and web management.  The one dealing with the Principal Residence Exemption is now called Income Tax Folio S1-F3-C2 Principal Residence and can be found here: http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s1/f3/s1-f3-c2-eng.html

If you are on the right side of the tax law on this provision, then the capital gains from the disposition of your principal residence will be exempt from capital gains tax.  This is a loaded sentence: 1.  the gain has to be from capital, not on account of income; 2. it has to be your (a) principal (b) residence.   Failure to meet these criteria and you go from tax...
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