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tdma800
Real Estate Talker
Posts: 2977
Joined: Wed Jan 23, 2008 9:12 am

Re: What must the governments do to stop speculation?

Sat Apr 22, 2017 9:06 pm

myraa wrote:
yzfr1.   I like that idea.  My friends bought at the Viceroy in New West  (paid about $360,000) and they had to put down a deposit of $80,000 early on and then second deposit of $80,000 a few months before they moved in.  I was quite surprised by how big the deposits were.  I think that was unusual.

Some people feel better after leaving a large deposit. Others of course are jealous of it
 
yzfr1
Real Estate Talker
Posts: 264
Joined: Tue Mar 19, 2013 8:35 pm

Re: What must the governments do to stop speculation?

Sat Apr 22, 2017 9:42 pm

VanLord wrote:
yzfr1 wrote:

Now what if someone holding onto a pre purchased condo and the value goes down. Should they be taxed as well?

My whole point is, its impossible to tax the transfer of the contract.

All you can do is ban foreign ownership.

If you lose money on the assignment - its called a capital loss...you should know that
If you are a Canadian and you don't claim your capital gain on an assignment you are taking a big risk, as foreigner the gov has little recourse.
You don't have to ban foreign ownership or assignments, you can have all contracts registered by a lawyer and tracked by the land titles office. If the assignment changes hands the lawyers withhold a portion of the profit.  This isn't that hard, there are some logistical issues the need to be solved, but can and should be done.  While its true that the two parties may agree to a side deal (which can also be done on any real estate deal) but this is not to the advantage of the buyer, since he needs to have an accurate purchase price, otherwise he could be on the hook for higher capital gains.  

I was referring to applying a arbitrary tax to transferring a pre-sale contract. As I stated before, its impossible to put a value on the contract.
I think you are very confused at the moment.
"you can have all contracts resisted by a lawyer and tracked by the land titles office" the contracts are already registered with the layers. The contracts is between the seller (developer)  and the buyer (home owner) All this piece of paper is a agreement to buy the property for a set price at a future date. The contract is not the same as buying the actual property. No titles are transferred or issued until the strike date of the contract which is completion. For instance its up to the developer to decide how much downpayment he wants from the buyer and when. Now a days they are asking for as much as 25%. Again this is not mandated by real-estate rules for conventional deals. Usually deposit is 5% until subject removals. It's not a realestate transaction until the contract is executed and the buyer decides to exercise his right to buy the property at the agreed price.
Again with the withholding of the profits... how the heck is anyone going to know what the actual profits are or the losses of the pre-sale contract.
the purchase of the pre-sale lets say for example $500,000
when someone sells the "contract" for $20,000. The $20,000 is not tacked onto the $500,000.
The contract to buy the condo has no intrinsic value. Hence can't be added to net loss or gain for the person buying. So it will always result to a side deal. There is absolutely no reason for either party to admit gains. If anything capital loss would be abused. 
please take time to read my previous posts. and try to understand what I posted.. it's very clear.

It's called a "Pre-sale" as in there is no sale yet!

no losses or net gains can be occurred where then is no sale!
 
VanLord
Real Estate Talker
Posts: 288
Joined: Fri Aug 24, 2007 3:52 pm

Re: What must the governments do to stop speculation?

Sat Apr 22, 2017 10:18 pm

yzfr1 wrote:
VanLord wrote:
yzfr1 wrote:

Now what if someone holding onto a pre purchased condo and the value goes down. Should they be taxed as well?

My whole point is, its impossible to tax the transfer of the contract.

All you can do is ban foreign ownership.

If you lose money on the assignment - its called a capital loss...you should know that
If you are a Canadian and you don't claim your capital gain on an assignment you are taking a big risk, as foreigner the gov has little recourse.
You don't have to ban foreign ownership or assignments, you can have all contracts registered by a lawyer and tracked by the land titles office. If the assignment changes hands the lawyers withhold a portion of the profit.  This isn't that hard, there are some logistical issues the need to be solved, but can and should be done.  While its true that the two parties may agree to a side deal (which can also be done on any real estate deal) but this is not to the advantage of the buyer, since he needs to have an accurate purchase price, otherwise he could be on the hook for higher capital gains.  

I was referring to applying a arbitrary tax to transferring a pre-sale contract. As I stated before, its impossible to put a value on the contract.
I think you are very confused at the moment.
"you can have all contracts resisted by a lawyer and tracked by the land titles office" the contracts are already registered with the layers. The contracts is between the seller (developer)  and the buyer (home owner) All this piece of paper is a agreement to buy the property for a set price at a future date. The contract is not the same as buying the actual property. No titles are transferred or issued until the strike date of the contract which is completion. For instance its up to the developer to decide how much downpayment he wants from the buyer and when. Now a days they are asking for as much as 25%. Again this is not mandated by real-estate rules for conventional deals. Usually deposit is 5% until subject removals. It's not a realestate transaction until the contract is executed and the buyer decides to exercise his right to buy the property at the agreed price.
Again with the withholding of the profits... how the heck is anyone going to know what the actual profits are or the losses of the pre-sale contract.
the purchase of the pre-sale lets say for example $500,000
when someone sells the "contract" for $20,000. The $20,000 is not tacked onto the $500,000.
The contract to buy the condo has no intrinsic value. Hence can't be added to net loss or gain for the person buying. So it will always result to a side deal. There is absolutely no reason for either party to admit gains. If anything capital loss would be abused. 
please take time to read my previous posts. and try to understand what I posted.. it's very clear.

It's called a "Pre-sale" as in there is no sale yet!

no losses or net gains can be occurred where then is no sale!

I'm not confused at all...You are arguing about symantics...the profits from the assignment must be reported to CRA.  
http://www.cra-arc.gc.ca/nwsrm/fctshts/ ... a-eng.html
Myth – Real estate flipping is illegal.
Fact    Real estate flipping is not against the law. Flipping is a method of buying and selling real estate to earn income. Individuals may also use assignment clauses in real estate contracts to flip a property once or more before a final sale is made.
However, all the money made on real estate flips, including real estate commissions and appreciation in value (the difference between the purchase price and sale price), must be reported to the CRA.

In fact it maybe considered business income and the assignment price is likely subject to GST/PST as well.  
http://www.cra-arc.gc.ca/E/pub/gi/gi-120/gi-120-e.html
http://www.cra-arc.gc.ca/gncy/cmplnc/rl ... u-eng.html

Just because people are cheating doesn't make it legal and a free for all.  Unfortunately its an honour system right now and as I originally said if the CRA could crack down on this issue, we wouldn't need a speculator tax and this would in all likelihood cool the speculation as it would make it less attractive to by pre-sales with the intent of flipping the contract prior to completion.
Last edited by VanLord on Sat Apr 22, 2017 10:20 pm, edited 1 time in total.
 
tdma800
Real Estate Talker
Posts: 2977
Joined: Wed Jan 23, 2008 9:12 am

Re: What must the governments do to stop speculation?

Sat Apr 22, 2017 10:19 pm

yzfr1 wrote:
VanLord wrote:
yzfr1 wrote:

Now what if someone holding onto a pre purchased condo and the value goes down. Should they be taxed as well?

My whole point is, its impossible to tax the transfer of the contract.

All you can do is ban foreign ownership.

If you lose money on the assignment - its called a capital loss...you should know that
If you are a Canadian and you don't claim your capital gain on an assignment you are taking a big risk, as foreigner the gov has little recourse.
You don't have to ban foreign ownership or assignments, you can have all contracts registered by a lawyer and tracked by the land titles office. If the assignment changes hands the lawyers withhold a portion of the profit.  This isn't that hard, there are some logistical issues the need to be solved, but can and should be done.  While its true that the two parties may agree to a side deal (which can also be done on any real estate deal) but this is not to the advantage of the buyer, since he needs to have an accurate purchase price, otherwise he could be on the hook for higher capital gains.  

I was referring to applying a arbitrary tax to transferring a pre-sale contract. As I stated before, its impossible to put a value on the contract.
I think you are very confused at the moment.
"you can have all contracts resisted by a lawyer and tracked by the land titles office" the contracts are already registered with the layers. The contracts is between the seller (developer)  and the buyer (home owner) All this piece of paper is a agreement to buy the property for a set price at a future date. The contract is not the same as buying the actual property. No titles are transferred or issued until the strike date of the contract which is completion. For instance its up to the developer to decide how much downpayment he wants from the buyer and when. Now a days they are asking for as much as 25%. Again this is not mandated by real-estate rules for conventional deals. Usually deposit is 5% until subject removals. It's not a realestate transaction until the contract is executed and the buyer decides to exercise his right to buy the property at the agreed price.
Again with the withholding of the profits... how the heck is anyone going to know what the actual profits are or the losses of the pre-sale contract.
the purchase of the pre-sale lets say for example $500,000
when someone sells the "contract" for $20,000. The $20,000 is not tacked onto the $500,000.
The contract to buy the condo has no intrinsic value. Hence can't be added to net loss or gain for the person buying. So it will always result to a side deal. There is absolutely no reason for either party to admit gains. If anything capital loss would be abused. 
please take time to read my previous posts. and try to understand what I posted.. it's very clear.

It's called a "Pre-sale" as in there is no sale yet!

no losses or net gains can be occurred where then is no sale!

The noob thinks a few presales mean a lot lol
 
yzfr1
Real Estate Talker
Posts: 264
Joined: Tue Mar 19, 2013 8:35 pm

Re: What must the governments do to stop speculation?

Sat Apr 22, 2017 10:24 pm

I 100% agree with you that it should be taxed.

No one should be able to earn money for free in this country while be afforded the protections and rights it provides.

But as long as its the honesty policy there is no point in continuing to discussion.

Declaring tips for waiters / service people
How about collecting rent on basement suites
All the tax free labour in the renovation and construction business

There is a problem, but i have not heard a good solution on how to fix it. I'm only hearing that it should be fixed in which I'm in 100% agreement
 
tdma800
Real Estate Talker
Posts: 2977
Joined: Wed Jan 23, 2008 9:12 am

Re: What must the governments do to stop speculation?

Sat Apr 22, 2017 10:28 pm

Some trades fields are notorious for gray market billing lol
 
VanLord
Real Estate Talker
Posts: 288
Joined: Fri Aug 24, 2007 3:52 pm

Re: What must the governments do to stop speculation?

Sat Apr 22, 2017 10:33 pm

yzfr1 wrote:
I 100% agree with you that it should be taxed.

No one should be able to earn money for free in this country while be afforded the protections and rights it provides.

But as long as its the honesty policy there is no point in continuing to discussion.

Declaring tips for waiters / service people
How about collecting rent on basement suites
All the tax free labour in the renovation and construction business

There is a problem, but i have not heard a good solution on how to fix it. I'm only hearing that it should be fixed in which I'm in 100% agreement

fair enough !!!  The CRA has lots of lawyers, accountants and tax experts and this should be a priority...Withholding funds before they leave the country is a start
Calculating Fair Market Value and if a large discrepancy between FMV and the assignment price...They could force the seller to pay tax based on that value.
I guess your right, its not easy, but I believe it would help cool some of the speculation around the fringes of the real estate market.  
 
jimtan
Real Estate Talker
Topic Author
Posts: 5427
Joined: Tue Jul 31, 2007 10:59 pm

Re: What must the governments do to stop speculation?

Sat Apr 22, 2017 10:34 pm

VanLord wrote:
yzfr1 wrote:
I 100% agree with you that it should be taxed.

No one should be able to earn money for free in this country while be afforded the protections and rights it provides.

But as long as its the honesty policy there is no point in continuing to discussion.

Declaring tips for waiters / service people
How about collecting rent on basement suites
All the tax free labour in the renovation and construction business

There is a problem, but i have not heard a good solution on how to fix it. I'm only hearing that it should be fixed in which I'm in 100% agreement

fair enough !!!  The CRA has lots of lawyers, accountants and tax experts and this should be a priority...Withholding funds before they leave the country is a start
Calculating Fair Market Value and if a large discrepancy between FMV and the assignment price...They could force the seller to pay tax based on that value.
I guess your right, its not easy, but I believe it would help cool some of the speculation around the fringes of the real estate market.  

+1
 
tdma800
Real Estate Talker
Posts: 2977
Joined: Wed Jan 23, 2008 9:12 am

Re: What must the governments do to stop speculation?

Sat Apr 22, 2017 10:42 pm

jimtan wrote:
VanLord wrote:
yzfr1 wrote:
I 100% agree with you that it should be taxed.

No one should be able to earn money for free in this country while be afforded the protections and rights it provides.

But as long as its the honesty policy there is no point in continuing to discussion.

Declaring tips for waiters / service people
How about collecting rent on basement suites
All the tax free labour in the renovation and construction business

There is a problem, but i have not heard a good solution on how to fix it. I'm only hearing that it should be fixed in which I'm in 100% agreement

fair enough !!!  The CRA has lots of lawyers, accountants and tax experts and this should be a priority...Withholding funds before they leave the country is a start
Calculating Fair Market Value and if a large discrepancy between FMV and the assignment price...They could force the seller to pay tax based on that value.
I guess your right, its not easy, but I believe it would help cool some of the speculation around the fringes of the real estate market.  

+1

-1
 
tdma800
Real Estate Talker
Posts: 2977
Joined: Wed Jan 23, 2008 9:12 am

Re: What must the governments do to stop speculation?

Sat Apr 22, 2017 10:42 pm

VanLord wrote:
yzfr1 wrote:
I 100% agree with you that it should be taxed.

No one should be able to earn money for free in this country while be afforded the protections and rights it provides.

But as long as its the honesty policy there is no point in continuing to discussion.

Declaring tips for waiters / service people
How about collecting rent on basement suites
All the tax free labour in the renovation and construction business

There is a problem, but i have not heard a good solution on how to fix it. I'm only hearing that it should be fixed in which I'm in 100% agreement

fair enough !!!  The CRA has lots of lawyers, accountants and tax experts and this should be a priority...Withholding funds before they leave the country is a start
Calculating Fair Market Value and if a large discrepancy between FMV and the assignment price...They could force the seller to pay tax based on that value.
I guess your right, its not easy, but I believe it would help cool some of the speculation around the fringes of the real estate market.  

There's already withholding when foreigners buy a place
 
tdma800
Real Estate Talker
Posts: 2977
Joined: Wed Jan 23, 2008 9:12 am

Re: What must the governments do to stop speculation?

Sat Apr 22, 2017 11:23 pm

If anyone in the real world thought its so offensive when omg a foreigner that wasn't born in Canada buys something and spends money - preventing that would be easy - Just organize and win a campaign using the BC initiative act

It's something that could be done only in bc
 
reallyreal2
Real Estate Talker
Posts: 677
Joined: Fri Jun 03, 2016 11:30 am

Re: What must the governments do to stop speculation?

Sun Apr 23, 2017 7:42 am

yzfr1 wrote:
reallyreal2 wrote:
yzfr1 wrote:

When jitman runs out of arguments it always results to personal attacks. Just like when diplomacy ends, vilolence starts. Again it illustrates my point.

Yes selling a presale assignment can be taxed, anytime anything trades hand it can be taxed. Selling lemonade on the side of the road can be taxed. When you buy a used car on Craigslist and register the car you must declare the value and then its taxed. Most people cheat and declare a lower value.

My point about taxing a presale is, without setting up a very complicated regulatory system it's impossible to tax.

When you enter a contract on a presale, you have the right to purchase the property at a future date and a fixed price. Your right can or cannot be excersized.

If the market drops you can choose not to buy it.

Now when you sell a pre build. No property is changing hands. You are selling the right to buy that property.

How will you tax it? There is no intrinsic value of the contract, its the right to execute at a date. Its like a futures contract.

Now what if someone holding onto a pre purchased condo and the value goes down. Should they be taxed as well?

My whole point is, its impossible to tax the transfer of the contract.

All you can do is ban foreign ownership.


Sorry - I don't think you understand how presales work.  It is a contract - you have to buy at a future date.  You don't have an option to buy and if the market goes down walk away.

Ok as a bear I assume you never owned property before. You can absolutely walk away anytime, its called breach of contract. You lose your deposit. 

You can lose a whole lot more than just your deposit.
http://www.cbc.ca/news/canada/british-c ... s-1.802301
""There are plenty of cases in which vendors of property, not necessarily developers, have had deals with purchasers, where purchasers have backed out, and the vendors have sued, successfully for … the difference between the purchase price with the original deal, and what they get on a resale," said Whyte.
Real estate lawyer Ron Usher, who is not connected to the case, confirmed that if the developer resells the condo for less money, it can sue the original buyer for the difference.
"The contracts are quite clear. They have a right to claim that against the original purchaser," said Usher."

You are not buying an option to buy when you sign a pre-sale contract.  You are on the hook for the contract.  

FYI - you assumed wrong.  I own my home and have owned a few condos in the past.  Even purchased a presale in the past. 
Last edited by reallyreal2 on Sun Apr 23, 2017 7:44 am, edited 1 time in total.
 
tdma800
Real Estate Talker
Posts: 2977
Joined: Wed Jan 23, 2008 9:12 am

Re: What must the governments do to stop speculation?

Sun Apr 23, 2017 7:43 am

https://meta.wikimedia.org/wiki/Solution_in_search_of_a_problem
 
tdma800
Real Estate Talker
Posts: 2977
Joined: Wed Jan 23, 2008 9:12 am

Re: What must the governments do to stop speculation?

Sun Apr 23, 2017 7:45 am

yzfr1 wrote:
reallyreal2 wrote:
yzfr1 wrote:

When jitman runs out of arguments it always results to personal attacks. Just like when diplomacy ends, vilolence starts. Again it illustrates my point.

Yes selling a presale assignment can be taxed, anytime anything trades hand it can be taxed. Selling lemonade on the side of the road can be taxed. When you buy a used car on Craigslist and register the car you must declare the value and then its taxed. Most people cheat and declare a lower value.

My point about taxing a presale is, without setting up a very complicated regulatory system it's impossible to tax.

When you enter a contract on a presale, you have the right to purchase the property at a future date and a fixed price. Your right can or cannot be excersized.

If the market drops you can choose not to buy it.

Now when you sell a pre build. No property is changing hands. You are selling the right to buy that property.

How will you tax it? There is no intrinsic value of the contract, its the right to execute at a date. Its like a futures contract.

Now what if someone holding onto a pre purchased condo and the value goes down. Should they be taxed as well?

My whole point is, its impossible to tax the transfer of the contract.

All you can do is ban foreign ownership.


Sorry - I don't think you understand how presales work.  It is a contract - you have to buy at a future date.  You don't have an option to buy and if the market goes down walk away.

Ok as a bear I assume you never owned property before. You can absolutely walk away anytime, its called breach of contract. You lose your deposit. 

+1.  The other he/she/it obviously didnt own a home or apartment before.   Burping out a random article has little meaning. Anyone who's done this before knows you just walk away and lose wait you paid.  for some its a lot for some its not .    nothing fancy here. move along.
 
tdma800
Real Estate Talker
Posts: 2977
Joined: Wed Jan 23, 2008 9:12 am

Re: What must the governments do to stop speculation?

Sun Apr 23, 2017 7:47 am

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