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 person buying would, of course, include the assignment payment on the purchase of the condo to their ACB.
You buy an assignment for $100K on a $500K condo meaning you paid $600K for the condo - when it comes time to sell, you are going to use $600K as your ACB. CRA can very easily now go back and compare your cost against the sale agreement when you purchased - they will ask to review your purchase agreement with the developer and the assignment agreement. Then they check to see if the person that assigned you the paper claimed the gain on their taxes. Alternatively, CRA work the other way and audit the developer and compare the pre-sale agreements with who actually closed on the unit - if there is a difference, they can determine that there was an assignment. Once an assignment is identified, you don't have to be Sherlock Holmes to determine the assignment agreement. You say it is a side deal where both parties can say it was $1 - great, when the buyer of the assignment sells their place, their ACB is lower and they are paying more tax.
It's really very simple if you can think logically for more than 3 minutes at a time.