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Ontario urging Ottawa to change tax rules in bid to curb real estate speculation

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Real Estate Professional | 20 Mar 2017, 04:52 PM Agree 0
Ontario Finance Minister Charles Sousa is urging Ottawa to address speculative investing in the country's housing markets by changing how such profits are taxed
  • Jon | 20 Mar 2017, 05:07 PM Agree 1
    So to relieve the pressure on the Toronto housing market due to low inventory, the solution is to prevent investors from selling surplus or investment property, thus keeping inventory off the market. Brilliant.
  • Henry Timmins | 20 Mar 2017, 05:25 PM Agree 1
    The Government is here to help.....with a nonsense action that affects a very small percentage of the participants. But to be fair, capital losses must be treated the same when the market turns south.
  • PS I work in RE | 20 Mar 2017, 05:36 PM Agree 0
    Actually what they left out or didn't explain is that they are trying to up the taxes on "Flippers" - those who buy pre-sale condos and never live it the suite nor was it ever leased, as well as people (like in Scarborough) buy a house, renovate, never live in it or rent it out and sell it (less than 1 year) . If you look, I will continue to use Scarborough for example- houses were bought in 2016, completely renovated and the owner never moved in or rented it and sells for a huge price. Then theres is this part-when an agent gives a CMA they are not to tell a seller a price they are to suggest a spread - lower and upper price - But this not being done either - It is unethical for an Agent to suggest a price well below the current market value - like the house listed in the east end @$599,900 and the almost the same house next door (neither renovated) brought $850,000 - the 1st house @$599,900 was obviously grossly under listed - TREB,RECO and OREA need to get on this unethical practice - it both the Sales Reps and the sellers - Rules and Regulations are not being upheld... Even thought TIm Hudak says not non residents-Money is being filtered in the from Asia & other countries outside of Canada - Yes there is a lot- Son/daughter student- parents transfer money to them and then buy- This can be traced through FINTRAC easy everyone has to complete it, 1 for any transfer/deposit over $10,000 in a bank and for all Real Estate Sales Transactions both sides
  • Ian Hocking | 20 Mar 2017, 05:45 PM Agree 0
    I do find it interesting that Ontario doesn't seem to be able to make a decision and hence refers upwards, in other circles that might be called, "Passing the buck". However, I do agree that what is happening in our country at the moment is NOT a Canadian issue. The buying that is occurring is partly Canadian and partly overseas. If you look outward from the GTA 1-2 hours drive in any direction you will see that home prices have surged between 20-40% in the last 12 months. Meanwhile, the Canadian economic growth GDP is hovering around 2%, inflation is low around 1.5-2% and interest rates are correspondingly low as they are focused predominantly on the domestic economy. Based on the domestic economy and wage price inflation, that is also benign, there is absolutely no way that home prices could have surged by the amount they did. So what's the driving force? You would have to have your head stuck in the sand to not know what is happening. Call it whatever you like, but the fact is, $$, lots of $$ are flowing onshore from somewhere offshore. We can take aim at any particular country, but wherever you look, local Canadian families are being forced to make a decision to move away from where they grew up and likely their families grew up as they can no longer afford to live where they have lived. This is not because immigration has suddenly hit new highs, it's actually fairly steady (Around 250,000 a year for the past 20 years), it's simply because Canada is a reasonably stable place politically, and has a set of rules that allows you to liquidate your assets when you like. (As it should, it's called Capitalism). With the low Canadian $$ in the past few years we look even more attractive internationally, but when it comes down to it, the $$ that are flowing here and have been flowing here for the past few years are literally capital flight money from other countries that have, or threaten to have more restrictive policies. Just google China foreign reserves and look for a chart going back 20-30 years and you will see a huge outpouring of capital. That outflow just happens to coincide with an explosion in first Vancouver and now Ontario house prices. We don't have a lack of inventory, the same, if not more homes are selling now than they did last year, it's just they don't stay on the market for more than a few days so it appears we have an inventory issue. There are also more homes sitting vacant at the moment than I have ever seen, further tightening the affordability. The flight capital is, however, acting as if a huge amount of immigration showed up. Governments have indicated that they don't see more than 5% of buyers being foreign, and if you can't possibly imagine that an overseas friend or relative sends money to their Canadian friend / relative and asks them to buy a home then of course you won't truly see the foreign flow. The real issue with this money that is soaking up Canadian Real Estate is that it's not necessarily stable money, many homes are vacant, these are not necessarily families that are moving in and when a home is vacant that capital inflow can become capital outflow very easily. If you think that these capital in-flows look bad, you wait until money decides there's a better alternative somewhere else. I am a true believer that Governments should not intervene in economics, in my experience whenever they do something gets messed up, however, in my humble opinion this has little to do with Canadian economics, and therefore I find myself supporting a move to at least examine any rules that make the sort of speculation that is happening at the moment less attractive. Don't be so Canadian, Canadians, call it for what it is. This is NOT a Canadian economic problem, it's a world capital flight problem, and it IS a problem.
  • Robert C | 20 Mar 2017, 05:53 PM Agree 0
    The real culprits of real estate speculation in cities such as Toronto and Vancouver is not the individual home speculator (commonly known as the “flipper”) but the developers and institutional investors such as municipal governments and equity investment houses that tie properties up for years while they work to assemble larger lots for build-able developments. How do they do this, such tools as the “Option to Purchase” or the “Straw Buyer”. The real issue the Fed’s should be addressing if they are concerned about home prices soaring is the methodical dismantling by municipal governments of viable neighbourhoods all in the name of “progress and development”. Of course Bill Morneau won’t want to address this issue since his riding is a prime example of neighbourhoods being dismantled and developers speculating and assembling property for developments.
  • Joe Pacitto | 20 Mar 2017, 06:05 PM Agree 2
    I think the Government should increase the Capital Gains Tax only for people that keep the investment less than 5-10 years. This discourages buyers that buy to flip and make quick money.
  • Bill robertson | 20 Mar 2017, 06:15 PM Agree 1
    This too will pass. Every time the government changes things things mess up even more.
    If you take out all the people who are willing to risk capital nothing gets done.
    If you want to stimulate grow let the people who have investment property sell it with no immediate capital gains if reinvested and drop some regulations and watch the growth . More product would create competition.
    Another question is where can the small developer/ builder find a building lot.?
  • Don johnson | 20 Mar 2017, 06:20 PM Agree 1
    A true liberal concept add taxes - make them more expensive use taxes to help offset the increase - in meantime investors stop buying and developers stop building because speculators aren't buying - inventory gets more restricted so prices go up - so govt increases land transfer taxes to discourage speculators but that makes total cost go up - Wynn and her inept cronies need to go - I propose a 100% tax rate on their incomes would be a way we can reduce demand by taking away their money so they can't afford to live in the province anymore - the problem is red tape - in Burlington a building permit to build a detached home is approx 50000$ and there is an additional $8000 surcharge - plus it takes massive time and resources to develop a site for building - the problem is government policies - reduce immigration to 200000per year from 450000 and that is 50000-80000 homes we don't need to build this year -
  • Mozart | 20 Mar 2017, 06:35 PM Agree 1
    I agree with Joe Paccito - there should be a sliding scale depending on how long the property has been owned by the seller. Why should the long term investor be penalized because of the "flippers". Therefore, if you have owned your property for five years or more, 50% capital gains applies. If more than 2 years but less than 5, then 65% capital gains applies, and if 2 years or less than 75% applies. I think this is fair - penalizing the "flippers" while still encouraging investment specially in rental properties.
  • Mozart | 20 Mar 2017, 06:35 PM Agree 1
    I agree with Joe Paccito - there should be a sliding scale depending on how long the property has been owned by the seller. Why should the long term investor be penalized because of the "flippers". Therefore, if you have owned your property for five years or more, 50% capital gains applies. If more than 2 years but less than 5, then 65% capital gains applies, and if 2 years or less than 75% applies. I think this is fair - penalizing the "flippers" while still encouraging investment specially in rental properties.
  • Mozart | 20 Mar 2017, 06:35 PM Agree 1
    I agree with Joe Paccito - there should be a sliding scale depending on how long the property has been owned by the seller. Why should the long term investor be penalized because of the "flippers". Therefore, if you have owned your property for five years or more, 50% capital gains applies. If more than 2 years but less than 5, then 65% capital gains applies, and if 2 years or less than 75% applies. I think this is fair - penalizing the "flippers" while still encouraging investment specially in rental properties.
  • Mozart | 20 Mar 2017, 06:36 PM Agree 1
    I agree with Joe Paccito - there should be a sliding scale depending on how long the property has been owned by the seller. Why should the long term investor be penalized because of the "flippers". Therefore, if you have owned your property for five years or more, 50% capital gains applies. If more than 2 years but less than 5, then 65% capital gains applies, and if 2 years or less than 75% applies. I think this is fair - penalizing the "flippers" while still encouraging investment specially in rental properties.
  • Andy | 20 Mar 2017, 08:09 PM Agree 0
    To increase the capitol tax rate will further reduce the incentive to sell. This will effectively take out more supply. If the intention is to reduce flipping than the tax should target short term investors.
  • | 20 Mar 2017, 08:49 PM Agree 0
    We all have two views... it seems... personal greed and concern for the collective..........
    It's interesting how opinions fluctuate with personal gain
  • elsie | 20 Mar 2017, 10:16 PM Agree 0
    This is a free country ,,,,and if you have the money to inv
    est and you pay your taxes,,,what is wrong with that,,,,??? We are moving backwards and should be looking forward,,,,,investing,,,,creates building,,,,jobs,,,,,mortgages,,,big money spending at Home Depot roofers, kitchen people, bath purchasing ,and on and on ,,,lets face it,,,,,and it also creates rentals for people who need them ....take one purchase like this and see the whirlwind of money that is moved around for our economy
    The government is willing to not have a 50 percent capital gain that they did not work for ???? How stupid is this.....how are they going to replace all this money, as well as all the millions they are collecting on land transfer tax
    Lets get a plan our there that will help first timers instead,,,,like first time buyers grants from the government,,,,,and something that makes sense like this

    The investors have to pay land transfer tax, hst, and lawyers fees,,,,,so they are generating the economy,,,,,,lets get these politicians out there to boost the economy ,,,,,,not destroy it

    Properties that are bought and fixed up and flipped are a great asset to any neighbourhood ,,,,,so why would you stop this,,,,??????


  • Joseph Norkus | 20 Mar 2017, 11:39 PM Agree 0
    There are many investors and builders that are buying and selling properties after they have been renovated. They call them their personal residence but in fact it is not. They use either their own names, names of a spouse, relatives or close friends to hide the fact they are making a lot of money buying and selling and avoiding capital gains tax on the whole profit. The government is blatantly ignoring what is going on with this speculation and the rest of us are paying the bill.
  • Frank G | 20 Mar 2017, 11:51 PM Agree 0
    Mozart
    Best idea I have seen to curb speculative buying. That and a 15% tax on foreign buyers would do it.
  • Flipping4Profit.ca | 21 Mar 2017, 06:56 AM Agree 0
    Taxes are not the best strategy instead of denying the real issues. Province of Ontario and City of Toronto raking in lot of money due to land transfer taxes which shall be reinvested in affordable rental housing in GTA. Toronto is the mecca for immigrants - home to 2.8 million already, there are 100,000 new citizens flocking to Toronto each year. The key elements to the rising home prices are historically low interest rates, the unemployment rate, consumer confidence and a short supply. There is currently a significant shortage in terms of newly built detached homes in the GTA, with less than 1500 available on the market. Ten years ago there were over 18,000 houses of this kind available.
  • WB | 21 Mar 2017, 01:46 PM Agree 0
    This is just such a bad idea it begs a reply! It will not in my opinion slow the run away prices in Toronto but it will surely penalize every hard working average investor out there. After sacrificing for decades to own a rental property purchased with after tax money it is just wrong to further tax the potential gain. There should be further exemptions from capital gains not increases. This will stimulate the economy and encourage more sales/listings of this type of property and increase supply. There is a shortage of homes available coupled with low interest rates fueling the high demand in Toronto. Please remember there is a lot more to Ontario than the GTA. Other areas are suffering and need the stimulation.
  • Charles | 21 Mar 2017, 05:47 PM Agree 0
    Just like with so much else, Canadians wine wine wine, and tax tax tax! No sense in letting an open market dictate! People are always so jealous that someone actually makes a profit. Canada tries at every step to squash the entrepreneurial spirit.
  • Ron | 22 Mar 2017, 02:02 PM Agree 0
    The Governments are unable to implement any housing control especially when housing shortages appear. The one thing that will get pricing under control is inventory and as long as we have a shortage of trades we will continue to see huge price increases. Train more trades. A balance market will control the price. Remember it was the mid 80s Ontario Provincial Govt./ Bureaucratic wheel that had the foresight to close the Tech Wings in our Hi Schools & we expect them to correct this. We are deep doodoo. Sherlock. Just my opinion!
  • | 25 Mar 2017, 07:23 AM Agree 0
    Over 50% tax on anything is criminal.
  • Lysanne Brault, Broker, Ottawa | 25 Mar 2017, 09:10 AM Agree 0
    Increasing the Capital gain tax on investment properties accross the board would be likely being about a shortage of affordable rental housing for students, low income families, people in transition. The small investor is an important part of the mosaic of supply offer. The issue of foreign investment in Real Estate that makes property value artificially inflated is one that has to dealt with at the demand side: land transfer tax, capital gain tax increase only for foreigners or others means, a bit like we used to and still should protect agricultural land from foreign investment. . My two cents.
  • Fern | 26 Mar 2017, 01:57 PM Agree 0
    I agree. It should not address landlords, especially the small investors, who are helping make rental units available on the market. If people get turned off investing into rental units, the supply will dwindle and a shortage will ensue which will not make it more affordable or available. Don't discourage Canadians build their retirement. Speculators and foreign investors, that's another matter and creates an artificial market that should be addressed with rules and taxes.
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