COVID and the housing market

[GreyGhost]

The friend of a neighbour sold their place and is planning to rent for a year or so. They hope to take advantage of a market crash.

Dangerous game. Hopefully they have the proceeds in the market and stocks don't track real estate prices. The last person I know that did that sold in a 5000 sq ft in North york in ~2006 for 1.1. Probably worth something like 4 now and the dip never happened.

 

[Evoex]

Dangerous game. Hopefully they have the proceeds in the market and stocks don't track real estate prices. The last person I know that did that sold in a 5000 sq ft in North york in ~2006 for 1.1. Probably worth something like 4 now and the dip never happened.

it can't sustain it's current trajectory to be sure.

 

[GreyGhost]

it can't sustain it's current trajectory to be sure.

I entirely agree with that over the long-term (except for toronto proper where I expect detached to climb to the moon). The problem with any market is trying to time it. Lots of people can make money regardless of the vessel they choose to use. I know of very very few (maybe none?) that can consistently time any market. If someone had that ability, it's as good as the ability to print winning lottery tickets.

 

[Mad Mike]

No it isn’t you’re wrong again. I’m forced to sell off assets or valuate them and then pay taxes on them to leave the country even if I don’t want to sell them. You don’t understand the departure tax at all you should read the links I gave you

The only thing I found difficult to deal with is rrsp holdings. Most people don’t leave on a moments notice, so you can plan.

both times I left Canada I kept my real estate, all I recall doing was filing income tax in Canada on based on the property rents and expenses.

I did need to cash out rrsp, however that was planned, I set my departure date for Jan 10, I cashed in the rrsp before that, I got dinged some, but since my net income our the year was zero, I wasn’t murdered by the tax man.

I did eventually sell some property, RevCan tried to ream me on taxes, I got it sorted so I only paid capital gains from the day I left. They initially argued that I had to deem disposition at the time I left however they reversed that position after a bit of a fight.

 

[Superveloce]

The only thing I found difficult to deal with is rrsp holdings. Most people don’t leave on a moments notice, so you can plan.

both times I left Canada I kept my real estate, all I recall doing was filing income tax in Canada on based on the property rents and expenses.

I did need to cash out rrsp, however that was planned, I set my departure date for Jan 10, I cashed in the rrsp before that, I got dinged some, but since my net income our the year was zero, I wasn’t murdered by the tax man.

I did eventually sell some property, RevCan tried to ream me on taxes, I got it sorted so I only paid capital gains from the day I left. They initially argued that I had to deem disposition at the time I left however they reversed that position after a bit of a fight.

i’m talking about leaving permanently and giving up your Canadian citizenship not just going to live overseas for a few months or years.

 

[Mad Mike]

No it isn’t you’re wrong again. I’m forced to sell off assets or valuate them and then pay taxes on them to leave the country even if I don’t want to sell them. You don’t understand the departure tax at all you should read the links I gave you

The only thing I found difficult to deal with is rrsp holdings. Most people don’t leave on a moments notice, so you can plan.

both times I left Canada I kept my real estate, all I recall doing was filing income tax in Canada on based on the property rents and expenses.

I did need to cash out rrsp, however that was planned, I set my departure date for Jan 10, I cashed in the rrsp before that, I got dinged some, but since my net income our the year was zero, I wasn’t murdered by the tax man.

I did eventually sell some property, RevCan tried to ream me on taxes, I got it sorted so I only paid capital gains from the day I left. They initially argued that I had to deem disposition at the time I left however they reversed that position after a bit of a fight.

i’m talking about leaving permanently and giving up your Canadian citizenship not just going to live overseas for a few months or years.

I never planned to give up citizenship, I didnt plan on returning on either occasion. I did give up residency for tax purposes, so all the exit stuff had to be dealt with.

I returned both times after being recruited by Canadian companies. Was never the plan. I can leave any time, my stuff is now organized so I can leave without paying a dime.

 

[Baggsy]

Even Conrad Black manged to leave without paying, and Chrétien didn't like him at the time.

 

[nobbie48]

Dangerous game. Hopefully they have the proceeds in the market and stocks don't track real estate prices. The last person I know that did that sold in a 5000 sq ft in North york in ~2006 for 1.1. Probably worth something like 4 now and the dip never happened.

I worked with a guy 40 years ago and it was his dream to build his own house. He found a farmer that would sell him and acre and then sold his place in Oshawa. Then he found out the province wouldn't let the farmer detach the small parcel.

Prices on his street had gone up 15% so a friend let him live free in his basement for a year to save the difference. By then the prices were up 25%.

 

[Superveloce]

The only thing I found difficult to deal with is rrsp holdings. Most people don’t leave on a moments notice, so you can plan.

both times I left Canada I kept my real estate, all I recall doing was filing income tax in Canada on based on the property rents and expenses.

I did need to cash out rrsp, however that was planned, I set my departure date for Jan 10, I cashed in the rrsp before that, I got dinged some, but since my net income our the year was zero, I wasn’t murdered by the tax man.

I did eventually sell some property, RevCan tried to ream me on taxes, I got it sorted so I only paid capital gains from the day I left. They initially argued that I had to deem disposition at the time I left however they reversed that position after a bit of a fight.

I never planned to give up citizenship, I didnt plan on returning on either occasion. I did give up residency for tax purposes, so all the exit stuff had to be dealt with.

I returned both times after being recruited by Canadian companies. Was never the plan. I can leave any time, my stuff is now organized so I can leave without paying a dime.

for the 100th time. Giving up citizenship requires the departure tax. End of story

 

[Superveloce]

Even Conrad Black manged to leave without paying, and Chrétien didn't like him at the time.

And you know this because you are his accountant?

 

[Mad Mike]

for the 100th time. Giving up citizenship requires the departure tax. End of story

Renouncing your Canadian Citizenship is not required to leave Canada, it may be a requirement of some countries to gain their citizenship -- an any event, renouncing citizenship is not the trigger for tax, the trigger is becoming a non-resident of Canada for tax purposes.

The Departure Tax itself is not specifically a tax, it's simply what they call the trigger for Capital Gains taxes that become due or calculated at the time of your departure. It's not an additional or incremental tax, Rev Can wants to be sure you pay your taxes before you depart (difficult to collect once you are gone). There is generally no Capital Gain on your personal possessions (furniture, heavy equipment, cars, powertoys, planes -- these are typically depreciating assets which would not be subject to Capital Gains.) unless they are appreciating assets valued above $10K (car/MC/Gun/Stamp collections, gold and silver, expensive artworks etc.)

When you become a non resident, the CRA requires certain assets to be disposed of on or before the day you leave. If you dispose (sell) your property before hand, just report the capital gain as usual. If you keep the assets, it triggers a deemed disposition (meaning you sold the property at fair market value and then immediately bought it back, any capital gain is recorded at that moment and taxes are due on that gain.

For the average Joe this isn't a big deal, equity in - real estate, businesses, RRSPs, life insurance, and pensions are exempt from deemed disposition so the tax on these is deferred till the time of real disposition -- no different than if you stayed in Canada. They are still deemed disposed at your departure as the value of those assets needs to be set for future tax calculation purposes.

The killer is equities - stocks and bonds. If you have a gain on these investments, the gain becomes immediately taxable on the day you leave, these taxes are not deferred. Again, not an incremental tax, just a trigger to pay the tax on your gains so RevCan can get their taste.

What does this all mean? Not a whole lot to most people. If you have a ****-ton of capital gains in stocks and bonds, you will have to cough up cash and settle with the taxman. Other than that your tax treatment with respect to 'Departure Tax' will mean nothing to you as payment is deferred interest free until you would normally trigger capital gains taxes -- the day you sell.

 

[crankcall]

I worked with a guy 40 years ago and it was his dream to build his own house. He found a farmer that would sell him and acre and then sold his place in Oshawa. Then he found out the province wouldn't let the farmer detach the small parcel.

Prices on his street had gone up 15% so a friend let him live free in his basement for a year to save the difference. By then the prices were up 25%.

depending on your area in Ontario , the various gov'ts put a stop to that business for years. Every farmer was splitting off lots on the road and doing ok. Then they moved it to 5 acres minimum, then it had to be sold do a son/daughter . Every farmer that had a kid , got a lot, waited 24 months and then flipped it anyway .
My mom took a 6acres parcel and my uncle took a 9 acre lot off the front of our family farm. Turned out be be a decent investment, wish I got in.

Now if you have enough money behind you ie: developers.... you can turn almost any farm into a subdivision.

 

[crankcall]

it can't sustain it's current trajectory to be sure.

I told myself this in 1975 ....

 

[Baggsy]

And you know this because you are his accountant?

Nah, read it at the time, in one of those left-wing rags we like to call newspapers.

 

[GreyGhost]

depending on your area in Ontario , the various gov'ts put a stop to that business for years. Every farmer was splitting off lots on the road and doing ok. Then they moved it to 5 acres minimum, then it had to be sold do a son/daughter . Every farmer that had a kid , got a lot, waited 24 months and then flipped it anyway .
My mom took a 6acres parcel and my uncle took a 9 acre lot off the front of our family farm. Turned out be be a decent investment, wish I got in.

Now if you have enough money behind you ie: developers.... you can turn almost any farm into a subdivision.

Family friends are selling their farm east of the GTA. They had spun off five lots over the years and the municipality says that's it. The remaining 200 acres can't be split. They are looking for close to 5M. I doubt an individual will buy it as by the time they get a house constructed that looks like it belongs, they will be at least a few million more (old farmhouse on site is ok but for 5M+ you want something special). So the farmers can't subdivide it but I expect whoever buys it will have some money and experience behind them and bang out a few hundred lots.

 

[nobbie48]

depending on your area in Ontario , the various gov'ts put a stop to that business for years. Every farmer was splitting off lots on the road and doing ok. Then they moved it to 5 acres minimum, then it had to be sold do a son/daughter . Every farmer that had a kid , got a lot, waited 24 months and then flipped it anyway .
My mom took a 6acres parcel and my uncle took a 9 acre lot off the front of our family farm. Turned out be be a decent investment, wish I got in.

Now if you have enough money behind you ie: developers.... you can turn almost any farm into a subdivision.

Oh no sir, You can't develop Green Space.

Due to family connections a buddy was a little party and there were a number of developers there. He commented that they must be having problems getting building sites. They just chuckled.

One can't build on green space space but if you have enough of a different type of green you can get green space rezoned to light green.

And the beat goes on, la de da de da...

 

[GreyGhost]

Oh no sir, You can't develop Green Space.

Due to family connections a buddy was a little party and there were a number of developers there. He commented that they must be having problems getting building sites. They just chuckled.

One can't build on green space space but if you have enough of a different type of green you can get green space rezoned to light green.

And the beat goes on, la de da de da...

Yup. A big development in Richmond Hill on green space was allowed by locking up green space out by lindsay somewhere. Could deal for you when you can trade land worth 50K an acre for land worth 2M an acre.

Some of the MZO's are ending up with stormwater ponds in environmentally protected lands. I don't know enough to know if that is just fishy or if that is a nightmare for the species that were supposed to be protected.

 

[GreyGhost]

I saw another interesting mess caused by the crazy market. A rural house was listed in January 2021 for 849K. Sold conditional (I don't know for how much). The interesting thing I hadn't seen before was the condition was the seller had to find a suitable house to buy (backwards from the normal situation where you are waiting for the buyers house to sell). Seller got outbid on a few houses and terminated the deal at the end of February. Relisted for 899K this week. wtf. So the buyer was tied up thinking they had a house for over a month while the market continued to reach for the sky and then got their deposit back and told good luck. I have no idea if the seller has found another house or whether they will play the same game again and keep someone on the hook while they search.

 

[backmarkerducati]

for the 100th time. Giving up citizenship requires the departure tax. End of story

People here are giving you very good advice based on having actually done some of this stuff... not just "looked into it" or heard second hand. As for "giving up citizenship", well only you can decide what that is worth to you (sort of ego vs $$$$s) and it is likely not the best decision when it comes your money, but only you can weigh that. There are also things pointed out that you can do right now to prep for your big leave and lesson the impact if it is a real thing.

Just make sure this is not all an invalid excuse for not leaving.... well I can't leave because of XYZ, when X and Z are not true reality and Y will not be as bad as you think if you make the right moves. I have seen this one over and over from many, many people....

 

[Mad Mike]

Yup. A big development in Richmond Hill on green space was allowed by locking up green space out by lindsay somewhere. Could deal for you when you can trade land worth 50K an acre for land worth 2M an acre.

Some of the MZO's are ending up with stormwater ponds in environmentally protected lands. I don't know enough to know if that is just fishy or if that is a nightmare for the species that were supposed to be protected.

I looked at a number of MZOs, all that I found were on lands the previous govt let environmental groups protect without environmental assessments. If there was a rain puddle in Southern Ontario, they protected it.

To me it appears MZOs that have been issued are simply rolling back restrictions on lands that should have never been protected in the first place.

Sometimes you can put the genie back in the bottle.