Struggling financially and getting frustrated? | Page 17 | GTAMotorcycle.com

Struggling financially and getting frustrated?

Just tossing it out there but...maybe... First home no gains, after that.

50% at less than 1 year.
30% between 1 and 2 years.
15% between 2 and 3 years.
7% between 3 and 4 years.
0% after 4 years.

The fine details can easily change. But the idea, flippers need to be in and out fast. Everyone else not so much, BUT you may be in a jam and have to sell. Well if you made 100K on price and are selling (must sell) between 1 and 2 years you walk away with 70K, not too bad IMO.
 
mimico_polak said:
Thats a tough question and I’m not smart enough to answer.

to me it makes sense to tax a real estate sale for capital gain if someone has lived in the home for less than 3-5 years. Anything over that number of years and you’re tax free. When you see a pattern of house flipping you go to town and audit.

Have seen a guy on our street buy, rent out, rebuild, sell for 500k more after 2 years and then tell me he’s got 3 other properties in New Toronto.

he was smart though. He was the real estate agent, mortgage broker, general contractor and did the whole thing on his own with only subs. I wish I had that money making focused brain!
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I would just set a lifetime limit. It cleans up a lot of the mess. If you sell a business, there is an exemption limit of I believe around 800K that is automatically indexed to inflation. Use the same model for houses. If you make more than that in your life, you pay tax on anything over the threshold, simple. That eliminates any arguments over timing, length of ownership, number of flips etc.
 
GreyGhost said:
I would just set a lifetime limit. It cleans up a lot of the mess. If you sell a business, there is an exemption limit of I believe around 800K that is automatically indexed to inflation. Use the same model for houses. If you make more than that in your life, you pay tax on anything over the threshold, simple. That eliminates any arguments over timing, length of ownership, number of flips etc.
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Seems like the cleanest way to do it. Only exemption I would make is if you lived in the same house for 20+ years....then enjoy all that free capital gain. You earned it and you're obviously not a flipper.

My previous realtor made most of his money on flips, selling houses was a hobby (and he's one of the top ones in Mississauga area). One of his best money makers....short term interest only loans to flippers/contractors. 6-12 months interest only payments. You don't pay? He keeps the house.

I remember his comment....'people are stupid and they don't check, buy the cheapest tiles, granites, laminate floor, and paint....they see fresh things and don't care to look any deeper.'

Had houses for his cousins/nephews/nieces/parents all over the GTA...he buys, they live, he sells, he keeps and they had a free place to stay for X years. Everybody wins...except actual home buyers who want a house for their family.
 
Jesus, people want more taxes??

It it bothers some then maybe they should take the risk and also buy and flip for profit.
Who do you think is more efficient at driving the economy? Someone making a good living and spending or the tax collectors.


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Allistonfjr said:
Jesus, people want more taxes??

It it bothers some then maybe they should take the risk and also buy and flip for profit.
Who do you think is more efficient at driving the economy? Someone making a good living and spending or the tax collectors.


Sent from my iPhone using Tapatalk
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If you operate it as a business, should be taxed accordingly. My argument is people are flipping houses, driving up the prices for normal people increasing it for the rest, and then not paying taxes on their profit.

I have no issue with flippers doing what they do, so long as they play within the rules and pay tax. Obviously that's optimistic, and people will NOT willing pay tax if they don't have to....so someone has to step in.

Normal people would not be affected by a capital gains tax if properly implemented.
 
mimico_polak said:
If you operate it as a business, should be taxed accordingly. My argument is people are flipping houses, driving up the prices for normal people increasing it for the rest, and then not paying taxes on their profit.

I have no issue with flippers doing what they do, so long as they play within the rules and pay tax. Obviously that's optimistic, and people will NOT willing pay tax if they don't have to....so someone has to step in.

Normal people would not be affected by a capital gains tax if properly implemented.
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I have an issue with many flippers as in the quest for profit they are literally ruining the housing stock. They cover up major issues because it is cheaper, but look, shiny granite (crap like 2' of romex at panel and boxes tied to cloth wiring in between obviously with buried junctions, new tile over leaky tile, etc). Whoever buys those turds will end up gutting them to cleanup all of the intentionally buried problems. When people are buying a house to live in, in general they try to fix things properly and pass a better house along to the next person. If it's a business, it should be taxed as any other business (and if they get caught intentionally hiding issues, they should be prosecuted).
 
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GreyGhost said:
I have an issue with many flippers as in the quest for profit they are literally ruining the housing stock. They cover up major issues because it is cheaper, but look, shiny granite (crap like 2' of romex at panel and boxes tied to cloth wiring in between obviously with buried junctions, new tile over leaky tile, etc). Whoever buys those turds will end up gutting them to cleanup all of the intentionally buried problems. When people are buying a house to live in, in general they try to fix things properly and pass a better house along to the next person. If it's a business, it should be taxed as any other business (and if they get caught intentionally hiding issues, they should be prosecuted).
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Oh, you've met my next door neighbour. The one that bought the flipper rehab job. AKA money pit. It looked nice in the beginning with laminate flooring in the rec room........................then it rained, flooded and warped. Interlock sank, tiles came loose etc. Tens of thousand in fixups and no Tarion assistance.

Here's another part of the scam. Crack gets sold for cash and the dealer has to launder it.

He buys a fixer upper and pays the trades cash to rehab it. The government gets screwed on HST and income tax (Actually it's the taxpayer getting screwed). Sell at a profit and it's clean money to buy the Lambo.

If the dealer can find a private sale even better. Pay the going amount but make a deal where part of the price is in cash and the transfer tax is less. It isn't hard to make up a story why. Even more money gets laundered. It wouldn't be hard to wash a couple of hundred thou a year.
 
GreyGhost said:
I have an issue with many flippers as in the quest for profit they are literally ruining the housing stock. They cover up major issues because it is cheaper, but look, shiny granite (crap like 2' of romex at panel and boxes tied to cloth wiring in between obviously with buried junctions, new tile over leaky tile, etc). Whoever buys those turds will end up gutting them to cleanup all of the intentionally buried problems. When people are buying a house to live in, in general they try to fix things properly and pass a better house along to the next person. If it's a business, it should be taxed as any other business (and if they get caught intentionally hiding issues, they should be prosecuted).
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The rich only get richer (it seems) by screwing others over. This is a sad realization I have come to because I grew up thinking working hard and playing fair would accumulate wealth

Oh well :(

EXAMPLE... Kasey Wong (a-hole landlord), Donald Trump etc

Work example... They tell you they will hire you full-time but then you find out it's a convoluted scheme where you are actually contracted to the company. Why? Among other things less benefits, can't get enrolled in the employee savings plan etc. Their answer? Oh we will see how you do after the contract ends. Guess what? they won't renew the contract or you took them at their word so didn't start looking for other positions while working so now it's either accept another crap contract or end up homeless :)

So full-time actually just meant 40 hrs @ the lowest possible wage until you become too smart for them. Eventually they will want to kick you out because you have gotten too smart and they want to take advantage of the next group of newbies.....

^^ Has happened to countless friends when we were starting out because we didn't know better

Contract work should pay above a similar salary position to compensate for lack of benefits...


I HATE THIS MESSED UP SYSTEM
But if you cant beat them do you join then? Big moral dilemma for me. I already feel bad for making decent returns on the stock market this year, 200k people died for this money ???
 
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In general taxes can serve a couple bigger purposes, revenue for the government and behavioural modification. The second point is not always well understood and sometimes results in unintended consequences. My absurd example: the government decides they do not like red cars, so they add a 100% sales tax to just red cars. Even if the buyer really wants a red car most will decide on another colour, but the automakers may start making cars in orange that looks pretty red. (one unintended consequence). After market guys will make red wraps (second unintended...). Regardless the consumer and the seller will change behaviour to avoid paying the tax. At the same time the taxes also need to be fair, taxing red Fords but not red GMs is a problem. Sin taxes are another example of trying to modify behaviour with taxation.

So we are taxing real legit developers that buy and rebuild houses but not Joeblow private flipper, even though they are both in the same business and competing with each other.

The behaviour modification in this case is to discourage private flipping by making it less profitable. As it is now the we are actually encouraging it by taxing a business and not private as the unintended behaviour modification encourages under the table private flipping.

Instead of adding more taxes to things like land transfer that hurt everyone or arbitrary limits on CMHC.... we can address other aspects that are driving prices crazy and causing bidding wars. Prevent a lot of money laundering. Take some serious pressure off the market without causing a collapse.
 
backmarkerducati said:
In general taxes can serve a couple bigger purposes, revenue for the government and behavioural modification. The second point is not always well understood and sometimes results in unintended consequences. My absurd example: the government decides they do not like red cars, so they add a 100% sales tax to just red cars. Even if the buyer really wants a red car most will decide on another colour, but the automakers may start making cars in orange that looks pretty red. (one unintended consequence). After market guys will make red wraps (second unintended...). Regardless the consumer and the seller will change behaviour to avoid paying the tax. At the same time the taxes also need to be fair, taxing red Fords but not red GMs is a problem. Sin taxes are another example of trying to modify behaviour with taxation.

So we are taxing real legit developers that buy and rebuild houses but not Joeblow private flipper, even though they are both in the same business and competing with each other.

The behaviour modification in this case is to discourage private flipping by making it less profitable. As it is now the we are actually encouraging it by taxing a business and not private as the unintended behaviour modification encourages under the table private flipping.

Instead of adding more taxes to things like land transfer that hurt everyone or arbitrary limits on CMHC.... we can address other aspects that are driving prices crazy and causing bidding wars. Prevent a lot of money laundering. Take some serious pressure off the market without causing a collapse.
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Another side effect of discouraging flipping is some more affordable houses remain on the market. If you are trying to buy your first house, would you rather buy a house with wallpaper and laminate counter tops or continue to rent for the rest of your life? Somebody needs to pay for the granite and first time buyers are scraping together pennies. The polish can easily push houses beyond their ability to pay (especially when everybody wants a perfectly polished house so if you don't mind something ugly the price can be much better).
 
GreyGhost said:
Another side effect of discouraging flipping is some more affordable houses remain on the market. If you are trying to buy your first house, would you rather buy a house with wallpaper and laminate counter tops or continue to rent for the rest of your life? Somebody needs to pay for the granite and first time buyers are scraping together pennies. The polish can easily push houses beyond their ability to pay (especially when everybody wants a perfectly polished house so if you don't mind something ugly the price can be much better).
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Exactly. I would want a liveable fixer upper and do as much as possible as I can afford it. I get what I want, on my budget to my standards.

However I am good with tools. A genius computer programmer might not be able to drive a nail so needs the work done bothers. He / she doesn't build the same sweat equity. Also unless he / she has friends that can technically advise, a con artist contractor can get in and do a lot of harm to a structure.
 
nobbie48 said:
Exactly. I would want a liveable fixer upper and do as much as possible as I can afford it. I get what I want, on my budget to my standards.

However I am good with tools. A genius computer programmer might not be able to drive a nail so needs the work done bothers. He / she doesn't build the same sweat equity. Also unless he / she has friends that can technically advise, a con artist contractor can get in and do a lot of harm to a structure.
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While an uninformed (or unlucky) homeowner can always get taken by a substandard contractor, the damage is hopefully limited to a specific area of the home (one project screwed up). The genius computer programmer should have enough smarts and money to hire people that will do the job properly.

Most flippers basically have the scammer as the GC and they simultaneously make everything they touch worse than when they started. They then ensure that every screwup (or outright scam) is covered to make it inaccessible for inspection.

The sad reality is there is no disincentive to crappy flips. House A and House B both look the same at the end and attract the same sale price. House A was finished properly at great additional cost, House B is a *&^*&^show. The flipper has no business reputation that will be ruined, a home inspection can't see what was hidden (and often flipping gets worse in hot markets where they can essentially ban all pre-purchase inspections) and I have never heard of one getting their ass sued off for the crap they did (sold as-is, too bad for you). So refinisher A makes a ton less money and can sleep well at night but flipper B is a huge ass and a scourge on society but makes at least twice as much. That also means flipper B can expand their path of destruction as they are working with more capital. That prevents good refinisher A from finding stock that they can refinish profitably.
 
I don't think flipping is a big enough deal to warrant gov't intervention. Anyone here tried a flip? It's not easy and there's no guaranteed profit. Go try and find a property you can rehab at a profit, not easy these days. The only successful flippers I have met are real estate agents, and in their case the profit doesn't usually come from the flip, it comes from cheating sellers out of a fair market price for their homes.

One was caught around the corner from me, the poor sod had some health and employment issues and was swimming in debt, it was sell or face foreclosure. The realtor he called to list the place sensed his despair - she dangled $25K on the spot cash to cover his immediate cash trouble, and bought the house herself for 150K (25%) below FMV without listing it. He was extatic until he found out what happened. I know another gal in Burlington, a realtor, who has clients looking for places in desirable neighbourhoods in Burlington and Oakville. She finds and buys houses 'privately' then tidies them up to her buyer's specs and resells privately at an average $100K profit.

I don't think there are enough flippers to irritate the taxman, there's probably more tax avoided by the average small businessman then a flipper - and the gov't won't touch that with a hundred foot pole.

Are there scammers and lipstick flippers? Sure there are, but I don't imagine three's much of a career doing things that way.
 
Mad Mike said:
I don't think flipping is a big enough deal to warrant gov't intervention. Anyone here tried a flip? It's not easy and there's no guaranteed profit. Go try and find a property you can rehab at a profit, not easy these days. The only successful flippers I have met are real estate agents, and in their case the profit doesn't usually come from the flip, it comes from cheating sellers out of a fair market price for their homes.

One was caught around the corner from me, the poor sod had some health and employment issues and was swimming in debt, it was sell or face foreclosure. The realtor he called to list the place sensed his despair - she dangled $25K on the spot cash to cover his immediate cash trouble, and bought the house herself for 150K (25%) below FMV without listing it. He was extatic until he found out what happened. I know another gal in Burlington, a realtor, who has clients looking for places in desirable neighbourhoods in Burlington and Oakville. She finds and buys houses 'privately' then tidies them up to her buyer's specs and resells privately at an average $100K profit.

I don't think there are enough flippers to irritate the taxman, there's probably more tax avoided by the average small businessman then a flipper - and the gov't won't touch that with a hundred foot pole.

Are there scammers and lipstick flippers? Sure there are, but I don't imagine three's much of a career doing things that way.
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Maybe in general across the GTA but I can tell you that here in Niagara Region, there's a ton of 1950-1960 bungalows that people are buying up in the $400K range then put $100K into reno's and selling them for $600- $700K. It's absolutely big business here! The other housing thing in this region is small time developers buying knock-down houses on double lots and building a couple of $800 - $900K brand new bungalows. This is going on in multiple places all around the region the past two years. I fear it will ultimately bring all the GTA issues I was happy to flee 3 years ago to this region. Over crowding, higher crime rates and an infastructure incapable of handling the sudden population boom ☹
 
It is a huge problem for entry level detached housing in many if not all of the GTA. Maybe not for more expensive homes. Just depends on the market you are looking at.
 
backmarkerducati said:
It is a huge problem for entry level detached housing in many if not all of the GTA. Maybe not for more expensive homes. Just depends on the market you are looking at.
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Happens on more expensive homes too. Throw on some wide baseboards and crown molding and you are 3/4's of the way to "luxury". Hell, I've been in a lot of new build condos and in the vast majority of "luxury" condos, the only difference is tall poplar base (using every scrap they could find with butt joints everywhere) and occasionally crown.
 
Green Meenie said:
Maybe in general across the GTA but I can tell you that here in Niagara Region, there's a ton of 1950-1960 bungalows that people are buying up in the $400K range then put $100K into reno's and selling them for $600- $700K. It's absolutely big business here! The other housing thing in this region is small time developers buying knock-down houses on double lots and building a couple of $800 - $900K brand new bungalows. This is going on in multiple places all around the region the past two years. I fear it will ultimately bring all the GTA issues I was happy to flee 3 years ago to this region. Over crowding, higher crime rates and an infastructure incapable of handling the sudden population boom ☹
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A fixer upper in Hamilton never sees a for sale sign before it's gone.
 
GreyGhost said:
Happens on more expensive homes too. Throw on some wide baseboards and crown molding and you are 3/4's of the way to "luxury". Hell, I've been in a lot of new build condos and in the vast majority of "luxury" condos, the only difference is tall poplar base (using every scrap they could find with butt joints everywhere) and occasionally crown.
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I was doing a repair at a luxury condo and it wasn't going well. An owner came by and wanted to chat but I wasn't in the mood for their self importance. I told them the only difference between their luxury condo and the bargain joint down the street was that theirs had marble tile in the lobby and the other had carpet.

The same builders make them using the same contractors that use the same materials. With that being said we were equally ****** off.
 
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