Blog

Condo Investments & The CRA: Things To Know

Submitted by Sam on

So, you just sold your condo, you made a hefty profit and know you have to pay your taxes.

The bill might be more than you think.

If it’s your principal residence, there’s no tax, as long as you have the paperwork to prove it. The Canada Revenue Agency is taking a closer look at the condominium sector in what some in the industry have dubbed the “Condo Project" and as a result, you might want to think very carefully about how you record that housing sale you made in 2012.

Even if you own up to it being an investment property, you may not be allowed the capital gains tax break and that means a bigger hunk of your profit going to Ottawa.

Let’s say your gain is $100,000 and your tax bracket is 46%. Capital gains are taxed at 50% so you would only owe $23,000 on that profit.

Not so fast! If the CRA says you are in the business of flipping condominiums, get ready to pay based on the gain being counted as income for a tax bill of twice the amount at $46,000. And, it gets worse. You could also face a fine of up to 50% of the tax owed for making a false disclosure.

Joint Real Estate Ventures: Things To Consider

Submitted by Mase on

If you invest in real estate with partners, there are important things you need to discuss in advance. This will protect you later from costly legal or accounting fees.

Here are some of the main things to consider:

Who is going on title?

If it is your first investment, I suggest that all partners be on title to the property, in their personal names, as opposed to a corporation. A lender will want all the partners to sign personally for the mortgage, so there is little advantage to spending the extra money to incorporate, with additional bookkeeping fees and tax returns. You can always get insurance to protect against claims related to liability.

How are decisions going to be made?

Key decisions include who to accept as a tenant and which renovations to undertake. Most of them should have majority approval, but in some cases, you may require decisions to be unanimous, to protect all of the partners.

Who signs the cheques?

True Costs Of Home Ownership

Submitted by Mase on

 

Roughly 40 per cent of Canadians planning to enter the housing market over the next two years will be first-time homebuyers, according to a recent RBC poll.

Their dilemma: Should we buy now or are we better off waiting and trying to muster up a larger down payment?

It’s a tough question. To many people, the psychological benefits of buying are almost impossible to overcome. For them, owning a home isn’t just about dollars and cents; it’s about freedom and independence.

Plus, owning a property gives them the secure sense that, if nothing else, they have a solid asset to fall back on if something goes awry.

However, home ownership is also a choice that ties up tens of thousands of dollars and often carries a set of unexpected costs, particularly for first-time buyers. Ask anybody who has had to fix a roof and rip up an entire driveway in the same year.

Nonetheless, although it varies widely from city to city, the upfront cost of buying a home is seemingly only a little more than renting in some areas of the country – except that it isn’t.

Pages