In any event, I'm in favor of a tax that makes it less attractive for anyone (be it a person or a company, domestic or foreign) to own multiple properties, without being onerous on those who only own the one they live in. What are your thoughts on the idea?
Building new homes to increase supply must be a part of any solution to this housing crisis. But this alone won't solve it. The crisis likely won't subside as long as deep-pocketed investors see the real estate market as a way to make an easy buck.
I think that's a fair position. I don't agree but I understand that too many investors makes purchasing more difficult for home owners.
They however also play an important role in creating supply.
One important element you should consider is how vital investors are for the creation of new homes.
Particularly large condo developments like we see a lot of in Vancouver and Toronto; they can't get built without enough investors buying.
Those developments need about 60% presold to get construction financing and get built; that's not a number feasible by end users alone.
Most end users don't want to wait 3-5 year for the construction of these towers, so investors always make up the required purchasers to get to those construction financing thresholds.
Then when the condos are finished, they become rental supply or get resold to end users (home supply).
Like it or not, investors are vital to the cycle of home supply and rental supply.
It’s not a matter of one type of working being more valuable or admirable than the other. Public sector jobs are funded by taxation on private industry. You can’t have a strong public sector without a strong private sector - not for long, anyway. Increasing public spending through deficits rather than through growth in private industry stores up pain for the future.
If you want quality education, infrastructure, and health care, you should want a strong public sector.
If you want a strong public sector, you should want a strong private economy with high productivity and an attractive investment environment.
This isn’t correct as it suggests if health care was private and you reduced taxes in the amount currently spent on health care and then people spent there own money in the same manner on health care that it would be better for the economy. That isn’t true so it isn’t the public versus private distinction that determines what jobs consume resources and what jobs add resources.
A government could be involved in resource extraction and that would be additive to the economy. They could construct housing and be additive.
The real question is does the job produce surplus value or not.
In any event, I'm in favor of a tax that makes it less attractive for anyone (be it a person or a company, domestic or foreign) to own multiple properties, without being onerous on those who only own the one they live in. What are your thoughts on the idea?
Building new homes to increase supply must be a part of any solution to this housing crisis. But this alone won't solve it. The crisis likely won't subside as long as deep-pocketed investors see the real estate market as a way to make an easy buck.
I'm not seeing how a tax dodge would work in this case. Set it up such that for every property in Canada, tax on it must be paid, or the property is seized.
So you want no rentals? Or less of them? I get that you want to see people stop treating housing as an investment, but I'm not sure that this is a good way to accomplish that. The "flipping" tax is pretty good start to at least try to drive out the speculators.
I find it hilarious that the media is reporting how bad it has been over the past decade, but when you look at the actual graph as of 2020 growth was exactly the same for both sectors. So really it has only been since the private sector shed all of it's jobs that the government has stepped in to fill the employment void left by the crisis.
If people think things are bad for the economy now, imagine how much worse it could be without those jobs and the economic activity that comes with them. I'd rather have someone working for the government, earning money to circulate, than sitting home unemployed.
It's also really not the best stat given that consultants exist. If you fire 10,000 government workers and have a consulting agency replace them, you've created private sector jobs while reducing public sector ones. But you likely haven't saved any money nor are you generating non-government economic growth.
A better stat would be the actual cost of goods and services for the federal government as a % of GDP; basically it excludes transfers, direct payments, defense, interest payments, etc. So it's mainly just the cost of running the federal government. By that metric, right now is pretty low historically:
“Today we are unveiling our most ambitious budget yet,” said Finance Minister Chrystia Freeland. “In it, we are proud to set out a bajillion rillion quillion dollars in spending, which we will use for whatever thing we think you think is important.”
“We’re just throwing the kitchen sink at it at this point,” said Freeland, referring to the party’s efforts to fix Canada and/or get re-elected, and not necessarily in that order. “It’s our last kick at the can, #### it.”
“AI. Youth mental health. Lunch programs. Environmentally friendly mortgages. If you can name it, we’ve got a couple bajillion for it.”
“It’s literally not even real money at this point,” added Canada’s Minister of Finance.
I think that's a fair position. I don't agree but I understand that too many investors makes purchasing more difficult for home owners.
They however also play an important role in creating supply.
One important element you should consider is how vital investors are for the creation of new homes.
Particularly large condo developments like we see a lot of in Vancouver and Toronto; they can't get built without enough investors buying.
Those developments need about 60% presold to get construction financing and get built; that's not a number feasible by end users alone.
Most end users don't want to wait 3-5 year for the construction of these towers, so investors always make up the required purchasers to get to those construction financing thresholds.
Then when the condos are finished, they become rental supply or get resold to end users (home supply).
Like it or not, investors are vital to the cycle of home supply and rental supply.
True.
But there's a distinction between investors buying homes that haven't yet been built, vs buying homes that have already been built. The latter is where we seem to run into problems. How many properties are bought strictly to rent out as airbnbs, or to sit empty while they get flipped for a profit? Unfortunately there's no easy way to pin down a clear number, but what is clear is that investors usually do whatever gets them the greatest amount of profit for the least amount of work.
Nothing is free, bud! I don't need Musk tracking me just so I can read tweet replies. I'm good! Now if I could get everyone good to move on to Bluesky...
I think that ship sailed. There was a small, loud push from many that other services would take over from X amid its turmoil. Ultimately, those services couldn't offer what was needed at the critical time when they could have made in roads and not enough people switched.
Now apathy has most still at X and not moving. They had to strike while the iron was hot and timing wise they weren't able to, unfortunately.
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Well looks like I better kick out my current responsible tenants and Jack the eff out of the rent on my evil rental property. Not only am I paying for the massive mortgage increase, now I need to get back my pound of flesh lost in potential capital gains.
I was hoping to keep the house to possibly sell to my kids one day at a reasonable price so that they might move out of mine...but I guess that's going to be a hell of a fight.
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So you get someone else to pay a mortgage for you, the interest upon which you get to use as a tax deductible, and all the other associated costs you also get to use as tax deductibles, and then years down the line when you sell it and realize a capital gain of more than $250,000 you're going to get taxed on two thirds of the gain more than $250,000, a gain you probably did nothing intrinsically to realize, and... this is making you jack up your tenant's rent because...?
"I could have continued being a nice guy, but now that the government is going to hypothetically tax my as-of-yet entirely unrealized capital gain at some indeterminate point in future I just have to be an ###hole to my tenant; the government made me do it."
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So you get someone else to pay a mortgage for you, the interest upon which you get to use as a tax deductible, and all the other associated costs you also get to use as tax deductibles, and then years down the line when you sell it and realize a capital gain of more than $250,000 you're going to get taxed on two thirds of the gain more than $250,000, a gain you probably did nothing intrinsically to realize, and... this is making you jack up your tenant's rent because...?
"I could have continued being a nice guy, but now that the government is going to hypothetically tax my as-of-yet entirely unrealized capital gain at some indeterminate point in future I just have to be an ###hole
I have capital tied up, and right now after mortgage, insurance, and taxes the place is costing me money out of pocket. Plus maintenance and upkeep is not free...that new roof I had to put on sure wasn't.
So yeah, I either sell it off or I need to generate more from it because I can now expect to lose a portion of my expected gain.
So yeah eff you I'll do what I please. I've done a lot more than nothing to try and own a second property.
__________________ "Some guys like old balls"
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You'll be able to claim the principal residence exemption on some of the years.
For now, anyway.
Yeah unfortunately the increase in value for when we lived there isn't much compared to after.. unless we can just prorate it by time. I guess maybe that's how it would have to be done, kinda hard to get a market value of a condo 20 years ago.
FFfff has it been MORE than 20 years??
__________________ Uncertainty is an uncomfortable position.
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I have capital tied up, and right now after mortgage, insurance, and taxes the place is costing me money out of pocket. Plus maintenance and upkeep is not free...that new roof I had to put on sure wasn't.
All of which can be used as non-capital losses to offset your income, but go on...
Quote:
So yeah, I either sell it off or I need to generate more from it because I can now expect to lose a portion of my expected gain.
Aaaaand now you lost me. It was acceptable for you to take rental losses before, but now it isn't because a larger portion of your expected capital gain will be taxed when you sell the place...?
Quote:
So yeah eff you I'll do what I please.
And the truth comes out. If you'd have written this in the first place I wouldn't have remarked on your post whatsoever. Why blame the government for you doing what you damned well please? It's an excuse, not a reason.
He also says he's going to kick out the current tenants and get new ones in to jack the rent up on. That's a cautionary tale for those hoping for rent increase caps here in Alberta. In other provinces they have them but the landlords just find silly reasons to kick out or not renew current tenants.
I have capital tied up, and right now after mortgage, insurance, and taxes the place is costing me money out of pocket. Plus maintenance and upkeep is not free...that new roof I had to put on sure wasn't.
So yeah, I either sell it off or I need to generate more from it because I can now expect to lose a portion of my expected gain.
So yeah eff you I'll do what I please. I've done a lot more than nothing to try and own a second property.
Could be just me here, and someone set me straight if so, but when I was younger I remember boomers investing into housing and treating it as a long term investment tool, and they were happy to have a renter helping out with the costs, not necessarily trying to break even. Was viewed that paying $150/mth into a mortgage while a renter pays $700 was still an excellent payoff at the end.
Over time, I have seen the mentality change to must break even, and now even must profit every month. I feel this has been a factor on how rents are out of control as well.
I mean, shouldn't an investment actually cost you money? To expect to not have to put cash in monthly/yearly while someone else does and still complain about it.... man....
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Well there was the initial down payment as an outlay, so even in a must be cashflow positive outlook it still is costing $$.
And break even to me is different than just the mortgage, there's taxes, condo fees for condos, utilities if they're not under the tenant's name, etc.
Plus all the repairs and upkeep, unless you have a chunk to set aside for that when you buy a positive cashflow is needed to build up the $ for replacing the roof or hot water tank or whatever.
Most of my properties have been cash flow positive to some degree, but that is partially because of the really low interest rates we had for a long time. They are NOT positive today.
It'd all be part of the total picture when deciding to invest.. if you don't have the positive cash flow and you don't have the initial input to handle the upkeep and you can't cover a negative cashflow from personal income (basically a forced savings plan I see it like) then seems like a recipe for problems.
__________________ Uncertainty is an uncomfortable position.
But certainty is an absurd one.
Could be just me here, and someone set me straight if so, but when I was younger I remember boomers investing into housing and treating it as a long term investment tool, and they were happy to have a renter helping out with the costs, not necessarily trying to break even. Was viewed that paying $150/mth into a mortgage while a renter pays $700 was still an excellent payoff at the end.
Over time, I have seen the mentality change to must break even, and now even must profit every month. I feel this has been a factor on how rents are out of control as well.
I mean, shouldn't an investment actually cost you money? To expect to not have to put cash in monthly/yearly while someone else does and still complain about it.... man....
Yeah, with higher interest rates in the past, being significantly cashflow positive while having a mortgage wasn't really an option. With an 8-10% mortgage, you'd need gross rents to be something like 13-15% just to break even, which was a pretty tall order.
However, if you treated it as a long-term investment, then it was different. You start out maybe cash flow negative in the beginning, but as rents increase and your mortgage payments stay the same, you move into a better position over time and are eventually bringing in surplus money. And then by the end of the mortgage period, you've probably increased your initial down payment investment by 10x over 25 years (assuming modest price appreciation).
I have capital tied up, and right now after mortgage, insurance, and taxes the place is costing me money out of pocket. Plus maintenance and upkeep is not free...that new roof I had to put on sure wasn't.
So yeah, I either sell it off or I need to generate more from it because I can now expect to lose a portion of my expected gain.
So yeah eff you I'll do what I please. I've done a lot more than nothing to try and own a second property.
Couldn’t agree more, the thing people fail to realize is the capital that gets tied up and the risk associated with it. They just think you’re evil and make nothing but money on these poor people renting your house. If it’s so easy to buy investment property’s and make nothing but money, then why don’t these tools crying about them get one of their own?
Its going to be really interesting to see the reaction to this budget in terms of frantic selloffs before June 6? when these changes take effect.
When you look at the reaction to the budget in the media, I don't think its the reaction that the Liberals were expecting, and now the Liberals are desperate for PP to spring the budget trap and announce that he would kill the Capital Gains changes to support the "rich".
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