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Did You Know?

The BC provincial government made changes to the Strata Property Act (Act) that require all strata properties with more than four units to have a common property depreciation report completed by December 13, 2013.

 

The depreciation report is to provide estimates for "the repair and replacement costs for major items in the strata corporation and the expected life of those items."

What does this mean to you as a condo or townhouse owner or buyer or seller?  "Pay Me Now or Pay Me Later". 

The strata corporation can then use that information to assist it in determining the appropriate amount for the annual contribution to its contingency reserve fund.   People can better see what future costs will occur and budget accordingly whether living in or determining the value of a strata unit.  A value can be viewed as higher where a complex has a sizeable contingency fund AND work performed on schedule.  A large contingency fund with a big shopping list of deferred work can be misleading.  This is where reviewing a depreciation work shows its value.    

An ounce of prevention is worth a pound of cure. 

Pay less with monthly installments to a fund for timely maintenance or pay more fixing problems caused by neglection or delays.  Is that townhome or condo with the lower strata fees REALLY cheaper or is there a special assessment around the corner or loss of market value in the building when problems come to light?

Would you buy a resale car without an independent inspection by a qualified mechanic?

Some people would.  But likely at a heavily discounted price.  Other people would even consider making an offer.  The same thing I see with homebuyers.  

 

For more information on depreciation reports, visit www.housing.gov.bc.ca/strata/regs 

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JUST REDUCED from $499,800 to $474,800 for this 3 bedroom 2 FULL bathroom townhouse in Quilchena Park Estates, West Richmond.  

 

What makes this home rather special is that it has a ground entry MASTER Bedroom and two more bedrooms upstairs.  A suitable floor plan for those with a teenager or two that what some separation from the parents, or for the person not wanting or able to climb stairs everyday to go to bed.  

 

1,611 sq.ft. makes for a reasonable size and coupled with being an end unit with 2 private patio areas, one for sun lovers while the other helps provide an escape from the heat, there are more nice features to enjoy such as 

  • a wood burning fireplace (for good old fashioned marshmellow toasting on rainy days)
  • a storage shed in the carport (a place for your bikes and tools)
  • an upstairs landing for use as a den area
  • laundry room next to the kitchen's eating area (not a stacking set up squeezed in a closet)
  • an eating area for informal and a dining room for more formal meals
  • close to public transit, parks, and the west side dyke (taking the dog for a walk is handy)

See this 3 bedroom and 2 bathroom townhome in Quilchena by calling Bill de Mooy today. 

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A West Richmond (Quichena Park Estates) townhouse with 3 bedrooms and 2 full bathrooms.  Master on Ground floor.  Have a look at #42-3900 Moresby Drive.  2:00 - 4:00 pm. 

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Diane Francis

Taxpayers also victims of ‘hot money’ behind Canada’s condo bubbles

Diane Francis May 4, 2012 – 2:38 PM ET | Last Updated: May 4, 2012 3:01 PM ET

National Post

National Post

There are three times more condo high-rises being built in Toronto than in New York City and seven times’ more than in Chicago.

The condo bubbles in Toronto and Vancouver are caused by foreign speculation and are making housing unaffordable and creating financial risk for the country in terms of government-insured mortgages. But there’s another issue of vital concern to taxpayers.

There are three times more condo high-rises being built in Toronto than in New York City and seven times’ more than in Chicago. This boom is not the market at work, but is manipulation by “hot money” from abroad.

“I have come across something that I find astonishing, and which amounts to systemic tax fraud by investors, mostly foreign, on a massive scale,” wrote an investor involved in the industry.

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He explained how it works:

1. Foreigners sign an agreement of purchase for a condo unit, or for 50 at a time, and put down a 5% deposit. This buys a right to buy the unit in future at a fixed price. In financial markets, this is known as a derivative.

2. Many developers include in the agreement of purchase the right to “assign” this right to buy at a fixed price. In financial markets, this is called creating a futures market. This assignment of a right to buy at a fixed price turns buyers into speculators (unless they want to move in or rent out the unit) who are set up to flip the units for a profit as prices are pushed upwards.

The Australians were victims of the same shenanigans and shut it down and now Canada must too

3. Some developers, and intermediaries, are in the business of helping speculators flip their rights and pocket a fee for doing so. For instance, Mr. X from Asia pays $15,000 for the right to buy a $300,000 condo, then, when the price of similar units rise to $400,000, he can assign the right, get his deposit back and make the $100,000 difference. There is a frenzy of this speculation going on which makes prices escalate so rights can be bought and resold over and over again before a building is completed.

4. The paperwork for these agreements is kept in-house and my source said one intermediary told him that there are no T-5s issued to the speculator or to the Canada Revenue Agency, something that stock and futures market intermediaries must do so that taxes can be paid on the $100,000 trading profits. Instead, the profits vanish, possibly along with the paperwork, and taxes paid will be by the end user if they buy, rent out the unit and make a capital gain down the road.

“[Condo] brokers tell me I can flip my assignment and pay no tax and there is no paper trail. They say we do it all day long,” said the investor who asked to remain anonymous.

Under CRA rules, foreigners making Canadian-sourced income are fully taxable by the federal and provincial governments. In Ontario or BC, the total tax bill would be 46% or $46,000 in tax for $100,000 profit.

The unpaid taxes could be staggering, said a real estate agent. In Toronto, 20,000 condo units have been sold each year for the past five years. Let’s assume one-quarter were sold to foreign speculators who flipped the assignment and made $100,000 profit without paying taxes. Their Canadian-sourced income would total $500 million a year, and they would owe 46% of that in taxes or $230 million.

Most condo developers may not be involved in this game, but a few – notably developers with Asian and Middle East owners or backers and buildings located in downtown areas – certainly are.

So this is what must happen. As I argued last week, Ottawa must forbid the purchase by foreigners of any residences in Canada as Australia did in 2010 after foreign speculation and tax evasion damaged its housing market.

The Canada Revenue Agency should send in auditors to the lawyers and intermediaries and developers who have the lists of those who signed agreements of purchase. If they did not close on those deals, and the deals sold for more money than the agreements, then auditors must work backwards and assess income taxes.

The Ontario and other securities commissions should get involved because what is happening, if these reports hold true, is that an unregulated financial futures market is being created using and abusing Canadian residential properties as vehicles. Likewise, the federal and provincial government tax collectors should get involved.

If speculators who owe taxes are long gone – many of them are offshore funds that buy out entire buildings then sell units abroad – then the intermediaries and developers should pay the taxes.

This frenzy is forcing prices upwards. Meanwhile, condos in the suburbs often take months to sell because buyers want them as homes, not as convenient money machines to flip.

The investor who described the tax shenanigans took his information to several politicians and called the CRA hotline, but got nowhere. Tax officials said they needed specific names and addresses to investigate, but this is beyond a simple case. This requires a task force to look into this.

A realtor said ordinary foreigners are buying from “funds” that are bundling units in Toronto and promising huge returns.

“Foreigners have been lured into so-called investment products, property units, with promises of high yields,” wrote this real estate professional. “They are often small investors who go to property seminars overseas. Many of these buildings do not allow Canadians to buy these units, obviously because of the tax implications.”

The Australians were victims of the same shenanigans and shut it down and now Canada must too.

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