tax man

CRA Targets Speculators of Vancouver Real Estate

Steve Saretsky -

CRA Takes Aim at Condo Assignments & Foreign Buyers

With prices escalating out of control in recent years, it has attracted a growing herd of speculators, eager to profit on a historical bull market. And profit they did.

Perhaps one of the most lucrative ways to do it is through pre sale condos. The Scheme is a speculator’s dream, allowing buyers to leverage a favourable deposit structure and a rising market to flip the contract at a higher cost before completion.

These flips are incredibly difficult for CRA to track especially if the buyer is overseas. A perfect concoction to make a quick buck and dodge the tax boogeyman.

Feds Take Developers to Court

That dream could be coming to an end.

First reported over at BIV, The federal government is taking the developers behind the Marine Gateway project on Marine Drive and the Residences at West on southeast False Creek to court, probing for information on buyers who flipped their presale contracts before construction was completed to verify compliance with the Income Tax Act.

This could be the first of many shoes to drop. As many Vancouver developments are being flooded with assignments, such as Kensington Gardens, which has seen 16% of units flipped with completion still a year away.

New Banking Rules Target Foreign Buyers

If that wasn’t enough, the CRA was gifted another bullet in the chamber on July 1.
Now all Canadian banks must confirm detailed information on non-resident clients such as name, address, date of birth and taxpayer identification numbers .

The new reporting standard will allow dozens of countries including Canada and China to share information about bank accounts held by, or for the benefit of non-residents, in a system designed to fight global tax evasion.

It’s believed many foreign buyers who don’t principally live in Canada, but claim they do, are evading a 25% capital gains tax on the sale of homes.

The tax man is just warming up. With real estate prices surging nearly 50% over the past two years the feds are ready to cash in.

Join the Monday Newsletter

Every Monday morning you'll receive a short and entertaining round-up of news on the Vancouver & Canadian Real Estate markets.

"*" indicates required fields

The Canadian Economy

Steve Saretsky -

Happy Monday Morning! Over the past several months we’ve been highlighting the marked slowdown in residential building permits, a leading indicator of future supply. This is what happens when the cost of capital doubles, and in some cases, triples. This is a disaster in the making for a federal government...

Steve Saretsky -

Happy Monday Morning! The Bank of Canada moved to the sidelines once again, appeasing premiers in BC & Ontario who publicly pleaded with the BoC last week. It’s no secret these two provinces have the most to lose, their coffers largely built on a highly levered housing market, but we’ll...

Steve Saretsky -

Happy Monday Morning! A few weeks ago we summarized the cabinet shuffle, arguing the replacement of both the housing minister and immigration minister was simply rearring deck chairs on the Titanic. When new immigration minister Marc Miller was repeatedly questioned about rampant immigration putting strains on infrastructure and housing, he noted,...

Steve Saretsky -

Happy Monday morning! The Federal government is ramping up the noise amidst dismal polling numbers and a federal election only two years away. We had a cabinet shuffle just a few weeks ago, which included the immigration minister becoming the new housing minister. This week they arranged a housing retreat...

Steve Saretsky -

Happy Monday Morning! Headline CPI inflation surprised to the upside this past week, pushing back up to 3.3% and well above market expectations of 3%. However, those who have been following along here will know the importance of base effects. When headline inflation fell to 2.8% last month we were...

Get the Saretsky Report to your email every month

The Saretsky Report. December 2022