Tax Avoidance Scheme By Prince Charles
Every wealthy person and successful companies are engaged in legitimate tax deduction all over the world. “Only little people pay tax”.
Supposed tax avoidance has been a hot topic in Britain and the U.K. government has gone after corporate giants such as Google, Amazon and Starbucks, alleging they have all found ways of not paying tax.
They recently focused their attention on the tax deduction strategy of Prince Charles.
According to reports Prince Charles has a complicated business holding comprised of agricultural, commercial and residential lands in U.K. under a holding company called Duchy of Cornwall. The assets of the holding company are valued at $1.2 billion and it does not pay any income tax to the U.K. government. more »
Canada Revenue Agency Wants to Tax Real Estate Investors 100%
This could be scary news for Canada’s hot real estate market and real estate entrepreneurs. Canada Revenue Agency has launched a “Condo Project” to take a closer look at the income reporting of real estate investor in the condominium sector.
Taxation on gain from real estate income in Canada is collected at a preferred rate. That is why any one with savings prefers to invest in real estate. Here is how the income from Real Estate is taxed in Canada.
a). Profit from sale of a Principal residence is a tax free income; subject to you meet the criteria to claim that home as your principal residence.
b). Profit from sale of a Rental Property or Investment Property is treated as Capital gain under the Income Tax Act. As it’s a Capital Gain, taxpayer pays tax on only 50% of the income reported on the sale of an investment property. For Example, when you sold your property, if you had a profit of $100.000, 50% of that profit is taxable. So, if you are at 46% tax bracket, your tax on the profit will be $23,000. more »
Canada Revenue Agency Income Tax Real Estate: IRS US Tax
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Tax Issues To Consider By Canadians Investing In US Real Estate Market
I am often being approached by many Canadians asking about the current investment opportunity in US real estate market.
The opportunity might be very attractive, but investing in US or any other country for that matter is very complex for ordinary Canadians.
There are major tax implications to consider for investment property from both US and Canadian Tax agencies.
As a Canadian investor, you must report all your foreign investment over $100,000 to Canada Revenue Agency and also your income from your foreign investment sources to determine tax payer taxable income,
In US, Canadian investor must also file US income tax return and report all income from investment property to the US tax authority. Canadians also must obtain a US tax payer identification number (TIN) from IRS. Without a TIN, Canadian investor would not be able to realize the income from the property and transfer it to Canada. There is also the possibility of 30% source deduction of any profit from the investment property by the IRS.
If you are considering investing in US properties, it would be prudent to seek advice from a qualified tax or investment advisor, who are experts in cross border taxation.
Home Buyers Are Ignorant about HST in British Columbia and Ontario
I wrote about this myths about HST is causing a havoc in real estate market where HST was introduced in July 2009.
Home buyers are ignorant about HST and also real estate experts have failed to send the message about the net effect of HST to the prospective home buyers.
A recent study confirms my conclusion about HST and Real Estate market.
BC Province HST Real Estate: HST investment Property Tax Real Estate Tax
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Myths about HST and Vancouver Real Estate Market
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Ignorance about HST is causing a chaos on Vancouver real estate market. Every prospective home buyer, real estate agent, mortgage broker have their very own interpretation of HST on real estate transaction.
It’s a myth that housing market is down due to HST. HST could be a great opportunity for everyone involved in the housing market to bring in more sales. HST should not be blamed for a downtrend in housing market.
With the implementation of HST in BC, a new housing rebate program was introduced, to offset the additional HST burden on home purchase. Its an exciting program and it should attract more home buyers in the market.
A prospective new home buyer can purchase a brand new home with no HST, by using BC new housing rebate program. Most of the first time home buyers trying to get their first primary residence are qualified for this program. Beside that, homes for resale are not subject to any HST.
As per the BC new housing rebate program, after implementation of HST, if someone buy a new house valued at $525,000, using the program they do not have to pay any HST. The housing rebate of $26,250 caps off at $525,000. If the property cost more than $525,000, the buyer will pay HST on the additional amount above $525,000.
Also, one very important thing to remember or mention to the prospective home buyer that even Real Estate HST rate is 12%, BC portion of HST rebate of 7%, brings down the effective rate of HST to 5%.
Since HST is a tax on consumption, the higher the property value will be, the more your HST the buyer will pay.
For a property costing $525,000 there is no difference in cost for before HST purchase or after HST purchase.
But for a property costing $1 million after HST purchase puts an additional burden of $20,000, than it would have cost before HST, or 2% of additional tax due to HST.
So, for majority of BC new home buyers, HST does not have any impact at all, with BC new housing rebate program.
For a million dollar home the net impact of HST with BC new housing program is only 2%. And it starts to go up, with the increased purchase price of the housing.
It is well known that Vancouver home prices are inflated and if someone knowingly investing in that market, a 2% additional tax on a million dollar home purchase, should not make a significant difference in their purchasing decision. For high end home buyers its a choice between paying 2% HST now, or wait and pay 5% inflated price for the property few months later on top of more than 2% HST.