US Tax Grab Is Targeted At Canadian Real Estate Investors
Buying a House - Pay Cross Border Tax
Canadians, have been investing at an increasing rates in the US rental and vacation properties since the US housing market took a dive in price in 2008.
IRS tax law for off-shore investors (Canadians) states that, gross rental property income should be taxed at source @ 30% rate by the property management company and remitted to the IRS each month. Only filing a Non Resident USA tax return, Canadians can get back some of the rental income deducted at source. Since most Canadian does not have any mortgage, they cannot claim mortgage interest expense against their rental income, and almost 100% of the income is taxable in USA.
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2010 Holiday Gift from Vancouver City Council – 4.2% Property Tax Increase
The best city on Planet Earth got a little more expensive to live in and owning property. The Vancouver City Council decided to increase Residential Property Tax by 4.2% and Commercial Property Tax by 0.2%.
City’s operating budget stands at $1.03 billion.
In November the city also approved a 2.75-per-cent increase in user fees, primarily related to sewer, water and waste utility services. Some of those services were provided by Metro Vancouver.
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Why Translink Evergreen Line Home Owners Should Pay Higher Property Tax ?
Cities without access to world class public transit system, like Translink Skytrain and Bus network system, want huge capital investment in their cities and make their cities more accessible by public transit.
Translink Evergreen Line is a necessity for vast amount of people, who would love to leave their car at home and take public transit.
Translink does not have enough money to cover the cost of this new skytrain line. To make the dream of Evergreen line come true, along with Federal and Provincial Government, Cities covering the Evergreen line must also contribute to this construction funding.
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Vancouver’s Tax Payers are on the Hook for Olympic Village
Vancouver City Mayor Gregory Robertson announced that the city Taxpayers might suffer a loss on the sale of Olympic village condos.
Where as news reports are announcing that real estate price is going up all over Canada, it seems the developers of the Olympic condo complex having a difficult time to find buyers for their highly inflated priced, state of the art green tech residential complex.
City of Vancouver is on the hook for $1 billion in the development of the Olympic condo complex.
City loaned the money to the condo developer and was hoping to get it back, by the sale of condo in the complex, after the Olympic is over.
It has been eight months since the Olympic ended and the condos are still not sold, because the price is too high.
Developer Millennium is negotiating with the City to reduce the price of the condos to move them
Unfortunately, if the condos are sold at a reduced price, Vancouver city will not be able to recover the $1 billion tax payer’s money, invested in the project.
The Mayor said, “It’s impossible to predict now. The challenge is if sales don’t make it and the city can’t recoup the gap from Millennium’s asset base, then there is a loss.”
The Olympic Village Condo Complex has become a “White Elephant” for the City of Vancouver. The city had problems with finding Management Company of the complex. Early buyers are trying to back out off their contract. Several open house failed to attract new buyers.
Our Tax Money At Work.
BC Province HST Real Estate: HST investment Property Tax Real Estate Tax
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Myths about HST and Vancouver Real Estate Market
For Sale
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.