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'Fear and uncertainty': Out-of-province homebuyers could rush to sell if B.C. slaps speculation tax
'It's like Saskatchewan putting (poison) on all their fields'
CALGARY – Canadians are not rushing en masse to sell their recreational properties in British Columbia yet, but they’ve stopped looking to purchase vacation homes there amid growing fear of the province’s planned speculation tax.
“We haven’t been besieged by people looking to sell,” LandQuest Realty Corp. president Richard Osborne said of the B.C. NDP government’s proposed 2 per cent tax on the value of any unoccupied home in the more populated parts of B.C.
Still, Osborne said out-of-province homebuyers could rush to sell, depending on what the province legislates. The first reaction among his clients has been “fear and uncertainty”, and fewer are shopping.
Thousands of Albertans and Saskatchewanians own properties in the areas B.C. plans to hit with its speculation tax on vacant homes, including the Vancouver area, the Fraser Valley, Victoria, Nanaimo and Kelowna.
The tax has yet to be introduced in the legislature but the province described the need to “stabilize B.C.’s out-of-control real estate and rental market” marked by “distorted markets, sky-high prices and empty homes” in its throne speech last month.
The government expects the tax will apply to 15,000 residential properties. Anyone who owns a home but doesn’t live in B.C. and doesn’t rent it out would be subject to the speculation tax, which is one of several measures the province has proposed to make housing more affordable in parts of B.C. and especially the Lower Mainland.
“It’s clearly not a speculation tax,” Osborne said of the tax, which would also hit his own vacation property. A true speculation tax, he said, would apply to people that profit from flipping houses in short periods of time and should specifically target profits from short-term buyers and sellers.
Whether the proposed tax will effectively make houses more affordable in places like metro Vancouver, where the average price of a bungalow was $1.4 million at the end of 2017, according to Royal Lepage, depends on who is granted exemptions, University of British Columbia’s associate professor of economics Joshua Gottlieb said. He thinks any exemptions should be limited to specific groups, like retirees, rather than broad groups, like Canadians outside B.C.
Gottlieb was one of dozens of economists and business professors at UBC to endorse a similar proposal, called the B.C. Housing Affordability Fund, which would have taxed vacant homes and directed the funds to affordable housing projects or to reduce income taxes.
“We have punitively high taxes on labour income, which have now gotten worse with the new 2 per cent payroll tax for businesses above $500,000, that create a disincentive to work. At the same time, we have extremely low property taxes by North American standards,” Gottlieb said.
“The system is basically asking for an economy that is obsessed with real estate ownership and not productive work,” he said, adding, “I think we should tilt the tax system to tax property more because property doesn’t respond.”
Labour income, he said, is elastic and so would respond to a drop in taxes.
However, Osborne and others in the real-estate industry believe property values will be negatively impacted by the tax. “They’re going to create a bigger problem,” he said, adding the new tax could lead to a rush of sales, depressing property values and potentially leading to foreclosures as people’s mortgages are larger than the value of their homes.
B.C.’s tourism and real-estate industries – as well as successive governments – have spent years marketing the province as a place to visit, to enjoy and to retire.
Osborne said the new tax has instantly damaged that reputation and will impact business at wineries, salmon fishing outfits and ski resorts. “It’s like Saskatchewan putting (poison) on all their fields,” he said.• Email: firstname.lastname@example.org | Twitter:
Helping children up the property ladder can harm your retirement
Should you help your children buy their first house?
It's a question many parents are considering, especially in cities such as Toronto or Vancouver where a teardown can sell for upward of a million dollars.
According to a 2017 national survey conducted by Leger on behalf of the Financial Planning Standards Council, 37 per cent of Canadian parents intend to assist their children with the purchase of their first home.
Trevor King, a sales representative with Keller Williams Neighbourhood Realty in the trendy Junction area of Toronto, often encounters boomer parents helping their offspring get a foot on the property ladder.
He works a lot with first-time buyers across the city, frequently with parents tagging along on the house hunt. Since most don't have all the money needed for a downpayment – typically 5 to 20 per cent of the sale price in cash to qualify for a mortgage – they need mom and dad to come up with the shortfall.
Sometimes parents dip into their savings or refinance their own home, so they're taking out equity to help the children with a downpayment, Mr. King says. It could also be that parents are withdrawing funds from their retirement plan.
Some parents look at it as an investment, with a plan to sell the house after the first five years of the mortgage term, he says. The parents get their money back when the children sell, and maybe the young people can afford to move up to their next house because then they will be better off financially.
"Parents may or may not expect to recoup their money," says Mr. King. "As an agent, you don't always know the arrangements people have, but you see it happen. Maybe the kids will pay it back over a certain period of time. But that parental urge kicks in and they want to help their kids. It's understandable because otherwise their kids wouldn't be able to get into the market."
The obvious danger is that if the child defaults, both households could take a hit. Mortgage payments are just part of the stress and expense of home ownership at a time when the children are building a career and possibly starting a family.
"A lot of Toronto's houses are old so that could translate into the kids going back to their parents and saying, 'Hey, is there anything more I can have because we need a new furnace,' " says Mr. King. "It's our role as realtors to help people see the big picture so we go over the potential costs. It's not just securing that money for the downpayment, because life happens after you buy the house."
Mr. King expects buying a home to get even harder now that the new Office of the Superintendent of Financial Institutions (OSFI) mortgage rules have come into effect this month. They will include a tougher requirement for buyers to be stress tested to see whether they can handle higher interest rates. Some may not qualify for the mortgage amount they want.
"What we're going to see in real estate is that people are just going to have less money to spend," Mr. King says. "So that will place more pressure on parents to help out."
The biggest question financial advisors would ask the parents in this situation is this: Can you afford it? Making a decision to help your children buy a house now could impact your own standard of living down the road.
Ian Black, a fee-only financial planner and portfolio manager at Macdonald, Shymko & Co. Ltd. in Vancouver, is seeing a lot of parents helping their children get a footing in the overheated Vancouver market.
But he warns that giving $50,000 or $100,000 to your children for a downpayment could push parents onto the negative side later if the markets turn and your net worth falls.
"It's most common for parents to give to the kids when they're trading down themselves to a condo or retirement home and have cash because they've just sold their house for $3-million," Mr. Black says.
"First, you need to do some analysis to see if you can really afford to give some away. You still want to have a cushion in case you need a higher level of care later and may have to move into a more expensive medical facility."
He also says it's pretty rare that a downpayment loan from parents ever gets paid back. He suggests that clients structure it as a loan, but that's more as a protection in case of divorce.
"If you register a mortgage on the property, and your son or daughter gets divorced and the house is sold, the money would come back to you because that mortgage has to be repaid at the time of the sale," Mr. Black explains. "It's a bit tricky because the kids likely aren't actually paying that second mortgage back. It's just to protect the parents in case the kids divorce."
While emotions and guilt often come into the decision, he says parents need to help their children put it into perspective and be realistic about how much they can buy. That may mean the children have to move further afield, say to Langley, B.C., southwest of Vancouver, or buy a townhouse instead of a single-family home.
"At some point, it has to be tough love," Mr. Black says. "Set the limits on what you can give and have that discussion, disclosing what you're comfortable with. Or say, we're not going to be able to help you out. We're just not in a position to do that."
Susan Stefura, principal at Bespoke Financial Consulting Inc. in Toronto, says sometimes people come to them specifically because they want to help their children buy a home, but aren't sure how much they can afford to give them without jeopardizing their own retirement.
The biggest danger is giving away too much, which may force you to do things that you don't necessarily want to do, such as selling your own home or the family cottage or having to reduce your lifestyle.
"When you're older – retired or about to retire – it's harder to recover financially," says Ms. Stefura. "The days when you could just go back to work and earn something may be long gone. So before gifting or loaning the kids money, parents should do their own retirement plan to show the long-term implications. Once you've done the number crunching, you can say, here's our limit, this is what we can afford."
She feels strongly that children should participate in coming up with the downpayment so that they have skin in the game. She suggests helping them by giving gradually every year rather than a massive lump sum all at once – and making a condition that for every dollar you put in, they contribute 50 cents too. Another thing she warns parents about is considering how they're going to make the gift.
"You want to be careful how you get that money from where it is now to your child because you could be triggering some unintended tax consequences," Ms. Stefura says.
"I wouldn't use registered money because if you pull out $50,000 from your RRSP, you'll have a big tax bill in the year you withdraw that because any withdrawals from an RRSP or RRIF are taxed as income in the year the withdrawal was made.
"If you use non-registered money, there could still be a tax implication, depending on how that money was invested. If it's just sitting as cash in the bank, that's fine. But if it's invested in equities, the minute you sell that equity, you're potentially triggering a taxable capital gains in the year that you sell that equity. So be careful!"
To-Dos: Your January Home Checklist
Protect your home from harsh winter weather and get a jump-start on your top projects for the year
Houzz Contributor. I cover topics ranging from decorating ideas, product picks, Houzz tours, and interviews with designers and architects, to the monthly home maintenance checklist. My favorite pieces to write center around the emotional aspects of home and savoring life's simple pleasures. 12 Days of Holiday Hygge (free course) enrolling now:https://www.lauragaskill.com/holiday-hygge
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January may be cold and dark, but it can also be a time for bold beginnings. Make the most of your month by clearing space in your home, boosting warmth and dreaming up plans for the year ahead. Here are 13 to-dos to give your home a little midwinter TLC.
Things to Check Off Your List in an Hour or Less
Check smoke and carbon monoxide detectors. With more heater use and wood fires in the fireplace, it is especially important during winter to make sure those smoke and carbon monoxide detectors are working. Use the test button on each device, and change batteries as needed.
When bad weather has you stuck indoors and you’re looking for an alternative to screen time, board games and cards are a crowd-pleaser. Pull out everything you’ve got and check that each set has all of the pieces. Put games your family no longer enjoys aside to give away, and put the rest back neatly.
Stay toasty warm with plush, thick socks, cozy hats, scarves and gloves or mittens. Sort through your sock drawer, entryway baskets and hooks and anywhere else cold-weather accessories are hiding, and take stock of what you have. Replenish as needed.
Protect pipes from freezing. Why? Because frozen pipes can burst, leading to costly repairs. If you haven’t done so yet, be sure to insulate any exposed outdoor pipes. And if you’re planning to be away from home, ask a friend or neighbor to turn on your water to a trickle. Also, find out where your home’s water shut-off valve is so you can cut off the water quickly if a pipe does burst — and be sure to show your house sitter where it is.
Entice little ones stuck indoors to creative play and cut down on cries of “I’m bored!” Try adding a chalkboard or whiteboard wall, a play tent ortepee
, an area for messy art, a “stage” for acting or a tumbling mat.
If your house gets very dry in the winter with the heater on, you may need to add humidity to the air around some plants, especially citrus trees and ferns. You can use a humidifier or simply spritz them with plain water occasionally.
Make a fresh start with the new year and clear out the clutter. If dealing with the whole house feels overwhelming, focus on just a few categories of items, such as clothes, books and children’s toys.
Remove everything from the pantry, toss out stale and expired foods and wipe down the shelves before putting everything back.
Clean out the fridge and freezer, and clear off countertops. Let the refreshed space motivate you to stick with your health resolutions for the new year.
Heavy coatings of snow can cause tree limbs to break — which can be especially dangerous if a large limb is positioned near your home. Using a long-handled broom or rake, gently knock snow from branches after each storm.
Take down holiday decorations, and store them well. When you’re ready to put away the holiday decorations, take the time to do it with care (you’ll thank yourself later). Wrap delicate ornaments in tissue paper, and wrap string lights around cardboard to prevent tangling. Consider giving away ornaments that didn’t make it onto the tree this year, and repair or toss broken items. And if you’re not ready to say goodbye to the white twinkle lights quite yet, leave them up. We can all use a little extra cheer in the middle of winter.
In winter, it’s natural to want to spend extra time at home, just relaxing. Make yourself a haven for snuggling up to watch a movie or read. Layer on warming textiles, pour some hot tea or make cocoa, and settle in.
Take steps to prevent ice dams. Ice dams are areas of built-up ice that can accumulate around your roof line, causing leaks when the backed-up snow behind them begins to melt. Using a roof rake, remove snow after each storm. And, if you notice an ice dam beginning to form (and if you can safely reach the area), break it up now to prevent future damage.
My visit to the Little School.
I was introduced to the idea of coming on a visit from my friend Lia Travati. Lia lives in my condo complex and has a heart of gold for children and animals. She is a former Olympic figure skater for Italy and a international skating coach. She made Mexico her home recently and found her place to volunteer. She makes a meal for the children once a week and helps organize volunteers for the school. My first thoughts were.. oh going to the jungle?? When I picture jungle it's like the deep amazon with long drive into dense foliage and wild life.. nope we are 15 minutes on a dusty very bumpy road from the highway. Lia had made a pot of pasta and when I say pot this was a huge pot the size of a large canner. We picked up two other volunteers one who had jugs of juice. Lia brings lunch once a week, the school solely depends on volunteers and donations. This little village is built running along the power line road since the jungle is to hard to work into for development and with no equipment or money the community uses the road as it is already cleared. There is a irony living along the government built road for power yet this community exist with no power. As we drive into the village I see a body of water with garbage strewn on top and a crocodile which looms through the water lilies. We arrive at a small building with about 80 little children anticipating the arrival of lunch. I stood for a moment to assess my area and became quickly diverted with helping Lia dish out helpings to the children small to oldest.
The feeling was incredible to be part of this moment and also very humbling at points. I was in disbelieve that only 20 minutes from my condo in Playa Del Carmen is a village with how I can only explain as lost.
The children were excited to help me take pictures and then school was to start. There were 4 areas for the volunteer teachers to work with kids. I stopped in on the English class first which was in a thatch type building and then the middle grades upstairs in a new building which was built with donations from the Catalonia Hotel and Resorts and then down stairs to a covered area where the oldest children are taught.. I realized my inability to speaking Spanish put me at a great disadvantage as I wanted to communicate. Note to self... Learn Spanish. Martha Honorina Herrera is the lady in charge and as far as I witnessed she is an amazing lady. Martha runs the school for the children who other wise would not get an education. They follow the states curriculum and she takes students to the City to get their papers when finished the grade. Martha is the roots to this school when volunteers forget to show up she is the one scrambling for lunch and help. Martha organizes to have professionals come in and speak with the children. Sometimes a speaker will come in to speak to them about abuse and alcoholism and how the children can learn coping strategies, other times it's a speaker on hygiene or like today it was two paramedics talking on safety. The children are so happy and it does not take much to make them happy a meal and some attention. These children don't have running water, electricity and struggle with the many social issues in a poor community.
One story brought tears to my eyes and I'm glad I am writing this not telling it verbally. This young man was in school with his siblings but was not eating. Knowing he was hungry Martha asked why he would not eat and his reply " I feel guilty eating when my mother has no food at home" Martha arranged to help his family with some food from her own sources and some donations.
As we were getting ready to leave two taxi's pulled up with donations for Martha and the school.
Lia says people ask what do they need just as I did and her answer to me was why don't you come visit and see. They need everything.
While I loved my visit I came back to the condo very quiet as I was absorbing my morning and thinking what Rob and I can do to help. As Real Estate Agents we think marketing and while thinking how do we get people to know more about these children and the amazing school.. Website popped in mind. We will work in the next month and design a simple website that will link to the schools facebook page hopefully to raise some awareness for the school.
Talking with Rob and being part of this school for the day made us think of our home and Canada and how within our busy lives so many children and families slip out of focus and sometimes it could be just a hand reach away and with just a little effort we could change a child's world.
With snow falling and full-on winter upon us, we've found we're currently in need of winter boots, boys and girls, ages 2-5 and could really use your help. If you've got some and would like to donate them, they can be dropped any day of the week, 9am - 7pm.
Thanks in advance to those who can help out with this! We appreciate your support!
"As Chairman of the Board for the SSPC (Crisis Nursery), I am asking for your help in donating winter boots for our kids. You are welcome to contact me directly if you have any questions or want to know more about how you can help. On behalf of the Kids, thank you so much!"
I have been on the Board of Directorsfor the SSPC(Saskatoon Society for the Protection of Children) for almost 2 years now and serve as the Boards Chairman.
Our mission is.."to provide services which support the safety of children and and leads to the healthy development of families"
Our Board oversees two programs, one being the Crisis Nursery Program and the other is the Parent Aide progam. Both of these programs have been in existance since the early 1980"s. Our Crisis Nursery provides care for approximately 1400 children every year, and our Parent Aide program works with an average of 740 families a year and each year there is a long waiting list. Our Program Directors along with a dedicated staff do an amazing job under very difficult and sometimes, heart breaking circumstances. We are so thankful for them.
Our dedicated voluteer Board of Directors puts in much time and work into keeping our programs going through our Governace Policies and, in working hard on fund raising each year to raise in the area of $450,000. Above this needed money we accept gratefully many donations for our wonderful community of items such as clothing, toys, pampers, milk, food and more. We thank all of you that have that continue to supporting our progrin this way.
At the present time we are in need of 2 new Board members, if you have an interest in joining our board please contact me directly and I would be very pleased to meet with you and talk about what we do and the give you the information you would need to consider joining us.
Our Vision is...."to support and empower families and build a strong, inclusive and healthy community"
Rob Friesen, SSPC Chairman
FOR THE CITY OF SASKATOON
• Sales volume year over year is currently down 21.3%
• #of Sales according to the MLS were down 19.1%
• The average selling price for Saskatoon in the month of September was $343,785. September 2016 was $353,130.
• Houses in Saskatoon are currently selling at 96.6% of their list price.
• Average Days on the Market are 55 days.
• 767 New Listings
• 2,082 Active Listings
FOR AREA SURROUNDING SASKATOON
• Sales volume year over year is currently down 32.4%
• # of Sales according to the MLS are down 29.0%
• The average selling price of a home is $304,936 and in September 2016 was $320,936.
• Houses are currently selling at 95.0% of their listing price.
• Average Days on the Market are 73
• 234 New Listings
• 1,086 Active Listings