REAL ESTATE and TAXES
Canada Revenue Agency is stepping up efforts to collect taxes relating to real estate.This affects us in two main categories, HST and Income Tax. In all areas of business, investment, or large purchases like real estate, I encourage you to seek professional tax and legal advice.
First off, there IS HST on NEW Construction housing. If you purchase a property as your primary residence, and occupy it as such, then you qualify for an HST "rebate". This Rebate is already calculated in the builder's advertised price. A form is filled out when you purchase, applying the rebate, and you agree to occupy the home as your residence. If you "flip", rent out, or if your circumstances change and you must sell, YOU OWE the HST rebate back to CRA.
Second, If you own property as an investment or recreational property, generally the 50% Capital Gains rule applies. If you made $200,000 selling your family cottage, then $100,000 gets applied to your annual income and you pay tax accordingly. If however, you are "in the business" of buying and selling property, then 100% of the profits count as income. CRA is putting Realtors and Contractors into this category more often. Obviously, the first scenario is of the most benefit to you, however, the CRA may decide your investing too often and change the status of the sale to "income" instead of Capital Gain.
We all know of stories where someone "moves in" to their new property for a few weeks and claims it as their "principle residence". This is exactly what CRA is looking for! We used to get away with it, but; not anymore. Not only are they charging the taxes, but a 50% penalty for "gross negligence" (aka Tax Evasion). So, if you thought you made $100,000 on that Condo you "moved in" to for a few weeks, not only do you owe tax on the $50,000, you may also be billed $25,000 in penalties.
I have expereience helping people invest wisely and realize the greatest return. I also have a group of professionals including lawyers and accountants who can help with any and all questions you may have. Call me anytime to get started on a profitable venture!