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B.C. has tax cheats in crosshairs

Hiding real estate investments addressed

Canadian Real Estate Wealth

The British Columbia government is taking steps to end opportunities to anonymously invest and hide wealth in real estate.

Finance Minister Carole James says a new, publicly accessible registry is being created to identify the owners of real estate in the province.

A news release from the Ministry of Finance says the first-of-its-kind registry in Canada is aimed at improving transparency in the real estate market while ensuring owners pay their share of taxes.

Law enforcement agencies, tax auditors, as well as federal and provincial regulators will be able to access the registry when seeking details for any investigations.

Draft legislation, including a proposed land owner transparency act, has been included in a white paper posted on a government website and is open for feedback until Aug. 19.

The Finance Ministry says the legislation will also create a federal-provincial working group on tax fraud and money laundering.

James says the registry would improve B.C.’s reputation as a place for anonymous or covert property transactions.

“Right now in B.C., real estate investors can hide behind numbered companies, offshore and domestic trusts, and corporations,” James says in the release.

“Ending this type of hidden ownership in real estate will help us fight tax evasion, tax fraud and money laundering,” she says. 

The Canadian Press

Copyright © 2018 Key Media Pty Ltd

Home sales set for stronger 6 months, rates to rise

Economist say sales will rebound

Steve Randall
Canadian Real Estate Wealth

The impact of the B-20 mortgage guidelines, especially the stress tests, have made a significant impact on Canada’s housing sales; but that may be about to change.

In a newly-published outlook for mortgage rates and the housing market, the chief economist of the British Columbia Real Estate Association says there’s a good chance things will start to improve soon.

“If the impact of the stress test evolves in a similar fashion to past macroprudential tightening, we expect that home sales and the wider Canadian economy will rebound in the second half of the year,” says Cameron Muir.

He adds that the outlook for the economy is 2.3% growth in GDP in 2018 and 2% in 2019 with inflation slightly above 2%.

What about mortgage rates? The Bank of Canada is likely to continue to increase interest rates as the economy grows due to inflation at or near its target of 2%.

Mortgage rates are therefore likely to increase in the next year with the BoC expected to want to move the base rate from the current 1.25% to preferred long-run levels of 3-3.5%.

The outlook for mortgage rates is a 1-year posted rate of 3.80% by the end of 2018, rising to 4.64% a year later. The 5-year qualifying rate is forecast to reach 5.54% by the end of 2018, rising to 5.70% a year later; the 5-year discount rate’s forecast is 3.64% by the end of this year and 3.84% by the end of 2019.

Copyright © 2018 Key Media Pty Ltd

B.C. to make owners names of properties available in the fall of 2018

‘No more hiding’ BC tells real estate owners

Steve Randall
Canadian Real Estate Wealth

Owners of British Columbia’s real estate will soon be listed on a publicly accessible register to improve ownership transparency, if legislation is passed.

The register will be the first of its kind in Canada and is part of the provincial government’s 30-point Plan for Housing Affordability.

“British Columbia has developed a reputation as an attractive place to anonymously invest and hide wealth. Right now in B.C., real  estate investors can hide behind numbered companies, offshore and domestic trusts, and corporations,” said Carole James, Minister of Finance. “Ending this type of hidden ownership in real estate will help us fight tax evasion, tax fraud and money laundering. Our goal is to return fairness to the housing market.”

The register will help tax and law enforcement agencies, and regulators, with their investigations.

The proposed legislation would authorize collection of beneficial ownership information and is open for consultation, with British Columbians invited to share their feedback until August 19, 2018.

The proposal is part of a range of initiatives the BC government is taking to add transparency and close tax and fraud loopholes, including:

  • introducing a new law to track pre-sale condominium contract assignments and prevent tax evasion.
  • sharing information on the homeowner grant with federal tax officials to improve tax enforcement.
  • establishing a federal-provincial working group on tax fraud and money laundering.

Copyright © 2018 Key Media Pty Ltd

Here’s how Empty Homes Tax revenue will be spent

Vancouver city council approves allocation of $8 million towards affordable housing initiatives

Naoibh O?Connor
Vancouver Courier

Vancouver city council has approved staff recommendations on how to spend $8 million worth of empty home tax revenue it’s collected to date.

The City of Vancouver expects it will collect $30 million from the tax in the first year, but implementation and operating costs will eat up $10 million, leaving $20 million to be invested on affordable housing initiatives.

About $18 million of the anticipated $30 million has been collected so far, which, after implementation and operating costs are covered, produces $8 million for distribution.

The money will be split as follows:

  • $3.175 million: more affordable co-op and non-profit housing. It will be invested in providing land and resources for affordable non-profit and co-op housing.
  • $1 million: more affordable co-op and non-profit housing. It will be invested in co-op housing grants to update and improve existing co-ops and build new co-ops.
  • $3.5 million: Improvements to low-income housing. The money will be used to contribute to the purchase of buildings and/or to provide assistance toward improved living conditions in private SRO housing.
  • $100,000: Support for vulnerable renters. The money will be used to provide support to renters facing eviction.
  • $75,000: Support for vulnerable renters. The money will go towards the Vancouver Rent Bank.
  • $100,000: Funding for skills training in peer support, affordable housing management, and asset training for residents of supportive housing. The basis for the idea was dreamed up at a recent one-day workshop. Proponents called the initiative ‘temporary modular college’: temporary modular housing with on-site peer-based mentorship programming.
  • $50,000: Matching empty/underutilized homes and rooms with renters looking for housing. The money will support shared housing models like senior/student housing arrangements. 

Staff recommendations were informed by public feedback collected during a consultation process that included an online survey and a one-day “idea jam.”

 “I’m very pleased that council has approved a variety of new affordable housing investments funded by Vancouver’s first Empty Homes Tax,” Mayor Gregor Robertson stated in a June 21 press release. “Thank you to everyone who took the time to submit, like, and comment on your favourite housing ideas. We will now be moving forward with new initiatives that will boost support for low-income renters, create more co-op and non-profit housing, and look at new opportunities to make the best use of our existing rental housing.”

© 2018 Vancouver Courier

Taking shortcuts with insurance not a smart move

Often problems with ideas about insurance

Tony Gioventu
The Province

Dear Tony:

Our strata council has been advised by our property manager to pay for a water escape claim to our building rather than file an insurance claim to avoid an increase in our insurance costs and our deductible costs.

This is only the third claim in 10 years in our 18-floor highrise. As a result, we have only a $5,000 deductible.

The claim to repair damaged drywall, flooring and cabinets to the two units is estimated at $11,000, which we have been told we can recover from the owner who caused the claim from an overflowing bathtub. The owner who caused the claim has responded that they will not pay any amount as their insurance coverage for their unit will cover the deductible amount of $5,000. 

Our council is confused by the opposing information we have been receiving. Whose insurance covers the claim and can we recover the costs so the rest of the owners in the building are not paying for one owner’s neglect? 

Tara D., Burnaby

Dear Tara:

A common error condo owners make is applying the cause of the claim to whose insurance is responsible to cover the loss. 

Under the Strata Property Act, with the exception of a bare-land strata, the common property, common assets, structure and fixtures are insured through the strata corporation policy.

Basically, think of it this way: before the day an owner moves in, everything except removable appliances is covered. When these items are damaged, whether they are in a strata lot or defined as common property, it is the strata corporation insurance policy that is applied. 

Provided the amount of the claim is over the deductible as in your case, the insurer for the strata corporation remedies the loss and bills the strata corporation for the deductible. In this case: $5,000. 

The cause of this claim, an overflowing bathtub, falls under the responsibility of an owner. If an owner is responsible for a claim, the strata corporation may proceed with an action through the courts or the civil resolution tribunal to obtain a judgement to determine who is responsible for the claim and the amount of the deductible.  

When owners have prudently purchased condo insurance that covers the amount of a deductible, once they have received a statement or demand invoice from the strata corporation for the amount of the deductible, they contact their insurance provider who pays the amount. In most cases, the insurers work in co-operation well in advance to reduce red tape and delays. 

Strata councils seem to be under the impression they can deny a claim and manage the restoration themselves. There are several problems with this approach. First, an owner under the Strata Property Act is a named insured on the policy and they can file the claim directly. Second, the restoration and remediation when water damage is involved is rarely undertaken sufficiently to prevent mould, dry rot, pest infestation and future damage to the units. The final problem with avoiding the  filing of a claim is that the strata corporation will be limited to the extent of the amount it can collect from the owner.

If the owner was responsible for the claim and the deductible was $5,000, how would you expect to collect the additional $6,000 in damages that was covered by the insurance you have now declined? And neither amount is a deductible so the authority to proceed with an action to collect the amount may no longer apply. 

There is one other wrinkle in this approach. Where did the strata corporation get the authority to spend $11,000 of the owners’ common funds? This is not an emergency expense, authorized contingency expense or operating expense. It is an insurable claim covered by a common policy all the owners pay through their strata fees. Yes, there is a risk your deductible will increase and perhaps even your policy, but that is one of the costs of living collectively in a strata corporation.

© 2018 Postmedia Network Inc.

8888 Osler 76 homes at 8888 Osler Street Vancouver by Tria Homes

8888 Osler showcases efficient design

Mary Frances Hill
The Province

8888 Osler

What: 76 homes

Where: 8888 Osler Street, Vancouver

Residence sizes and prices: Studios and one- to three-bedrooms, 431 to 1,101 square feet, starting in the $500,000s Developer and builder: Tria Homes

Sales centre: 1510 West 71st Avenue, Vancouver

Sales centre hours: noon to 5 p.m., Sat — Thurs

Telephone: 604-715-6060

Marpole is having a moment, with the city and developers recognizing its potential as a revitalized and vibrant mixed-use Vancouver neighbourhood community, close to Richmond and the airport.

For interior designers, it’s exciting to be part of Marpole’s revitalization, says Cristina Oberti, whose firm designed the interiors of 8888 Osler, Tria Homes’ community of condominiums planned for the area.

“I see it as an opportunity. It’s a chance for us to be creative and imagine what the future of Marpole might look like a few years from now. Rarely do you get this kind of freedom as a designer,” says Oberti, principal of Cristina Oberti Interior Design Inc.

“I expect to see a lot of young families and single first-time buyers migrating to Marpole. It’s definitely a great area to invest in.” Where another professional might consider suites as small as 431 square feet as a restriction in their work, Oberti sees it as a challenge.

“To design for efficiency is to design smart. This is often when design becomes the most interesting and inspired,” she says. “There is literally no room for wasted space.”

Oberti says she and her team enjoyed creating an open-concept area with a multi-functional use of space. Visitors will find that the design of the kitchen takes advantage of every last square inch available.

Oberti says kitchens in smaller homes look great when a homeowner sees them as deserving of attention as fine pieces of furniture.

It’s too easy to crowd countertops with appliances and devices. But in an open-concept space, it’s on full view, so Oberti incorporated deep drawers and spinning Lazy Susan shelving to maximize storage space.

At 8888 Osler, “the kitchen is designed to be exceptionally efficient. It’s an area that is always on display, so it needs to look good, if not in order. Besides hiding things from view, the extra storage also gives the kitchen an interesting esthetic.”

First-time homebuyers of smaller suites may want to ask themselves hard questions about what is essential in a comfortable home, but Oberti suggests that choosing fewer items should not be seen as a hardship or sacrifice, particularly when these pieces serve one or more functions.

“As cities grow, our spaces become more and more precious, so we have to make the most out of what we have available to us,” she notes.

“In these cases, it’s important to prioritize. Is it essential to have that massive sectional, when a more compact love seat will do the trick? I don’t see it as a limitation, but rather as another way of approaching the spaces we inhabit.”

© 2018 Postmedia Network Inc.