Real Estate

Did we just hit the bottom of the Toronto RE correction?

  • Last Updated:
  • Oct 22nd, 2017 1:43 pm
Deal Addict
May 31, 2007
4239 posts
1376 upvotes
Looking at Realtor, very few one bedroom units are actually 500k downtown. Other 1 bedroom units are way less. Seems like a couple trendy areas command that. And you are right to sell, capital gains tax going to be 10-25% of your gain, + realtor and lawyer fees add 3-5%.
[OP]
Deal Addict
Feb 22, 2011
1675 posts
1475 upvotes
Toronto
sorrowt wrote:
Aug 10th, 2017 10:23 am
Dont forget, The 200k profit from selling your rental property is a taxable income (when you sell). so that could drop by some 2 digits percentage.
1. Only half the gain is taxable. The other half is tax free.
2. He was definitely being sarcastic.
Member
Sep 19, 2012
411 posts
247 upvotes
Calgary
rjg4235 wrote:
Aug 10th, 2017 11:54 am
Only half the gain is taxable. The other half is tax free.
Depends. Did you take CCA on the rental property? If yes, then you will have recapture which is a 100% income inclusion. If you didn't take CCA on the property, you've been paying taxes on the income (rent less expenses, which don't include principal repayment) the entire time. Government loves to take its pound of flesh!
[OP]
Deal Addict
Feb 22, 2011
1675 posts
1475 upvotes
Toronto
ahlaker wrote:
Aug 10th, 2017 12:05 pm
Depends. Did you take CCA on the rental property? If yes, then you will have recapture which is a 100% income inclusion. If you didn't take CCA on the property, you've been paying taxes on the income (rent less expenses, which don't include principal repayment) the entire time. Government loves to take its pound of flesh!
He claimed he would have to pay tax on the $200k when he sells, I was pointing out that that is incorrect.
[OP]
Deal Addict
Feb 22, 2011
1675 posts
1475 upvotes
Toronto
Zolo is showing Toronto up 7.1% YoY, seems like all the prediction of a negative YoY by September are going to be wrong.

Active listings down to 5679.

Anecdotally I have heard realtors stating clients who were having issues selling at the price they want have decided to capitalize on rent market and list property for lease instead. One thing a lot of people forget is that there are options for homeowners.

edit; I'll just add people expecting a rush of people trying to sell in fall might be disappointed. There was a rush in April because it was a hot market with inflated prices. It makes sense people would rush to cash out then, especially with new rules causing uncertainty. I doubt people will rush to sell in a depressed market.
Last edited by rjg4235 on Aug 10th, 2017 12:40 pm, edited 1 time in total.
Jr. Member
Jun 19, 2017
161 posts
305 upvotes
I'm curious what kind of return on equity cash flow positive landlords are getting out there right now based on (rental profit + principal payments)/(fair sale price - principal owed)

Also, getting significant rental price increases seems to be key in the RE investor business plan given current prices. What strategies are landlords using to get those increases? The new regulations strike me as encouraging lower tenant turnover over the long term and limit increases below the level of inflation.

This policy strikes me as very negative for resale values of renter occupied units.

There is so much discussion on rising rents, condo prices being strong. They still seem kinda high to me, can someone out there step me through how the fundamentals support these prices, I feel like I'm missing something.

From what I can see there are over 65k units under construction, around 40k completions a year, what effect will this have on supply/demand over the next few years? This doesnt seem too out of line with population growth.
Newbie
Aug 23, 2014
81 posts
16 upvotes
Mississauga, ON
rjg4235 wrote:
Aug 10th, 2017 12:36 pm
He claimed he would have to pay tax on the $200k when he sells, I was pointing out that that is incorrect.
lol, I said there is a tax, I didnt say on what or how much, where did you read that?

anyways half of the 200k is 100k, the max tax can be 53%, which means the 200k gains can gets you to pay 53k in taxes.
Deal Addict
May 31, 2007
4239 posts
1376 upvotes
rjg4235 wrote:
Aug 10th, 2017 12:40 pm
Zolo is showing Toronto up 7.1% YoY, seems like all the prediction of a negative YoY by September are going to be wrong.

Active listings down to 5679.

Anecdotally I have heard realtors stating clients who were having issues selling at the price they want have decided to capitalize on rent market and list property for lease instead. One thing a lot of people forget is that there are options for homeowners.

edit; I'll just add people expecting a rush of people trying to sell in fall might be disappointed. There was a rush in April because it was a hot market with inflated prices. It makes sense people would rush to cash out then, especially with new rules causing uncertainty. I doubt people will rush to sell in a depressed market.
Average detach might hit negative YOY Sept, because it the way last years numbers were compared to Aug. For the rest of the market via average, maybe you're right.
Tons of people try to sell in this market, the active listings growth is huge and noticeable.

Richmond hill detach active listings doubled.
Ajax active listings detach almost tripled
Toronto active Detach almost double

Not including all the listings pulled, deals failed, etc.

Now when you add sales decline, this creates a problem for comeback.
Sr. Member
Jul 14, 2002
971 posts
287 upvotes
rjg4235 wrote:
Aug 10th, 2017 12:40 pm
Zolo is showing Toronto up 7.1% YoY, seems like all the prediction of a negative YoY by September are going to be wrong.

Active listings down to 5679.

Anecdotally I have heard realtors stating clients who were having issues selling at the price they want have decided to capitalize on rent market and list property for lease instead. One thing a lot of people forget is that there are options for homeowners.

edit; I'll just add people expecting a rush of people trying to sell in fall might be disappointed. There was a rush in April because it was a hot market with inflated prices. It makes sense people would rush to cash out then, especially with new rules causing uncertainty. I doubt people will rush to sell in a depressed market.
Renting is an option, but most people would prefer not to go that route (with a detached).
I would say most people the past few years actually lucked out with that option because of the price gains.
The neighbour that I know is renting a million dollar home for $2k. He was hoping to sell last year but did not sell and ended up renting it out. Not sure if he would even get a million now.
It becomes a tougher option to rent out when the market trends downwards as opposed to upwards.

I just saw a terminated listing two months ago, relisted at $150k lower. Only time will tell in this tug of war, if sellers will come back out or if buyers will take the plunge.
[OP]
Deal Addict
Feb 22, 2011
1675 posts
1475 upvotes
Toronto
sorrowt wrote:
Aug 10th, 2017 1:17 pm
lol, I said there is a tax, I didnt say on what or how much, where did you read that?

anyways half of the 200k is 100k, the max tax can be 53%, which means the 200k gains can gets you to pay 53k in taxes.
Note even remotely close to 53%.

Capital gains on assets that you hold for at least one year are considered long-term gains and taxed at 15 percent. This is also only taxed on half the gain, less fees, taxes and commissions.
Last edited by rjg4235 on Aug 10th, 2017 2:27 pm, edited 1 time in total.
[OP]
Deal Addict
Feb 22, 2011
1675 posts
1475 upvotes
Toronto
Jungle wrote:
Aug 10th, 2017 1:32 pm
Average detach might hit negative YOY Sept, because it the way last years numbers were compared to Aug. For the rest of the market via average, maybe you're right.
Tons of people try to sell in this market, the active listings growth is huge and noticeable.

Richmond hill detach active listings doubled.
Ajax active listings detach almost tripled
Toronto active Detach almost double

Not including all the listings pulled, deals failed, etc.

Now when you add sales decline, this creates a problem for comeback.
Double and triple sounds crazy until you realize you are comparing it to last year which had less than half the normal amount of listings.
Sr. Member
Jun 12, 2007
860 posts
130 upvotes
GTA
rjg4235 wrote:
Aug 10th, 2017 2:28 pm
Double and triple sounds crazy until you realize you are comparing it to last year which had less than half the normal amount of listings.
August 2016 had less than half the normal amount of listings? I never noticed that but then again never looked at the actual numbers. Do you have the numbers for 2016 and the previous 2-3 years so we can compare?
Deal Addict
May 31, 2007
4239 posts
1376 upvotes
rjg4235 wrote:
Aug 10th, 2017 2:27 pm
Note even remotely close to 53%.

Capital gains on assets that you hold for at least one year are considered long-term gains and taxed at 15 percent. This is also only taxed on half the gain, less fees, taxes and commissions.
Are you sure? taxtips says on portion of entire gain it could be 10-27% (depending on marginal tax rate)

http://taxtips.ca/taxrates/on.htm
[OP]
Deal Addict
Feb 22, 2011
1675 posts
1475 upvotes
Toronto
NuclearBlast wrote:
Aug 10th, 2017 2:46 pm
August 2016 had less than half the normal amount of listings? I never noticed that but then again never looked at the actual numbers. Do you have the numbers for 2016 and the previous 2-3 years so we can compare?
Here is last few years July so we can see just how "high" 2017 is;

2012: 20,318
2013: 20,514
2014: 19,549
2015: 16,673
2016: 11,346 - Comparing to an outlier will make the normal look bad
2017: 18,751

All the archives are here;
http://www.trebhome.com/market_news/market_watch/

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