Real Estate

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

  • Last Updated:
  • Aug 19th, 2017 7:14 am
[OP]
Sr. Member
Feb 22, 2011
936 posts
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Toronto
Jungle wrote:
Aug 10th, 2017 4:22 pm
For half the gain @ your marginal tax rate. Or the full gain between 10-27% as tax tips displays it, again based on your marginal tax rate. (same result, different way of calculating)

I don't know how @rjg4235 says capital gains is 15% unless he knows the marginal tax rate of that poster or I am unaware of special tax that RE receives.

http://www.taxtips.ca/taxrates/on.htm
Yes looks like I'm wrong about the 15% max, it is only on half the gain though which is after all expenses are removed. I'm sure many people will time sale to reduce tax implications.
Newbie
Aug 4, 2017
17 posts
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capital gain tax rate of non principle residence is indeed effectively half of marginal rate

another freehold investment property i purchased a couple of months ago:
compared to summer 2016 price in the neighborhood, checked at least 10+ properties sold, paid 3-4% more than 2016 price
rented out , no vacancy, very easy to rent out becoz of location
rent pays off motgage, income tax, insurance, and part of property tax

first 2 years it pays mortgage principle 32k, in 10 years it will pay off principle abt 180k as less and less payment goes to interest over the years gradually
in 10 years time IMO market value will go up at least 15% than now,that is about 120k

downpayment 170k

good or bad investment?
[OP]
Sr. Member
Feb 22, 2011
936 posts
920 upvotes
Toronto
Looks like the tax had a short lived impact in Vancouver;

Just as Toronto’s housing market is beginning to slow down, Vancouver’s is roaring back to life.

New home prices in Canada’s most-expensive market jumped 1.5 percent in June, and have gained 5 percent since March, data released Thursday by Statistics Canada show. That’s the biggest three-month increase since 1990. Prices for existing homes are also on fire, gaining 11 percent in the five months through July, according to data released this month by Vancouver’s real estate board.


The rebound, following a short slump late last year, underscores just how difficult it is to control runaway prices in the face of historically low interest rates and purchasing by foreign investors. Vancouver has become a test lab for policy makers seeking to engineer a soft landing.

Canada tightened mortgage rules several times in recent years to discourage a buildup of record consumer debt and when that didn’t work the British Columbia government set a 15 percent foreign buyer tax last August. Toronto followed with a similar levy in April.
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Dec 17, 2009
66 posts
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rjg4235 wrote:
Aug 11th, 2017 11:40 am
Looks like the tax had a short lived impact in Vancouver;

Just as Toronto’s housing market is beginning to slow down, Vancouver’s is roaring back to life.

New home prices in Canada’s most-expensive market jumped 1.5 percent in June, and have gained 5 percent since March, data released Thursday by Statistics Canada show. That’s the biggest three-month increase since 1990. Prices for existing homes are also on fire, gaining 11 percent in the five months through July, according to data released this month by Vancouver’s real estate board.


The rebound, following a short slump late last year, underscores just how difficult it is to control runaway prices in the face of historically low interest rates and purchasing by foreign investors. Vancouver has become a test lab for policy makers seeking to engineer a soft landing.

Canada tightened mortgage rules several times in recent years to discourage a buildup of record consumer debt and when that didn’t work the British Columbia government set a 15 percent foreign buyer tax last August. Toronto followed with a similar levy in April.
Is it possible that, since Toronto and Vancouver now both have the FBT, the rich foreigners are flocking back to Vancouver, bringing their prices up? Vancouver is their first choice to begin with.
Newbie
Mar 8, 2017
52 posts
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S52B wrote:
Aug 11th, 2017 12:12 pm
Is it possible that, since Toronto and Vancouver now both have the FBT, the rich foreigners are flocking back to Vancouver, bringing their prices up? Vancouver is their first choice to begin with.
That's exactly what I was thinking, If they have to pay the tax the might as well stay in Vancouver.
[OP]
Sr. Member
Feb 22, 2011
936 posts
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Toronto
S52B wrote:
Aug 11th, 2017 12:12 pm
Is it possible that, since Toronto and Vancouver now both have the FBT, the rich foreigners are flocking back to Vancouver, bringing their prices up? Vancouver is their first choice to begin with.
Definitely possible. I honestly have no idea what it means. It's also possible a big change to a market will cause uncertainty as people wait to see what happens.
Newbie
Aug 4, 2017
17 posts
10 upvotes
Loads of immigrants and international students move to Toronto every year. Many of them are richer than the average joes in GTA. Watch out those international students. Many of them will stay after finish study and get PR status. Their parents might not buy properties for them now due to FBT, but it will only be deferred a couple of years. Average local can't compete with those families in terms of purchasing power.
Newbie
Aug 4, 2017
17 posts
10 upvotes
Jungle wrote:
Aug 10th, 2017 11:10 am
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%.
i will just keep it.

abt rent it is batshit crazy, a 2 bedroom unit less than 700 sq ft in my condo building was just rented out for $3k
the purchase price with parking included no more than 400k, that owner did a good job

yup this neighborhood is considered trendy but the condo interior finish feels a bit cheap
surprising that it commands such high rent
Member
Jan 17, 2006
493 posts
190 upvotes
Toronto
Jungle wrote:
Aug 10th, 2017 4:22 pm
For half the gain @ your marginal tax rate. Or the full gain between 10-27% as tax tips displays it, again based on your marginal tax rate. (same result, different way of calculating)

I don't know how @rjg4235 says capital gains is 15% unless he knows the marginal tax rate of that poster or I am unaware of special tax that RE receives.

http://www.taxtips.ca/taxrates/on.htm
rjg4235 wrote:
Aug 10th, 2017 5:03 pm
Yes looks like I'm wrong about the 15% max, it is only on half the gain though which is after all expenses are removed. I'm sure many people will time sale to reduce tax implications.
You actually much closer to correct numbers than Jungle .

Even with 500K of profit you pay around 16% of tax, we have brackets based taxes ,so Jungle's rounded up 27% never will happen even in theory.
Heck even for 1 million gain you pay just north of 18%.

http://www.icalculator.info/canada/fina ... nnual.html
Last edited by ilim on Aug 11th, 2017 2:35 pm, edited 2 times in total.
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Oct 23, 2003
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gtx1050 wrote:
Aug 11th, 2017 1:12 pm
Loads of immigrants and international students move to Toronto every year. Many of them are richer than the average joes in GTA. Watch out those international students. Many of them will stay after finish study and get PR status. Their parents might not buy properties for them now due to FBT, but it will only be deferred a couple of years. Average local can't compete with those families in terms of purchasing power.
Except Toronto's got crappier weather and is an industrial town with nothing else to do besides go to a pub. Vancouver is a nature based playground (and a boring city) vs Hong Kong/New York/London type cities which are "city" based playgrounds, but have no nature on offer for the rich folks.

Rich foreigners' primary choice doesnt rely on a city known for its past blue collar work, nor are they looking for jobs in finance in downtown. Toronto's always going to be a worker's city first, just like Vancouver will keep being a primary tourist destination and not much else.

If you're wealthy and real estate isnt an issue, nor are you looking for jobs, and you come from a huge city in Asia like Hong Kong/Singapore/Shanghai, what is your primary choice going to be:

Toronto - industrial and sad looking concrete jungle, far from Asia, 5 months of winter, but best job market in Canada
Montreal - french centric language with 8 months of winter, far from Asia, but best night life in Canada
Vancouver - extremely boring city with horrible night life, 3 months of winter (maybe) but generally +5 Celsius and rain, city is closest to Asia, and one of the best if not the best geo-location in the world. 5 minute walk to the ocean, 20 minute drive to go skiing on the nearest mountain.

If you look at things from truly wealthy people's perspective, you'll get why Toronto will always play second fiddle to Vancouver in RE choice for foreign born Asians (unlike locally born Asians from Canada/US) .
Member
Jun 12, 2017
295 posts
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Buggy166 wrote:
Aug 11th, 2017 2:37 pm
Except Toronto's got crappier weather and is an industrial town with nothing else to do besides go to a pub. Vancouver is a nature based playground (and a boring city) vs Hong Kong/New York/London type cities which are "city" based playgrounds, but have no nature on offer for the rich folks.

Rich foreigners' primary choice doesnt rely on a city known for its past blue collar work, nor are they looking for jobs in finance in downtown. Toronto's always going to be a worker's city first, just like Vancouver will keep being a primary tourist destination and not much else.

If you're wealthy and real estate isnt an issue, nor are you looking for jobs, and you come from a huge city in Asia like Hong Kong/Singapore/Shanghai, what is your primary choice going to be:

Toronto - industrial and sad looking concrete jungle, far from Asia, 5 months of winter, but best job market in Canada
Montreal - french centric language with 8 months of winter, far from Asia, but best night life in Canada
Vancouver - extremely boring city with horrible night life, 3 months of winter (maybe) but generally +5 Celsius and rain, city is closest to Asia, and one of the best if not the best geo-location in the world. 5 minute walk to the ocean, 20 minute drive to go skiing on the nearest mountain.

If you look at things from truly wealthy people's perspective, you'll get why Toronto will always play second fiddle to Vancouver in RE choice for foreign born Asians (unlike locally born Asians from Canada/US) .
By your logic people would be flooding to coastal cities all over. There are 100s of miles of shoreline on CA that are breath-taking yet have almost no housing nearby. Likewise on east coast. Weather and natural beauty are not everything.

Rich people are not buying places to live in to enjoy natural beauty or warmer weather. They are buying RE to park money into a relatively stable asset that appreciates well over time. Between a city that relies on tourism and a city that is the financial hub of a G7 country, which do you think is likely to see continued high demand and appreciation?

edit: nevermind, for some reason I thought we were discussing wealthy people parking money in re not choosing a place to immigrate to
Last edited by trekkie500 on Aug 11th, 2017 2:59 pm, edited 1 time in total.
[OP]
Sr. Member
Feb 22, 2011
936 posts
920 upvotes
Toronto
Buggy166 wrote:
Aug 11th, 2017 2:37 pm
Except Toronto's got crappier weather and is an industrial town with nothing else to do besides go to a pub. Vancouver is a nature based playground (and a boring city) vs Hong Kong/New York/London type cities which are "city" based playgrounds, but have no nature on offer for the rich folks.

Rich foreigners' primary choice doesnt rely on a city known for its past blue collar work, nor are they looking for jobs in finance in downtown. Toronto's always going to be a worker's city first, just like Vancouver will keep being a primary tourist destination and not much else.

If you're wealthy and real estate isnt an issue, nor are you looking for jobs, and you come from a huge city in Asia like Hong Kong/Singapore/Shanghai, what is your primary choice going to be:

Toronto - industrial and sad looking concrete jungle, far from Asia, 5 months of winter, but best job market in Canada
Montreal - french centric language with 8 months of winter, far from Asia, but best night life in Canada
Vancouver - extremely boring city with horrible night life, 3 months of winter (maybe) but generally +5 Celsius and rain, city is closest to Asia, and one of the best if not the best geo-location in the world. 5 minute walk to the ocean, 20 minute drive to go skiing on the nearest mountain.

If you look at things from truly wealthy people's perspective, you'll get why Toronto will always play second fiddle to Vancouver in RE choice for foreign born Asians (unlike locally born Asians from Canada/US) .
Toronto has 2,500,000 people born in other countries. That is 4x the entire population of Vancouver... I think it's safe to say plenty of immigrants choose Toronto...

8 of Canada's richest 20 people live in Ontario, 1 lives in BC... I think it's safe to say wealthy people choose Ontario...
Member
Sep 19, 2012
365 posts
213 upvotes
Calgary
ilim wrote:
Aug 11th, 2017 2:35 pm
Even with 500K of profit you pay around 16% of tax, we have brackets based taxes ,so Jungle's rounded up 27% never will happen even in theory.
Heck even for 1 million gain you pay just north of 18%.
http://www.icalculator.info/canada/fina ... nnual.html
That link quotes 2014 tax rates. Put a $500k gain into StudioTax 2016 and you'll see that in Ontario you're paying $98.5k in taxes. That works out out to 20% -- and that's if you have no other income. If you're already near the top rate, you'll get no benefit from the "brackets based taxes" you're quoting. Someone already making $150k in Ontario who sells their property for a $500k capital gain will be paying ~26% on their capital gain. @Jungle's numbers could certainly happen "even in theory".
Sr. Member
Jul 14, 2002
872 posts
235 upvotes
trekkie500 wrote:
Aug 11th, 2017 2:59 pm
By your logic people would be flooding to coastal cities all over. There are 100s of miles of shoreline on CA that are breath-taking yet have almost no housing nearby. Likewise on east coast. Weather and natural beauty are not everything.

Rich people are not buying places to live in to enjoy natural beauty or warmer weather. They are buying RE to park money into a relatively stable asset that appreciates well over time. Between a city that relies on tourism and a city that is the financial hub of a G7 country, which do you think is likely to see continued high demand and appreciation?
Vancouver - home of the rich retirees or poor youth/youth of the retirees
Toronto - home of the youth with jobs or parents of the youth
Member
Jun 12, 2017
295 posts
279 upvotes
dantey wrote:
Aug 11th, 2017 3:15 pm
Vancouver - home of the rich retirees or poor youth/youth of the retirees
Toronto - home of the youth with jobs or parents of the youth
I will second that.. would love to move out west when I retire :)

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