Failure to submit your tax exemption form will result in huge tax increases

Duffie Osental
REP

British Columbia’s Ministry of Finance gave a deadline for homeowners to apply for exemption from the province’s speculation and vacancy tax.

Seen as a way to address the overheated housing market in BC’s large metropolitan areas, the speculation and vacancy tax looks to turn unused properties into rentals.  According to CBC News, homeowners who live in their properties are exempt from paying the tax, but must complete an exemption form by 31 March otherwise they’ll automatically pay by default.  Notices will be sent to homeowners in the Lower Mainland, Greater Victoria, Kelowna, and Nanaimo in the coming weeks.

CBC News said that B.C.’s Ministry of Finance expects that more than 99% of British Columbians will be exempt. This means that, of the 1.6 million households that will receive the letter, only about 32,000 homes will be taxed.

According to CBC News, the tax rate is 0.5% of the property’s assessed value for all properties subject to the tax in 2018. For 2019 and subsequent years, the tax rate is 2% for foreign owners and satellite families, and 0.5% for Canadian citizens or permanent residents of Canada who are not members of a satellite family. Satellite families are those families where the majority of the combined income is earned outside of Canada.

Copyright © 2019 Key Media Pty Ltd

December 2018 say 13,000 jobs gone in Canada

Steve Randall
REP

There was a reduction of 13,000 jobs in Canada in December 2018 according to the latest report from ADP Research Institute.

The decline was led by a loss of 7,700 jobs in trade/transport and utilities; 6,900 in construction; and 3,500in ‘other services’ which includes public administration.

Finance and real estate employment fell by 2,600.

However, the weak end to 2018 belies what was a solid year for employment growth and the November’s increase was revised upwards from 39,100 to 74,000.

“Despite a dip in job growth in December, overall gains for 2018 were strong,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Of the more than 340,000 jobs added this year, education and healthcare, professional services and leisure and hospitality were significant drivers of growth.”

The industries posting gains in December were led by manufacturing (up 4,700), administrative and support (up 3,700), and education and healthcare (up 3,000).

The ADP Canada National Employment Report is produced by the ADP Research Institute and derived from actual ADP payroll data. It measures the change in total nonfarm payroll employment each month on a seasonally-adjusted basis.

Copyright © 2019 Key Media Pty Ltd

Canada?s largest banks to cut 5-year mortgage rate

Steve Randall
REP

Canada’s largest bank may have sparked a rate war by offering customers a “special offer” 5-year mortgage rate of 3.74%.

The reduction of 15 basis points is likely to be met with similar deals from other major lenders; many alternative lenders have already reduced rates but the Big 5 have been holding back.

“Banks could’ve cut fixed rates weeks ago. The reason they held out is because they can,” RateSpy.ca founder Rob McLister told CBC News.

With bond yields falling following the BoC’s dovish tone on interest rate rises, mortgage rates have been expected to fall and some lenders are already offering rates as low as 3.29% for a 5-year FRM.

The RBC cut is notable as it’s the bank’s first cut since 2017. It’s also notable for its minimal size, which will likely have a corresponding impact on the market – unless further cuts follow.

“RBC is the largest mortgage lender in Canada, so whenever they move their mortgage rates we can expect that the other four banks will follow suit,” James Laird, president of CanWise Financial told RateHub.ca. “We anticipate that the other big banks will soon have a publicly posted rate of 3.74% as well.”

RateHub.ca calculates that with a $400,000 mortgage a typical homeowner would save $32 a month on their $2,080 monthly payment.

Copyright © 2019 Key Media Pty Ltd

City of Vancouver – Vacancy Tax Office.

other

With regards to your inquiry, the definition of the “principal residence” per the Vacancy Tax Bylaw No. 11674 is as follow:

“principal residence” means the usual place where an individual lives, makes his or her home and conducts his or her daily affairs, including, without limitation, paying bills and receiving mail, and is generally the residential address used on documentation related to billing, identification, taxation and insurance purposes, including, without limitation, income tax returns, Medical Services Plan documentation, driver’s licenses, personal identification, vehicle registration and utility bills and, for the purposes of this by-law, a person may only have one principal residence;

Also, Section 4.7 and 4.8 of the bylaw;

• 4.7 The Collector of Taxes may require a registered owner to provide information at any time and for a period of up to two years after the applicable vacancy reference period ………
• 4.8 The Collector of Taxes may require a registered owner to submit evidence to verify a property status declaration and the status of the property.

For your reference, you can also find a copy of the Vacancy Tax By-Law No.11674, here: https://bylaws.vancouver.ca/11674c.PDF

Most properties will not be subject to the Empty Homes Tax / Vacancy Tax, including those:

• Used as a principal residence by the owner, his/her family member or friend, or other permitted occupier for at least six months of the current year
• Rented for residential purposes for at least six months of the current year, in periods of 30 or more consecutive days
• Meeting the criteria for one of the exemptions

You can learn more about the Vacancy Tax at the Vancouver.ca/eht or by following this link.

A reminder, pursuant to the Vacancy Tax Bylaw No. 11674 – every owner of class 1 residential property in the City of Vancouver must make a Property Status Declaration every year. The declaration period for 2018 Property Status Declaration is now open. The 2018 Empty Homes Tax property status declaration period will open until February 4, 2019. Failure to declare by February 4, 2019, will result in your property being deemed vacant and subject to a tax of 1% of its assessed taxable value.

During the declaration period, you can make your Property Status Declaration through one of the following options:

• Online – at the City’s website vancouver.ca  – with your folio number and access code you can make your declaration from anywhere, anytime with internet connection
• By calling 3-1-1 within the City of Vancouver or 604-873-7000 (from outside the city) – our staff at the calling centre are available from 7:00am to 10:00pm 7-days a week including holidays
• At the City Hall – during business hours
• At your local Vancouver Public Library – during library’s hours, please have your folio number and access code available

Panel of developers predict housing trends for coming year with cautious optimism; one says single-family price correction was “necessary”

Joannah Connolly
Western Investor

Home prices in Metro Vancouver may slide further in 2019 but then will recover as demand continues and supply remains constrained, according to a panel of developers at a 2019 forecast event.

Speaking at the Urban Development Institute’s annual Forecast Luncheon on January 17, Neil Chrystal, president and CEO of Polygon Homes, said, “This year, the single-family home market will remain slow, and experience further price corrections…. In order for prices in the multi-family market to stabilize, we must first find the bottom of the single-family market, and I believe this will happen in 2019. 2019 will be the year of a reset in the multi-family sector. Developers will have to offer new homes at reset prices.”

Chrystal added, “I honestly believe this is a good thing. If any market was overshot it was the high-end single-family sector, and these price adjustments are long overdue, and quite frankly necessary, before the market can move forward again. But I think we’re near the bottom, because people will need to get on with their lives.”

Eric Carlson, founder and CEO of Anthem Properties, said, “Many are eager for the [home price] bubble to burst. But there is no bubble. This is just a slight adjustment. More expensive single-family homes will adjust more, and as you move towards the middle and lower end, prices will also adjust a little, stop, and then reverse. I expect these price declines to dissipate over the next year, even reverse by the end of the year, and here’s why. Once the market adjusts to whatever foreign buyers and [those affected by the speculation tax] leave it because of the taxes, new investor demand will take its place and prices will grow from there.”

Carlson agreed with Chrystal that a market slowdown can only last so long. “There’s still a push on the market. We still have these 15 to 20,000 new households forming every year, no matter what – and they need housing. And people can temporarily stay in their parents’ basement suites or double up, but at some point they’ll stop waiting and buy, and I think that ‘some point’ is some months away. And that’s happening no matter what’s going on in Shaughnessy or the British Properties.”

Carslon said that he also expected average rents to continue to rise by well above the rate of inflation, despite new rent control measures that tie rental price increases to inflation on occupied units.

Todd Yuen, president of industrial at Beedie Development Group, pointed to the influx of many thousands of new workers from companies such as Amazon as having an effect on demand in the housing market (known as the “Amazon effect”). He cited an anonymous source close to Amazon’s deal to occupy the former Canada Post building in downtown Vancouver, who told Yuen that with Amazon’s employees earning around US80K-$120 a year (CAD $106-$160K), the company was not concerned about finding housing for those workers.

“We’re expecting Amazon to bring in about 5,300 employees [to the Canada Post building]… Amazon’s workers want to be in a world-class city like Vancouver. There was no concern about availability of homes or pricing… Most of all, [Amazon values] Vancouver’s post-secondary education [as a source of new employees]. So they want to be here, and they’ll figure out the rest later.”

In response to moderator Jon Stovell’s question of whether such companies are “just going to stare down the housing market,” Yuen noted Microsoft’s recent announcement that the company is spending $500 million in Seattle on affordable housing, for its own workers and for the homeless, as an example of a possible solution.

Copyright © Western Investor

Polygon Homes CEO warning homebuyers that proposed condo projects may be cancelled

Josh Sherman
other

The president and CEO of a major developer is warning homebuyers that more proposed condo projects may be cancelled as inexperienced builders struggle in a cooler market that is still finding bottom.

 “Last year, we also saw a few smaller projects get into trouble where they were either cancelled, or, in one situation, buyers were asked to pay additional money to ensure completion of their project,” says Neil Chrystal, the top executive at Polygon Homes, at the Urban Development Institute’s recent 2019 forecast event.

“We may see more of this in 2019, as many inexperienced homebuilders struggle to find suitable financing and are faced with significantly higher construction costs,” he continues.

As a result of falling revenues and higher municipal fees, one Vancouver development was cancelled during the approvals process in the past year, according to industry researcher Urban Analytics. Two other projects were pulled from the market but may relaunch.

Bottom of Form

“They haven’t necessarily been cancelled; rather the developers pulled them off the market and are re-evaluating the product and may make some changes prior to bringing them back on the market,” explains Michael Ferreira, managing principal of Urban Analytics, in an email. “So they may modify the unit mix and pricing,” he adds.

Polygon’s Chrystal has some advice for anyone who wants to buy a home in Vancouver this year at a time when condo projects aren’t guaranteed to move forward. He suggests sticking to developments from experienced builders with successful track records.

Despite — or perhaps, because of — the challenges some developers may face, Chrystal suggests 2019 is a good time to purchase a home in Vancouver.

After all, in order to receive financing to actually build a project, developers need to sell a certain number of units before breaking ground. “Builders are introducing incentives and are releasing product at prices well off the peaks of 2018,” says Chrystal.

And despite mortgage rates climbing in the past year, they are still historically low — for now. The Bank of Canada has made it clear that it intends to raise the overnight rate, which influences the lending market, though Chrystal doesn’t anticipate that will happen this year, despite some predictions to the contrary.

Chrystal also highlights job growth and low unemployment in the region. “It is very rare for a housing market to remain depressed when the local economy is doing so well,” he says, suggesting these builder incentives and price reductions won’t last long.

© 2019 BuzzBuzzHome Corp

Will your home be taxed?

other

Each year, every owner of residential property will have to make a property status declaration. This will determine if the property is subject to the Empty Homes Tax, also known as the Vacancy Tax.

The Province of BC’s Speculation and Vacancy Tax  is in addition to the City’s Empty Homes Tax. If you own residential property in Vancouver, you may have to pay both taxes

Properties not subject to the tax

Most properties will not be subject to the Empty Homes Tax, including those:

• Used as a principal residence by the owner, his/her family member or friend, or other permitted occupier for at least six months of the 2018 tax year
• Rented for residential purposes for at least six months of the current year, in periods of 30 or more consecutive days
• Meeting the criteria for one of the exemptions 

See if the tax applies to you

Exemptions and scenarios that may apply to you

This content is for informational purposes only. It is not intended as advice or a determination of whether your property will be subject to the Empty Homes Tax

If there is any discrepancy between the information provided here and the provisions of the Vacancy Tax Bylaw  (183 KB), the latter will prevail.  These changes are in effect for the 2018 reference period (January 1 to December 31, 2018.)

Exemptions:

You will not be subject to the tax if you can meet one of the exemptions listed below.

If you claim one of the following exemptions, you must be able to provide evidence that validates your declaration if asked.

Clarifications to the Vacancy Tax bylaw were made on September 18, 2018. These changes are in effect for the 2018 reference period (January 1 to December 31, 2018).

Evidence documentation is not required at the time of declaration and will only be requested if the property is selected for audit.

Exemption types

Occupancy for full-time employment

Owner in care

Estate of deceased

Transfer of property

Undergoing redevelopment or major renovations

Strata rental restriction

Court order

Limited use residential property

© 2019 City of Vancouver

Five year fixed rate dropped by 15 basis points

Canadian Real Estate Wealth

Royal Bank of Canada has lowered its posted five-year fixed rate by 15 basis points from 3.89 per cent to 3.74 per cent.

Mortgage rate comparison website founder Robert McLister says RBC is the first of the Big Six banks to cut its advertised five-year fixed rate after a fall in five-year bond yields.

McLister adds that he expects other big banks to follow suit in the coming days.

When asked what prompted the rate drop, an RBC spokesperson said a number of factors have impacted the Toronto-based bank’s cost of funds.

RBC says that includes the rate the bank pays in the wholesale market, increasing regulatory costs and market volatility.

McLister says now that market volatility has subsided, the bank’s competitors have started undercutting big banks which puts pressure on them to act.

Copyright © 2019 Key Media Pty Ltd