Canada Housing/Debt: Trust me, I'm a landlord.

The Something Awful Forums > Discussion > Debate & Discussion > Canada Housing/Debt: Trust me, I'm a landlord.

T.C.: Feb 10, 2004; Believe.

Even if the bank of Canada performativity did one small cut, it's not like they can significantly diverge from the US, so anyone who's talking up a substantive change before the US starts cutting is likely selling something

# ? May 11, 2024 03:15

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# ? Jun 8, 2024 08:59

Femtosecond: Aug 2, 2003

No real surprise? I mean even telling the CRA that you sold your home wasn't required until just a few years ago and not avoiding taxes is practically a badge of honour amongst the rich business set.

quote:

CRA uncovers $1.3 billion in unpaid taxes in B.C. real estate sector
The CRA identified $957 million in unpaid income taxes over eight years of audits targeting B.C. real estate, more than five times the amount in Ontario, which has three times B.C.'s population

After taking a deeper look into B.C.�s real estate sector, Canada�s tax regulator has uncovered $1.3 billion in unpaid tax bills.

The Canada Revenue Agency has dramatically ramped up its auditing of real estate in recent years, scrutinizing both personal transactions and professional activities.

The agency has found �a disproportionate amount of non-compliance� in Canada�s largest metropolitan centres, with Metro Vancouver �identified as an area that requires our unique attention,� said Jason Charron, director general of the CRA�s compliance programs branch, recently. �We�re continuing to focus on the Lower Mainland, where we know there�s non-compliance.�

Since launching a dedicated real estate task force in 2019, the CRA has mostly focused on Ontario and B.C., increasing the number of audits performed, sending out reassessment notices for billions in additional taxes the agency believes should be paid, and levying hundreds of million dollars in penalties.

In Ontario, the agency assessed $1.4 billion in unpaid taxes and penalties in the real estate sector between 2015 and 2023. B.C., which has about a third of Ontario�s population, had almost the same amount of tax non-compliance identified over the same period: $1.3 billion.

These real estate audits looked at a wide range of activities and entities: property-sellers illegitimately claiming the principal residence exemption, unreported capital gains, people who reside outside of Canada and invest in property here, share transfers and corporate structures designed to mask a property�s beneficial owners, and the activities of homebuilders and realtors.

Although the total value of unpaid taxes and penalties found in B.C. and Ontario was similar, the nature of non-compliance was markedly different in the two provinces. In Ontario, most non-compliance identified by the CRA in real estate was related to unpaid GST and HST on new homes or inappropriately claimed rebates on those taxes. In B.C., most of the non-compliance related to income tax.

Data provided by the CRA shows that the agency identified $957 million in income tax-related non-compliance in B.C. real estate between 2015 and 2023, more than five times the amount found in the larger province of Ontario, at $178 million, over the same period.

The CRA says confidentiality laws prevent the release of information about the audits, but sent a written statement that said, in general, the income tax-related non-compliance included:

� Situations where a taxpayer acquired an expensive home without a clear reported source of income

� Profits from the quick flipping of homes that aren�t properly reported as taxable business income

� People, including those who aren�t residents of Canada, failing to report capital gains on sales of real estate

� Unreported income earned outside of Canada

� Non-compliance by realtors and developers.

The CRA declined to say how which categories the $957 million broke into � for example, how much was related to property flippers or developers or non-residents � citing the need to protect taxpayer information and maintain �the integrity of our risk assessment system.�

The number of income tax-related audits CRA conducted in B.C. real estate increased by almost 10 times between the 114 audit files opened in the 2015 fiscal year and the 1,089 opened last year.

There has been a corresponding boom in what the agency calls �audit assessments,� meaning the combined value of unpaid taxes still owing and penalties levied. Income tax-related audit assessments related to B.C. real estate averaged $6.4 million annually for the two fiscal years between 2015 and 2017, and shot up to an average of $155.1 million annually over the most recent two-year period, a 2,300 per cent increase.

Canada�s 2019 federal budget included $50 million over five years for the CRA to create a real estate task force, with specialized audit teams. Last month, the 2024 budget boosted that funding to $73 million for the next five years.

This work seems to be �paying for itself and then some,� said Tom Davidoff, an associate professor at the University of B.C.�s Sauder School of Business. The findings show there was �obviously� some kind of problem with tax compliance in this sector, he said, �but what we don�t know is how big of a problem it is now � If there was a problem and they solved it, that would be fantastic.�

For years, many British Columbians were �ringing the bell� about people cheating on their taxes with real estate dealings, said Davidoff, director of UBC�s Centre for Urban Economics and Real Estate. This recent crackdown might not make housing in B.C. significantly more affordable, he said, �but it�s real money and it�s certainly useful to get it back where it belongs.�

Davidoff co-authored a 2022 paper published in The Canadian Tax Journal, which examined the top five per cent of Greater Vancouver homes had a median value of $3.7 million, while the median owner paid income taxes of just $15,800. This was the lowest correlation of property values to income tax contributions of any North American city, the authors wrote, concluding that �most luxury homes in Greater Vancouver appear to be purchased with wealth derived from sources other than earnings taxed in Canada.�

Considering these earlier findings, Davidoff said it makes sense that the CRA�s recent audits of B.C. real estate uncovered income tax �chicanery.�

Representatives of both the Greater Vancouver Realtors and the Canadian Home Builders Association of B.C. said they haven�t heard anything from their members about any recent increases or changes in CRA activity.

Canadians for Tax Fairness, a non-profit tax policy advocacy group, said it welcomes the CRA �doing more to ensure that the real estate sector complies with tax laws, and we encourage the government to adequately fund the CRA so they can do their job.�

In an emailed statement, Canadians for Tax Fairness spokeswoman Erica Shiner said: �Tax avoidance continues to be a problem in many sectors, costing Canadians billions in revenue each year.�

That last bolded point another reminder that although the various taxes on foreign buying may have not lead us to the promised land of housing affordability for all, foreign capital was/is real and had a distortionary impact on the market.

# ? May 15, 2024 17:10

Hubbert: Mar 25, 2007; At a time of universal deceit, telling the truth is a revolutionary act.

Femtosecond posted:

That last bolded point another reminder that although the various taxes on foreign buying may have not lead us to the promised land of housing affordability for all, foreign capital was/is real and had a distortionary impact on the market.

drat, that's crazy, no one could have expected this!

quote:

These real estate audits looked at a wide range of activities and entities: property-sellers illegitimately claiming the principal residence exemption, unreported capital gains, people who reside outside of Canada and invest in property here, share transfers and corporate structures designed to mask a property’s beneficial owners, and the activities of homebuilders and realtors.

[...]

For years, many British Columbians were “ringing the bell” about people cheating on their taxes with real estate dealings, said Davidoff, director of UBC’s Centre for Urban Economics and Real Estate. This recent crackdown might not make housing in B.C. significantly more affordable, he said, “but it’s real money and it’s certainly useful to get it back where it belongs.”

Davidoff co-authored a 2022 paper published in The Canadian Tax Journal, which examined the top five per cent of Greater Vancouver homes had a median value of $3.7 million, while the median owner paid income taxes of just $15,800. This was the lowest correlation of property values to income tax contributions of any North American city, the authors wrote, concluding that “most luxury homes in Greater Vancouver appear to be purchased with wealth derived from sources other than earnings taxed in Canada.”

Considering these earlier findings, Davidoff said it makes sense that the CRA’s recent audits of B.C. real estate uncovered income tax “chicanery.”

lol lmao

Hubbert fucked around with this message at 18:23 on May 15, 2024

# ? May 15, 2024 18:20

COPE 27: Sep 11, 2006

Justin Trudeau actually managed to solve my own personal housing affordability, thanks to having high income, no assets, low cost of living area , high taxes, and a spouse but no kids I was able to make a down payment magically appear and get a mortgage that is cheaper than rent. I love neoliberalism now!

# ? May 15, 2024 20:08

T.C.: Feb 10, 2004; Believe.

Eh, that paper looks pretty bad, honestly. The foreign stuff is really weak and is just tacked on to a tax policy paper. Then he throws some really strong conclusion statements, including that quote.

# ? May 15, 2024 20:15

Lead out in cuffs: Sep 18, 2012; "That's right. We've evolved."

"I can see that. Cool mutations."

Femtosecond posted:

No real surprise? I mean even telling the CRA that you sold your home wasn't required until just a few years ago and not avoiding taxes is practically a badge of honour amongst the rich business set.

That last bolded point another reminder that although the various taxes on foreign buying may have not lead us to the promised land of housing affordability for all, foreign capital was/is real and had a distortionary impact on the market.

Eh, the taxes helped, but it's always been clear that enforcement is the bigger issue, and that's squarely a federal responsibility (even though the issue is local).

# ? May 15, 2024 20:15

Femtosecond: Aug 2, 2003

T.C. posted:

Eh, that paper looks pretty bad, honestly. The foreign stuff is really weak and is just tacked on to a tax policy paper. Then he throws some really strong conclusion statements, including that quote.

yea it's basically a tax policy paper and then like, "well there's no real good explanation for why someone can afford this property with no income so presumably it comes from somewhere else??"

But the last person that tried to look into this issue from a more direct angle, Andy Yan, looking at the names of the persons who were claiming no income, was called a racist so I think Canadians are going to be too polite to really look into the details of this issue.

And tbh I don't think it really matters. The relevant part is the tax evasion.

The whole foreign buyer/capital issue is a basket of several problems such as:

1) Rich foreigners bailing on their home countries and retiring here.
2) "Satellite families" where folks have a foot on two countries, working in one and living partially here. (Really people that are just getting a early start on point 1).
3) Rich foreign investors looking for yield and buying condos to flip or hold. (ie. condos are cheaper in Vancouver than Hong Kong).
4) Rich foreigners wanting a Pied-a-Terre (the market of every building Westbank made for several years).

Pretty clear how points 1 and 2 would create the appearance of a weird lack of income. Canada caught flat footed here because no one ever thought retirees would be a problem and that we'd run out of SFHs for them to buy and that locals would start becoming unhappy that they couldn't find a SFH to buy.

Given that folks in category 1 and 2 were largely Permanent Residents because they were planning on moving here forever, the foreign buyers tax largely targeted point 3 and 4. We know that this has had an impact because we're seeing condos, especially of the luxury type made by Westbank, basically disappear from the list of residential development proposals and a significant rise in purpose built rental proposals.

Femtosecond fucked around with this message at 20:58 on May 15, 2024

# ? May 15, 2024 20:56

Muscle Tracer: Feb 23, 2007; Medals only weigh one down.

COPE 27 posted:

Justin Trudeau actually managed to solve my own personal housing affordability, thanks to having high income, no assets, low cost of living area , high taxes, and a spouse but no kids I was able to make a down payment magically appear and get a mortgage that is cheaper than rent. I love neoliberalism now!

same, except the loving neoliberalism part.

# ? May 15, 2024 21:45

Precambrian Video Games: Aug 19, 2002

He was evicted and his home was later listed on Airbnb. Meanwhile, his landlord hosted a charity event to end homelessness. (link)

quote:

While they both lived in London, Ont., their worlds were very far apart.

Tech entrepreneur Adam Malamis was well-known in London�s business and charitable sectors. He had been on the Chamber of Commerce board and recognized as a �Top 20 under 40� by London Inc. magazine. His web-development firm, Simalam, caters to non-profits and government agencies and he helped launch a nationwide volunteer snow-shovelling network described as �an experiment in kindness.�

Meanwhile, Erwin Long was living a reclusive life in a small duplex. He preferred the company of his cat, Boo-Boo. �I always had cats all my life. I�m from a big family,� Long, 61, said in an interview. �Everybody had their own pet. Eight kids, eight pets.� His unit at the front of the small bungalow had a porch, big kitchen and a small bedroom just wide enough to fit a queen-sized bed. After a workplace injury dislocated his hip and injured his back, he said his mental health worsened and he could no longer work. But at $550 per month, he could afford the rent on his disability pension.

Their worlds collided in 2019. That was the year Malamis launched an annual charity boxing match dubbed �Fight to End Homelessness� � envisioned as a Vegas-style, white-collar, black-tie boxing match where business leaders square off to raise money for the homeless. Sponsored by the city�s biggest developers, the event has raised more than $700,000 for shelters run by Youth Opportunities Unlimited.

It�s also the year a company for which Malamis is the sole director bought Long�s duplex and illegally evicted him, leaving him sleeping on the street and bouncing between shelters, a rooming house and a motel room. And even though the Landlord and Tenant Board ruled in Long�s favour, with the adjudicator saying the landlord�s actions were �deplorable,� years later Long has yet to be paid any of the money owing to him.

Not even quoting the rest of the story because it just gets worse and worse, this piece of poo poo is refusing to pay the whopping $6700 fine he owes and the LTB can't do anything about it because they don't enforce anything. I'll remember this next time some scumbag landlord whines about how long it takes to evict renters.

I don't even know what to say about the fact that this house is going for $110/night on AirBnb. In London!

Precambrian Video Games fucked around with this message at 06:59 on May 16, 2024

# ? May 16, 2024 06:57

qhat: Jul 6, 2015

What�s the odds this web development firm he owns is another overly expensive government contractor that is friends with the same people who were responsible for the ArriveCAN debacle?

# ? May 16, 2024 08:50

T.C.: Feb 10, 2004; Believe.

quote:

“Top 20 under 40” by London Inc. magazine

Get your loving act together, local business magazine. The number of people has to equal the age.

God damned amateurs

# ? May 16, 2024 11:09

Muscle Tracer: Feb 23, 2007; Medals only weigh one down.

T.C. posted:

Get your loving act together, local business magazine. The number of people has to equal the age.

God damned amateurs

It's tough when there are only 20 entrepreneurs in the whole town, OK?

# ? May 16, 2024 13:27

Purgatory Glory: Feb 20, 2005

Muscle Tracer posted:

It's tough when there are only 20 entrepreneurs in the whole town, OK?

Every landlord is an entrepreneur :eng101:

# ? May 16, 2024 16:41

COPE 27: Sep 11, 2006

How about a middle 20 between 20 and 40

# ? May 16, 2024 17:50

PT6A: Jan 5, 2006; Public school teachers are callous dictators who won't lift a finger to stop children from peeing in my plane

Landlords should be subject to a $5000 fine per unit each year that they can't secure a character reference from their tenants.

You know how car salesmen are like "please rank me five stars on everything or the sales manager will spank me!"? That's how landlords should feel.

# ? May 16, 2024 18:29

COPE 27: Sep 11, 2006

Re-education camp for any landlord with a NPS below 80

# ? May 17, 2024 02:22

qhat: Jul 6, 2015

If by NPS below 80 you mean a detectable heart beat, and by reduction camp you mean guillotine without trial, I�m on board.

# ? May 17, 2024 02:50

Precambrian Video Games: Aug 19, 2002

Landlords should have to get a license at a residential school.

# ? May 17, 2024 02:53

Femtosecond: Aug 2, 2003

Here's an example about how ~luxury furnishings~ are irrelevant and 100% do not matter in the grand scheme of things.

Look at the furnishings on this ~800 sqft DTES condo, currently for sale for about $700k at $900/sqft. A bit of a discount from the typical $1000/sqft we see in Vancouver, but is that because of the furnishings or the DTES? Probably more the latter.

https://www.rew.ca/properties/5641878/502-66-w-cordova-street-vancouver-bc

How on earth could the furnishings be so insanely basic and bad?

Well folks may recall that this building was one of the early attempts to engineer affordable housing through simply making it very basic and the developer just taking less profit. The units in this DTES building were sold for sub $300k with a priority for local DTES area workers.

The problem of course was that there was no priority given to whoever the first buyers sold it to after. So ultimately those early buyers got an incredible discount and then turned around and flipped it.

Looking back on this article though lol imagine paper handing this and only flipping it for a mere 70k gain in 2014 when the real spike was yet to come and a 400k gain was possible.

So here we are now with this one time $300k unit now selling for $700k+ and still having hilariously low quality furnishings.

Femtosecond fucked around with this message at 01:41 on May 25, 2024

# ? May 25, 2024 01:35

Freshwater Louie: Jun 22, 2004; fffffffff

but but but at least it is a block west of where the DTES starts, and you are only a block away from some overpriced tex mex at tacofino and gringo

# ? May 25, 2024 05:08

qhat: Jul 6, 2015

Gringo is my favourite completely unmemorable place that I�ve only ever been once in my life

# ? May 25, 2024 05:26

Precambrian Video Games: Aug 19, 2002

If there's one thing developers and builders love it's kitchen cabinets than can barely fit a normal-sized plate. Or you know, no cabinets at all.

# ? May 25, 2024 05:56

RBC: Nov 23, 2007; IM STILL SPENDING MONEY FROM 1888

we've found that millinieals dont like kitchen cabinets, windows, or appliances so we're just building what sells

# ? May 25, 2024 22:50

Boot and Rally: Apr 21, 2006; 8===D; Nap Ghost

Femtosecond posted:

Here's an example about how ~luxury furnishings~ are irrelevant and 100% do not matter in the grand scheme of things.

Look at the furnishings on this ~800 sqft DTES condo, currently for sale for about $700k at $900/sqft. A bit of a discount from the typical $1000/sqft we see in Vancouver, but is that because of the furnishings or the DTES? Probably more the latter.

https://www.rew.ca/properties/5641878/502-66-w-cordova-street-vancouver-bc

How on earth could the furnishings be so insanely basic and bad?

Well folks may recall that this building was one of the early attempts to engineer affordable housing through simply making it very basic and the developer just taking less profit. The units in this DTES building were sold for sub $300k with a priority for local DTES area workers.

The problem of course was that there was no priority given to whoever the first buyers sold it to after. So ultimately those early buyers got an incredible discount and then turned around and flipped it.

Looking back on this article though lol imagine paper handing this and only flipping it for a mere 70k gain in 2014 when the real spike was yet to come and a 400k gain was possible.

So here we are now with this one time $300k unit now selling for $700k+ and still having hilariously low quality furnishings.

It seems that most (all?) affordability programs have issues. The options seems to be "help people get into a house, then let them do whatever" (the above case) which is a huge hand out to the person who gets in the house first. Or "help people get into a house, then require they share the gains" which means people do not, or cannot, leave, and so is a huge hand out to the person who gets in the house first. The issue is one of entrance vs exit affordability (see here: https://hub.hku.hk/bitstream/10722/274609/1/Content.pdf?accept=1).

# ? May 26, 2024 15:33

Subjunctive: Sep 12, 2006; ✨sparkle and shine✨

Taxation of gains on primary residence sale is the same as the latter form, right? Have to share the gains, and so can�t afford to purchase an equivalent property?

# ? May 26, 2024 15:45

MickeyFinn: May 8, 2007; Biggie Smalls and Junior Mafia some mark ass bitches

Subjunctive posted:

Taxation of gains on primary residence sale is the same as the latter form, right? Have to share the gains, and so can�t afford to purchase an equivalent property?

Why couldn�t someone buy the same place again? If you could afford the payments the first time, why not the second?

# ? May 26, 2024 20:43

Subjunctive: Sep 12, 2006; ✨sparkle and shine✨

MickeyFinn posted:

Why couldn�t someone buy the same place again? If you could afford the payments the first time, why not the second?

You purchase a house for $100,000.

It and another identical house increase in price to $200,000.

You sell your house for $200,000, and pay 25% tax on the gains of $100,000.

You now have $175,000 to buy a $200,000 house.

I don�t think it matters how much of the purchase price you mortgage, you lost money you might not be able to afford by what�s effectively a �wash sale� of homes. If you�re porting a mortgage you�re going to have to grow it to cover that extra $25,000 of equity value you lost, I imagine.

# ? May 27, 2024 02:56

PT6A: Jan 5, 2006; Public school teachers are callous dictators who won't lift a finger to stop children from peeing in my plane

Subjunctive posted:

You purchase a house for $100,000.

It and another identical house increase in price to $200,000.

You sell your house for $200,000, and pay 25% tax on the gains of $100,000.

You now have $175,000 to buy a $200,000 house.

I don�t think it matters how much of the purchase price you mortgage, you lost money you might not be able to afford by what�s effectively a �wash sale� of homes. If you�re porting a mortgage you�re going to have to grow it to cover that extra $25,000 of equity value you lost, I imagine.

I�m no expert but I feel like this is why policy that made real estate number go up constantly was, in fact, a lovely stupid fuckin� idea.

# ? May 27, 2024 03:37

MickeyFinn: May 8, 2007; Biggie Smalls and Junior Mafia some mark ass bitches

Subjunctive posted:

You purchase a house for $100,000.

It and another identical house increase in price to $200,000.

You sell your house for $200,000, and pay 25% tax on the gains of $100,000.

You now have $175,000 to buy a $200,000 house.

I don�t think it matters how much of the purchase price you mortgage, you lost money you might not be able to afford by what�s effectively a �wash sale� of homes. If you�re porting a mortgage you�re going to have to grow it to cover that extra $25,000 of equity value you lost, I imagine.

I don�t think you�ll get the astronomical housing price increases if there are large taxes on the gains, so I�m not sure this example is relevant. It also isn�t clear to me that we should be planning housing policy around making sure that people who already bought a place get to keep buying more, the same or otherwise. That philosophy seems to be a strong contributor to the current crisis.

# ? May 27, 2024 04:09

Boot and Rally: Apr 21, 2006; 8===D; Nap Ghost

Exit affordability includes taxes, closing costs, realtor fees, the whole shebang. For all of those things, policy needs to be set to achieve a certain goal. That is true of all taxes and fees. The same argument could be made for gains on other investments. In the housing market in general taxes are used to pay for things that government needs to do. It is a transaction and investment the same as any other. The balance has to be right to not freeze up the market (unless you want to). As long as mortgages are easy to get I think it makes sense to tax gains. It is complicated, you have to balance the handouts to owners vs. renters and so on.

It is different for affordable housing. If the goal is to provide housing and not expect them to leave then exit affordability doesn't matter. If the stated goal is to get people into the market in general, via affordably housing, then you have to consider exit affordability. The usual case is to get people out of affordable housing because it keeps expectations to funding a program once and keep cycling that money back in to help other people. This creates tension because the goal of recycling the funding and getting people into the wider market are at odds.

# ? May 27, 2024 05:21

Subjunctive: Sep 12, 2006; ✨sparkle and shine✨

MickeyFinn posted:

I don�t think you�ll get the astronomical housing price increases if there are large taxes on the gains, so I�m not sure this example is relevant. It also isn�t clear to me that we should be planning housing policy around making sure that people who already bought a place get to keep buying more, the same or otherwise. That philosophy seems to be a strong contributor to the current crisis.

I�m not saying that it should or shouldn�t be, I�m pointing out a parallel, and explaining to you how it affects affordability because you explicitly asked to have it explained.

# ? May 27, 2024 08:27

Muscle Tracer: Feb 23, 2007; Medals only weigh one down.

PT6A posted:

I’m no expert but I feel like this is why policy that made real estate number go up constantly was, in fact, a lovely stupid fuckin’ idea.

Nah, see, if you're in that scenario and are moving into a retirement home instead of a new hosuse, you just get to keep the $75k of pure profit.

And boy are you gonna need it once you see what these ghouls are charging!

# ? May 27, 2024 13:28

MickeyFinn: May 8, 2007; Biggie Smalls and Junior Mafia some mark ass bitches

Subjunctive posted:

I�m not saying that it should or shouldn�t be, I�m pointing out a parallel, and explaining to you how it affects affordability because you explicitly asked to have it explained.

Yes, the question was to tease out your assumptions on how taxes on housing gains might affect affordability. In my follow up post, I�m pointing out that your assumption of large housing appreciation (2x) is likely faulty in the case of significant taxes on housing gains and that the status quo of housing as a quickly appreciating asset is bad policy.

To be more clear: the premise of your original post seems to me to be that housing prices must go up, otherwise you would not be concerned about being able to buy the same house again when gains taxes are brought up. And I want to point out that large enough taxes on housing gains would significantly slow long term housing appreciation as it would no longer be an appealing speculative asset.

# ? May 27, 2024 15:40

ZShakespeare: Jul 20, 2003; War gives the right to the conquerors to impose any condition they please upon the vanquished.

Buy the house and then die in it.

# ? May 27, 2024 16:02

Baronjutter: Dec 31, 2007; "Tiny Trains"

I think all profits should be taxed. I don't care if you made 100k in pure profit from selling canned corn you kept in a vault, a house, or stocks. Just tax it all the same, no carve outs for middle class voters.

# ? May 27, 2024 16:11

Femtosecond: Aug 2, 2003

MickeyFinn posted:

I don�t think you�ll get the astronomical housing price increases if there are large taxes on the gains, so I�m not sure this example is relevant. It also isn�t clear to me that we should be planning housing policy around making sure that people who already bought a place get to keep buying more, the same or otherwise. That philosophy seems to be a strong contributor to the current crisis.

I think it's bad if we discourage and punish sideways moves through tax policy.

Ideally there should be no friction from someone in Vancouver taking a better job in Toronto, but if there's remarkable financial penalty to selling your house and moving versus staying put, then we've put up barriers to people moving and changing careers (uh oh the economists are upset). That's the best case scenario where someone is presumably getting a pay raise to take some better job. There's also the scenario of someone simply moving to take care of a parent or something where they'd be losing even more.

We already have a problem of Boomers not downsizing and staying in their homes because they correctly look around at the options and say "well lol these are terrible" and moving to some new tiny condo that is so expensive that it doesn't put enough money in their pocket to make up for the hassle. If we add even more financial penalty to moving, we'll have even less people move.

I can forsee problems around reduced liquidity in the housing market. It's hard to take the leap of faith that assumes that price appreciation will come down so it won't matter.

Femtosecond fucked around with this message at 17:09 on May 27, 2024

# ? May 27, 2024 17:05

Subjunctive: Sep 12, 2006; ✨sparkle and shine✨

Baronjutter posted:

I think all profits should be taxed. I don't care if you made 100k in pure profit from selling canned corn you kept in a vault, a house, or stocks. Just tax it all the same, no carve outs for middle class voters.

I think this should be true, and I hold it next to my heart with the belief that housing should not be subject to market forces or financial structures.

(I also think that cost basis should be indexed to inflation for everything, while I�m at it, but I think that�s more intellectually appealing than useful policy given how slippery the variable effects of �inflation� on different groups are.)

Subjunctive fucked around with this message at 17:33 on May 27, 2024

# ? May 27, 2024 17:30

Subjunctive: Sep 12, 2006; ✨sparkle and shine✨

MickeyFinn posted:

Yes, the question was to tease out your assumptions on how taxes on housing gains might affect affordability. In my follow up post, I�m pointing out that your assumption of large housing appreciation (2x) is likely faulty in the case of significant taxes on housing gains and that the status quo of housing as a quickly appreciating asset is bad policy.

To be more clear: the premise of your original post seems to me to be that housing prices must go up, otherwise you would not be concerned about being able to buy the same house again when gains taxes are brought up. And I want to point out that large enough taxes on housing gains would significantly slow long term housing appreciation as it would no longer be an appealing speculative asset.

2x doesn�t matter, it was just to make the math clearer. I also didn�t say what timeline the 2x was on, and I think even you�ll agree that �large housing gains� typically imply a short timeframe relative to inflation. taxing capital gains on primary residences isn�t going to stop inflation

the same issue is present if the starting price was $1,000,000 and the sale price is $1,100,000, a mere 10% increase, which could be after 10 years in the house meaning that the �asset� trails inflation

if housing prices don�t go up faster than wages then the concept of �exit affordability� wouldn�t really be germane in the first place, and that concern about exit affordability applying to principal residence taxes as it does to the factors discussed in the post to which I was replying

(even if house prices were frozen by law at those of May 27, 2024, most homeowners are�I suspect without research�sitting on unrealized gains that would be subject to capital gains tax and put them in this position, but I guess it would only happen for the next sale)

the reality is that housing prices are subject to market forces, which mean that they can vary for a given homeowner even when there isn�t a crazy systemic increase across the entire continent

# ? May 27, 2024 17:30

Boot and Rally: Apr 21, 2006; 8===D; Nap Ghost

Femtosecond posted:

I think it's bad if we discourage and punish sideways moves through tax policy.

Ideally there should be no friction from someone in Vancouver taking a better job in Toronto, but if there's remarkable financial penalty to selling your house and moving versus staying put, then we've put up barriers to people moving and changing careers (uh oh the economists are upset). That's the best case scenario where someone is presumably getting a pay raise to take some better job. There's also the scenario of someone simply moving to take care of a parent or something where they'd be losing even more.

We already have a problem of Boomers not downsizing and staying in their homes because they correctly look around at the options and say "well lol these are terrible" and moving to some new tiny condo that is so expensive that it doesn't put enough money in their pocket to make up for the hassle. If we add even more financial penalty to moving, we'll have even less people move.

I can forsee problems around reduced liquidity in the housing market. It's hard to take the leap of faith that assumes that price appreciation will come down so it won't matter.

That positions ignores all the people who cannot get into housing because it is appreciating so rapidly. I think it overly focuses on one aspect of "freedom to move". If someone wants to maximize freedom to move they should rent. One could also look at mortgaged housing as a way to keep people in a certain area and provide a stable work force for businesses to build off of.

Another way to look at it is that a 30 year mortgages provide freedom to change jobs. After 10 years in a place the mortgage will have only gotten cheaper, so you can take a job that you believe does good instead of having to hustle for the highest paying job to keep up with rent that goes up like clockwork every year.

Boot and Rally fucked around with this message at 18:35 on May 27, 2024

# ? May 27, 2024 17:31

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# ? Jun 8, 2024 08:59

Subjunctive: Sep 12, 2006; ✨sparkle and shine✨

Boot and Rally posted:

That positions ignores all the people who cannot get into housing because it is appreciating so rapidly. I think it overly focuses on one aspect of "freedom to move". If someone wants to maximize freedom to move they should rent.

How would taxing gains on primary residences help with that, specifically? If people are seeking returns, rather than trying to preserve housing status, why wouldn�t they bake the tax into the price they seek for the house? This is basically what happened with HST on new and overhauled houses, from what I can tell.

(Renting provides �freedom to move� but sacrifices things like �I can confidently plan to be here in 6 months� and �I can make changes to the place to better suit my needs�. I lived in a lot of different rental housing as a kid, and it sucked moving between neighbourhood friend groups and even schools every couple of years because the landlord wanted to sell or renovict.)

Subjunctive fucked around with this message at 17:38 on May 27, 2024

# ? May 27, 2024 17:36

The Something Awful Forums > Discussion > Debate & Discussion > Canada Housing/Debt: Trust me, I'm a landlord.

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