26 Feb

BC becomes first in Canada with housing ‘integrity’ register


Posted by: Kimberly Walker

The identity and citizenship of all parties in a condo or strata transaction in British Columbia will be listed in a new register.

The BC finance minister confirmed Monday that the provincial government has launched the Condo and Strata Assignment Integrity Register (CSAIR) with the aim of fighting tax evasion and adding more transparency to BC real estate transactions.

“For too long, speculators and tax evaders have been taking advantage of loopholes in our real estate market, driving up prices and shutting British Columbians out of the market,” said Carole James, Minister of Finance. “B.C.’s housing market needs to work for British Columbians. With this new register, we are leading the country in real estate transparency and taking real action to moderate the condo market. We’re already starting to see results in Metro Vancouver.”

The gap in information caused by pre-sale condo flipping will be closed with this new register as developers will collect and report information including identity and citizenship of all parties.

First quarter reporting

The register is a secure online portal via myLTSA Enterprise and developers are required to provide information from the first quarter of 2019 by April 30 and pay a $195 fee per assignment.

“The condo and strata assignment register is a step in the right direction by creating another tool for transparency and closing tax evasion loopholes in the real estate market,” said James Cohen with Transparency International Canada and Canadians for Tax Fairness. “We hope to see the B.C. government continue this very important path of shining a light on real estate, particularly bringing transparency to anonymous beneficial owners of corporations and trusts, so they are not a soft target for tax evaders and money launderers.”


25 Feb

B.C. real estate audits reveal widespread tax evasion


Posted by: Kimberly Walker

After reporting a record number of B.C. real estate audit assessments in 2018 – amounting to about $170 million – the Canada Revenue Agency is expected to receive a treasure trove of data from the B.C. government tying home ownership to income declarations.

The province is estimating it will collect $642 million over the next four years from the newly implemented BC speculation and vacancy tax, aimed at satellite families and those who leave their secondary urban homes empty for most of the year.

Whether these 2019 budget estimates hold water will partly depend on what the government deems to now be the “most advanced auditing processes in the country,” thanks in part to a suite of new efforts to collect information on home ownership.

Complex audits are bound to follow the submission of speculation tax declaration forms, policy and tax experts suggest.

The annual 2% tax against a satellite family’s assessed home value is designed to bridge a policy gap that has led to tax avoidance attributable to trends in global migration and the internationalization of B.C. real estate.

In essence, satellite family breadwinners earn income abroad while having their families live in B.C. The household thus pays little income tax in Canada but utilizes social services, the bulk of which is paid for by such taxes.

Real estate audits
This chart shows the Canada Revenue Agency’s results of an augmented Ontario and B.C. real estate audit program commencing April, 2015. Ontario’s 31,749 audits averaged $17,241 in reclaimed taxes whereas B.C.’s 6,861 audits reclaimed, on average, $45,241.

B.C. real estate audits lucrative for the taxman

In 2015 the CRA augmented its compliance program for B.C. and Ontario real estate audits. Last month the agency issued a report claiming it had collected $140.7 million from 1,417 real estate audits in B.C. alone, from April, 2018, to December, 2018.  That’s $99,294 per audit, well above the three-year average of $45,182 per B.C. audit, and miles ahead of Ontario’s average of $17,241 per audit.

Tax collectors are getting more efficient, it appears, as 1,470 B.C. real estate audits from April 2015 to March 2016 generated only $18.5 million in evaded taxes.

In B.C., $173.4 million of the $310.4 million recovered in taxes – from 6,861 audits since April 2015 – is income tax related (lifestyle audits of owners of expensive homes and capital gains assessments on home sales). The other portion relates to unreported GST on sales and house flipping. Ontario’s 31,749 real estate audits since April 2015 brought in $547.4 million. Overall, the CRA also applied $70.9 million in penalties for knowingly making false statements.

The $642 million estimated new tax revenue is payment of the speculation tax only. The B.C. government says it has not assessed the amount of tax from unreported worldwide income or capital gains could be recovered from the data it collects for the speculation tax. After Ministry of Finance experts declined an interview request from Glacier Media, the government said it does expect the speculation tax auditing process to help identify overseas tax evasion and thus the ministry is expected to flag audit leads for the CRA.


Out migration and expensive homes

B.C. technically defines a satellite family as one in which unreported worldwide household income is greater than local income.


Satellite family arrangements can be observed by looking at investor-class immigrant “out-migration.”

A government study of the now defunct federal investor immigrant program (foreigners paying an $800,000 loan for permanent residency), favoured by Chinese nationals, showed “out-migration” rates of investor immigrants after 10 years was 26.2 %, well above any other immigrant stream.

As an example, from 2006 to 2010, Canada admitted 13,151 investor immigrants and 34,544 of their spouses and dependents. According to the 2016 census, there remained only 7,590 of those investor immigrants and 27,370 spouses and dependents, showing a disproportionate number of breadwinners left the country within five years.

The average assessed value of homes owned by investor class immigrants in Metro Vancouver, in 2018, was $1.78 million for those admitted by the federal government and $2.2 million for those entering via Quebec, according to a recent Statistics Canada study. Furthermore, recent investor immigrants (since 2009) own single detached houses with average values of either $3.11 million for federal investors or $3.30 million for Quebec investors.

Of 121,650 investor immigrants admitted since 1986 and still declaring residency in Canada, 52% are now located in British Columbia, per census data.


Tax tries to close “bad tax setup”

Satellite family arrangement have given rise to wealthy people – often foreign nationals or recent immigrants – with access to foreign sources of money having a greater advantage in owning homes in Metro Vancouver than local income earners, said Josh Gordon, assistant professor at Simon Fraser University’s School of Public Policy.

Foreign money inflows into real estate by various means have decoupled housing prices from local income earners, Gordon contended, pointing to widely available data of the Vancouver real estate phenomenon where relatively low incomes are reported in some of the most expensive neighbourhoods in Canada.

Gordon said the purpose of the speculation tax is to close the gap on a “huge subsidy” due to a “bad tax setup.”

“It’s a tax avoidance problem, not purely tax evasion. This arrangement is perfectly legal and that’s the problem,” he argued.

“Over time much of the expensive property will come to be owned by people outside the labour market,” said Gordon.

Gordon said presumably higher consumption based taxes paid by satellite families are an inadequate substitute for any unreported or even reported worldwide income.

“Those families will be using the education and health care system for much of their life. The purchase of a couple luxury vehicles does not capture the services they will consume,” said Gordon.

Richmond’s Andersen Tax LLP international tax accountant Steven Flynn said at first glance the speculation tax should be able to capture those families whose breadwinner is not filing Canadian taxes. Should a satellite family try to file a speculation tax exemption, the federal and provincial governments should be able to cross reference low income to high property value, via the auditing system, said Flynn.

For satellite families, “in general terms, by filing for an exemption under the B.C. speculation and vacancy tax, you’re admitting to a government agency that you’re a Canadian resident for income tax purposes. The expectation is the individual is subject to Canadian income tax of their worldwide income,” said Flynn.

But some audits of overseas spouses could be tricky, said David Duff, professor and director of the LL.M. in Taxation program at University of British Columbia’s Peter A. Allard School of Law.

Duff said people make arrangements to ensure that they are not residents in Canada for tax purposes. So one could remain a non-resident for tax purposes in Canada even if their Canadian household does not pay the speculation tax.

“The key is that they’re not residents for Canadian tax purposes. Residence for tax purposes is not the same thing as citizenship or permanent residence status,” he explained.

“Perhaps the [speculation] tax will trigger real or fictitious separations for tax purposes,” he said.

And Flynn said under the federal tax act, overseas cash gifts do not count as worldwide income.

And so, to determine unreported worldwide income, said Duff, “since the CRA has no way to audit this income directly, it will have to rely on whatever information it is able to obtain from the jurisdiction in which the spouse is a resident.”

“It will be necessary to get information from other jurisdictions on the income of spouses of Canadian citizens or permanent residents who claim the exemption. This is increasingly possible with improvements in the international exchange of tax information, but a significant administrative challenge nonetheless,” Duff said.

Polling indicates the BC NDP’s new speculation tax is supported by four in five British Columbians, but the opposition BC Liberals and special interest groups have panned its implementation, citing objections such as allegedly unclear and unfair exemptions and privacy concerns about providing one’s social insurance number.

“I think its revealing that someone would be more concerned about connecting income tax data to property ownership than about widespread tax avoidance,” countered Gordon, who seems confident the tax will do what it is intended to do.

Flynn said collection of a SIN should not be a concern and would appear necessary to make the tax effective.

Bryan Short, director of the BC Freedom of Information and Privacy Association, said his group is “monitoring” the tax.

“If the B.C. government can demonstrate that the collection of SINs is absolutely necessary to the facilitation of the speculation tax, then they are not overstepping boundaries,” said Short, via email.

7 Feb

Mortgage Rates Effective Today


Posted by: Kimberly Walker

Brought to You By Dominion Lending Centers,

Subject to Change Without Notice, Qualifications Apply.

5 yr Fixed Insured Special 3.59%

Variable Rate Mortgage Decreased: 3.35%

5 year VRM Insured P-0.60%

5 yr Fixed Insured Special 3.59%

Purchase ( Conventional)     Refinance Rates             Rental

4 yr 3.79%                                            3.84%                    3.94%

5 yr 3.69%                                            3.74%                    3.84%

7 yr 3.99%                                            4.04%                    4.14%

10 yr 4.39%                                         4.44%                    4.54%

7 Feb

Morneau taking close look at return to 30-year insured mortgages, homebuilders’ association says


Posted by: Kimberly Walker

The federal government appears to be considering a budget announcement that would allow first-time homebuyers to obtain 30-year insured mortgages, up from the 25-year limit now, according to the Canadian Homebuilders’ Association.

Such a move would represent a change in direction after more than a decade of measures by federal Conservative and Liberal governments since the 2008 recession aimed at cooling housing markets and encouraging Canadians to take on smaller mortgages.

While the Bank of Canada continues to express concern about high household debt, politicians are also getting an earful from younger Canadians – a potentially key voting demographic – who can’t afford to enter the housing market.

Finance Minister Bill Morneau’s coming budget will be the government’s last before the scheduled October election. The minister recently said he is looking at home affordability issues for millennials, but he has not publicly speculated on potential policy options.

Over the past two weeks, top officials from the Prime Minister’s Office and Mr. Morneau’s office met with Kevin Lee, the chief executive of the Canadian Home Builders’ Association, to discuss potential budget measures.

Association spokesman David Foster said there is clear interest from government in the request put forward by housing industry groups to bring back 30-year insured mortgages.

“They keep wanting to talk with us about it, and it wouldn’t cost them a dime, so I’ve got to think those are somewhat positive signals,” Mr. Foster said on Wednesday.

The association discussed the matter earlier this week with Mr. Morneau’s chief of staff, Ben Chin. They also met last week with Sarah Hussaini, a policy adviser in the Prime Minister’s Office.

Pierre-Olivier Herbert, a spokesperson for Mr. Morneau, declined to comment, saying the office does not speculate on potential budget measures.

The association has had several meetings with officials and MPs over the past year in the run-up to the 2019 pre-election budget and recently narrowed down its wish list to just two items: a return to 30-year insured mortgages for first-time homebuyers and an easing of stress test measures that restrict access to non-insured mortgages.

Mr. Foster said officials are expressing interest in both options, but especially the 30-year mortgage proposal because it can be enacted unilaterally by the Finance Department. Changes to the stress test would require the co-operation of the Office of the Superintendent of Financial Institutions, an independent regulator that just this week defended the existing rules.

MP Francesco Sorbara, who chairs a Liberal caucus on housing affordability issues that formed last year and is a member of the House of Commons finance committee, did not dismiss the 30-year mortgage proposal as a way of helping first-time homebuyers.

“It is one idea of many that is worthy of consideration, with the caveat that we maintain a secure and healthy housing market and that individuals are not overextending themselves,” he said.

Paul Taylor, president and CEO of Mortgage Professionals Canada, is also advocating for the 30-year mortgage option and said he was “encouraged” by Mr. Morneau’s recent comments about addressing affordability for millennials. However, Mr. Taylor said he has not received any indication from federal officials that a decision has been made.

The date of the budget has not yet been announced. The House of Commons only sits for one week in March, which makes the week of the 18th a likely window for the minister to deliver the budget. However, there is also speculation in Ottawa that the budget could be released in the final week of February.

Homebuyers with a down payment of at least 5 per cent of the purchase price but less than 20 per cent must be backed by mortgage insurance. This is offered by the Canada Mortgage and Housing Corp. – a Crown corporation – as well as two private insurers.

 In 2008, after briefly allowing insured mortgages with a 40-year amortization period, then-Conservative finance minister Jim Flaherty reduced the maximum period to 35 years. The Conservative government lowered the maximum to 30 years in 2011 and acted again in 2012 to bring it to 25 years, where it has stood since. The moves were promoted as a way to prevent high-risk borrowing.

Shortly after the Liberals formed government in 2015, Mr. Morneau announced further mortgage tightening rules that December by doubling the size of the required down payment for insured mortgages for the portion of a home’s value from $500,000 to $1-million.

Mr. Foster, of the home builders’ association, said restricting insured 30-year mortgages to first-time homebuyers should prevent consumers from getting in over their head.

Millennials have most of their working years ahead of them and would likely pay off the mortgage sooner than 30 years, he said.

“We don’t think it involves any additional risk,” he said. “These are prime borrowers.

5 Feb

New Rates Coming Down the Pipeline


Posted by: Kimberly Walker

New Rates Coming Down the Pipeline

Brought to you by: Kimberly Walker

Dominion Lending Centers, Valley Financial




  Term   Posted Rate  
1 YEAR 4.69%
2 YEAR 3.94%
3 YEAR 3.79%
4 YEAR  3.64%
5 YEAR FIXED 3.54% (>80.01% LTV)
3.89% (75.01-80% LTV)
  3.79% (70.01-75% LTV
 3.74% (65.01-70% LTV)
3.69% (Under 65% LTV)
5 YEAR ARM PRIME – 0.85% (>80.01% LTV)
PRIME – 0.55% (75.01-80% LTV)
PRIME – 0.70% (70.01-75% LTV)
PRIME – 0.75% (65.01-70% LTV)
 PRIME – 0.80% (Under 65% LTV)


Posted mortgage rate summary subject to change. Refer to matrices.
5 Feb

Inventory rises and apartment sales take lead during modest January market


Posted by: Kimberly Walker

SURREY, BC – Overall inventory levels continued to recover as market activity remained moderate through January.

The Fraser Valley Real Estate Board processed 784 sales of all property types on its Multiple Listing Service® (MLS®) in January, a 2 per cent decrease compared to sales in December 2018, and a 35.2 per cent decrease compared to the 1,210 sales in January of last year.

Of the 784 total sales, 250 were residential detached homes, 190 were townhouses, and 257 were apartments. This is the first time in the Board’s history that apartments have outsold residential detached homes during a month.

“This remains a challenging environment for buyers and sellers alike,” said John Barbisan, President of the Board. “Factors such as reduced buying power, changing expectations for pricing, and a recovering inventory are all having an impact.”

There were 5,995 active listings available in the Fraser Valley at the end of January, an increase of 9.9 per cent compared to December 2018’s inventory and an increase of 51.3 per cent year-over-year.

Additionally, 2,609 new listings were received by the Board for the month, a significant increase compared to December 2018’s intake of 978 new listings and a 24.7 per cent increase compared year-over-year.

“Historically, January months start slowly, and 2019 is following that trend,” explained Barbisan. “Pricing for each of our major residential property types remains either stable or decreased in most areas. This isn’t necessarily indicative of what’s to come in 2019, but it reinforces the need to be aware of what’s happening in your local market in order to be effective.”

For the Fraser Valley region, the average number of days to sell an apartment in January was 45, and 44 for townhomes. Single family detached homes remained on the market for an average of 55 days before selling.

HPI® Benchmark Price Activity

  • Single Family Detached: At $954,100, the Benchmark price for a single family detached home in the Fraser Valley decreased 1.2 per cent compared to December 2018 and decreased 3.3 per cent compared to January 2018.
  • Townhomes: At $522,100, the Benchmark price for a townhome in the Fraser Valley in the Fraser Valley decreased 1.8 per cent compared to December 2018 and increased 0.5 per cent compared to January 2018.
  • Apartments: At $409,000, the Benchmark price for apartments/condos in the Fraser Valley decreased 2.2 per cent compared to December 2018 and increased 1.2 per cent compared to January 2018.

Full package: