65 replies to this topic

[househuntvictoria]

The City has been lobbying the Federal Government about the tax situation for rentals for several years now, along with other cities across Canada. Apparently the Federal Government doesn't give a damn.

It is the one place where DaveK and Phil MCavity's libertarian program makes sense to me. The rental housing crises is, imo, almost entirely manufactured on a federal level through tax policy. If the feds had the will, they could make it disappear with a stroke of the pen, by simply removing the barriers to the private market providing it.

Now back to your regularly scheduled socialist-sympathizing Caramia.

Take this from the position of I don't think the amount of taxation on the income from basement suites is a substantial barrier to homeowners wanting to rent an area of their house out.

Reducing the amount of tax collected will mean reducing the amount of services provided. I don't think the real problem we're trying to address is caused by low vacancy. Currently, the housing options available are not suitable for the people that need the most help.

Does anyone really think that homeowners will start renting their suites to people on the street or families on income assistance?

If you own a home with a suite that collects $12,000 per year in rent, and your family earns the median income of roughly $80K, your tax bill increases by 26% (before deductions) from $19,318 to $23,998. It is realistic to expect that through planning, a homeowner can reduce the $4500 to under $3500 with the available deductions they have access to.

Will you refuse a $12,000 per year pay increase from your employer because you'll have to pay more tax?

[Newlywednotnearlydead]

Pandoras box. Lets unleash the 'suite police' like the qubec language police. Force all those illegal suites to start declaring the income for tax purposes. Hmmmm, unintended consequences, some will shut down thereby reducing the availability of affordable accomodation creating another housing crisis and some will increase the rent to offset the income tax payable.

Very few if any homeowners will want to sacrifice a portion of income to the taxman without recouping from the tenant.

See househuntvictoria's post above. Anyone who shuts down a rental accomodation rather than pay taxes on it is an idiot for cutting off their nose to spite their face. As househuntvictoria said, has anyone ever turned down a pay raise because it would bump them into another tax bracket?

Regardless of the potential consequences, rental income is still income. If I have to pay tax on my investments, landlords have to pay taxes on their rental incomes. And no, I don't just stuff my money into my mattress because I have to pay tax on my investment income.

[rjag]

All I'm saying is that if costs increase (taxation is a cost of business) then the cost will be passed on. No business will absorb 100% of any increase for very long, eventually the cost is passed on.

I completely understand your moral and ethical objections to this as undeclared income, however, this is the way it is and an effective solution has not been brought forward otherwise it would have been resolved before now. As long as housing costs are inflated to the current levels, there will be a group of people that will provide a service (landlord) to offset their costs and there will be people willing to pay for that service (tenants).

If our housing costs were significantly less then there would not be as much rental stock. Look at Nanaimo for example, there are very few apartment rental buildings becuase housing is significantly less than Victoria.

So do you apply the same argument to boarders? I remember living in Fairfield 15 years ago and the house across the street had 3 boarders and no-one batted an eye, yet when the neighbour next door to them put in a small suite you would have thought the end of the world was nigh.

I dont get it, whats the difference between boarders and tenants apart from the kitchen, its still increased density and parking at the end of the day, yet one is acceptable and one is not?

[concorde]

A portion of all of the costs associated with being a landlord can be written off for income tax purposes, including depreciation of the house value.

Of course you can, and now your property is a revenue generating property, and kiss your capital gains excemption goodbye when you sell. Expect a huge income tax bill when you sell if you made money on the property

[concorde]

Pandoras box. Lets unleash the 'suite police' like the qubec language police. Force all those illegal suites to start declaring the income for tax purposes.

Interesting comment, but Quebec City (and possibly all of Quebec, I'm not sure) does have suite police. It is next to impossible to have an illegal suite in Quebec City.

[househuntvictoria]

All I'm saying is that if costs increase (taxation is a cost of business) then the cost will be passed on. No business will absorb 100% of any increase for very long, eventually the cost is passed on.

Except that when you raise rent, which is the only way to "cover costs" you end up paying more tax. It's a self defeating action.

Caramia, I'm not positive about this, but I think that renting out a suite in your own home doesn't classify the entire property as revenue producing. I'm not sure the tax implications would be that you would lose your entire principle residence tax exempt status.

[Caramia]

Good points all, but I wasn't talking about home owner or suite landlord taxes. I was talking about the construction of new rental buildings and the shortage of rental housing overall. I won't derail this thread about suites except to post this link http://www.housingaf...ntal Report.pdf for further thought.

If it was economically feasible for developers to build apartments nation-wide, the City wouldn't have to offer tax incentives and try to encourage suites.

That said, I approve of this policy direction. Maybe the $5K is a good idea, maybe it is a bad idea. But what is a TERRIFIC idea is for the City to deliberately cut down barriers to providing suites. It is a change of direction - not long ago we were cracking down on suites and throwing up all kinds of policy barriers to their creation.

New suites added do provide to the lower end of family housing, and they are a good choice for a single mom. Also if tenants of illegal suites aren't filling out census forms, doesn't that effect the amount of money the municipality gets? I'm pretty sure that is determined by census pop. I wonder how long it would take to pay back the $5K by adding the one extra family to the city census? Anyone know how much the City gets from senior levels of gov per person?

[househuntvictoria]

Good points all, but I wasn't talking about home owner or suite landlord taxes. I was talking about the construction of new rental buildings and the shortage of rental housing overall. I won't derail this thread about suites except to post this link http://www.housingaf...ntal Report.pdf for further thought.

If it was economically feasible for developers to build apartments nation-wide, the City wouldn't have to offer tax incentives and try to encourage suites.

That said, I approve of this policy direction. Maybe the $5K is a good idea, maybe it is a bad idea. But what is a TERRIFIC idea is for the City to deliberately cut down barriers to providing suites. It is a change of direction - not long ago we were cracking down on suites and throwing up all kinds of policy barriers to their creation.

New suites added do provide to the lower end of family housing, and they are a good choice for a single mom. Also if tenants of illegal suites aren't filling out census forms, doesn't that effect the amount of money the municipality gets? I'm pretty sure that is determined by census pop. I wonder how long it would take to pay back the $5K by adding the one extra family to the city census? Anyone know how much the City gets from senior levels of gov per person?

I'm not sure if it's even calculated as per capita or not. Most revenue for cities is property tax and fee-based. I think Federal transfers amount to less than 20% of total budgets and most of it will be rebates of GST and other taxes.

It is economically feasible to build rental apartments. But the profit margins are not the same as condo developing, so profit oriented businesses are going to choose condos over apartments. It is also more difficult for developers to get longterm financing from their sources.

Langford has had some purpose built rental construction in the past several years. Wall Developments in Vancouver announced recently that they were refunding the deposits to a bunch of pre-sale purchasers and redesigning their property adjacent to the Olympic village into rental apartments because they can't sell out their condo development.

The City of Victoria could have set aside a percentage of land use for rental only developments, unless this is somehow contradictory to any bylaws/constitution. They could have changed height restrictions and density restrictions to favour rental apartment development too. There are all kinds of carrots they could have dangled before ineffectively handing out $250K.

The $250K would be better spent on a business to business marketing campaign to convince REITs to invest in purpose built rental properties. REITs would be more likely to finance these developments because of their longterm income producing potential. The city could give them a business tax exemption, or a property tax exemption, or both. bcIMC which manages all the public sector pensions and provincial investing, based here in Victoria, could be persuaded to add to their portfolio of rental properties. There is a strong business case for this type of development here. The city does a terrible job of selling it to the institutional investors, who are most likely to make these kinds of investments.

The Feds could target stimulus funds for rental apartment construction and expand CMHC's responsibilities to include managing a portfolio of publicly owned housing.

I still maintain that $5K for a basement suite will have a neglegible impact on the affordable housing issue.

You asked about recovering the tax money: seems to me that the city is giving the homeowner $5K so that they can transfer it back to the feds via income tax on their suite income in the first year or two... in other words, no one wins except federal general revenue.

[mat]

Let's take it as fact that there are hundreds, likely a few thousand, 'illegal' suites, or rooms for rent, in the CRD. Certainly it would only take a quick perusal of the UVIC Off Campus Housing website (they charge for that listing), Craigslist, TC and many other ad venues to see how many people advertise accommodation rentals of all sorts. Few, especially 'room rentals', are qualified as legal - or even calculated for tax purposes. Many households have been doing this for years without hassle - it is a noted, but accepted part of the neighbourhood. Then add in summer B+B's, who often rent the rooms long term over winter - there is allot of uncounted accommodation.

What has happened over recent months is a massive increase in listings for 'suites' and 'shared accommodation'. People are feeling far less secure and offering rooms, or quickly converted basement suites to raise cash for mortgages - while renters are looking for deals. UVIC housing listings have jumped - students are considered prime renters - and this leaves those who have been happily (for all sides) providing a good service for years to a niche market, competing against renters desperate for cash and knowing little about providing a decent service.

It is agreed that secondary suites, even room rentals, should be legalized - but done so in a way that allows for flexibility, and for renters a rating service would be an asset.

What should not happen is tying in grant money for conversion to the type of renter. The Mayor of Victoria is quoted as saying this 'suite grant' would help alleviate the homeless issue - how? A home owner renovating a basement suite will not have as 1st choice someone coming out of addiction treatment, or referred from social services - 1st choice will be someone with references, a job, and deposit.

[Holden West]

A home owner renovating a basement suite will not have as 1st choice someone coming out of addiction treatment, or referred from social services - 1st choice will be someone with references, a job, and deposit.

I think what is anticipated is that "1st choice" renter, (let's say a UVic student), moves into one of these nice, newly renovated legal suites. Let's say he moved out of his cheaper, grittier suite that is now freed up for someone who is coming out of the supportive housing system and is ready for independence.

[mat]

I think what is anticipated is that "1st choice" renter, (let's say a UVic student), moves into one of these nice, newly renovated legal suites. Let's say he moved out of his cheaper, grittier suite that is now freed up for someone who is coming out of the supportive housing system and is ready for independence.

Problem with that is those 'grittier suites', and I do agree there are allot of them out there for students, are owned, and rented out, by owners who will not rent to homeless or 'marginal' renters. There has been such a tight rental market in Victoria (Saanich et al) for over a decade that prime renters (students, graduates in 1st jobs, transient professionals) had limited choice - they might get a good neighbourhood, but a lousy suite. In this I mean drafty, noisy, old basements in Gordon Head, Oak Bay, Fairfield etc. - those rentals are still available, most often in homes with the landlord living above. Neither the landlord, nor the neighbourhood, want problematic tenants.

The situation will remain the same until government recognizes the actual situation (they must do as councilors and MLA's live here - and some rent out as well) - and policy is applied that deals with reality.

[sebberry]

Tax-law wise, is there any difference between renting out a seperate suite and renting out a room where you are sharing kitchen/bathroom facilities in the same living space?

[mat]

Tax-law wise, is there any difference between renting out a seperate suite and renting out a room where you are sharing kitchen/bathroom facilities in the same living space?

Nope - as far as I know it comes in as general income.

[Sue Woods]

The situation will remain the same until government recognizes the actual situation (they must do as councilors and MLA's live here - and some rent out as well) - and policy is applied that deals with reality.

Yes, I agree. I see nothing in Fortin's plan that will 'require' landlord's to agree to keep rents low - or accept the hard to house - so how can he say this will create affordable housing? I don't get it.

[househuntvictoria]

Yes, I agree. I see nothing in Fortin's plan that will 'require' landlord's to agree to keep rents low - or accept the hard to house - so how can he say this will create affordable housing? I don't get it.

Sue, me thinks you do get it. Me thinks Dean doesn't. Somehow supporters of this policy are suggesting that market conditions (that is, vacancies) will lead to landlords renting suites or rooms to people with alcohol and drug issues, single parents with multiple at-risk children, or people with disabilities and/or mental illnesses. I can't see vacancy rates reaching those levels of desperation for landlords.

[Caramia]

I don't know.. when you drill down into that marginal private market, I think you find a lot of landlords with drug habits and dysfunctional personalities who are just as likely to rent to someone they feel a kinship with. I'm thinking of some of the amazing wingnuts I've had as landlords, and wondering...
lol

[julienne]

I don't know.. when you drill down into that marginal private market, I think you find a lot of landlords with drug habits and dysfunctional personalities who are just as likely to rent to someone they feel a kinship with. I'm thinking of some of the amazing wingnuts I've had as landlords, and wondering...
lol

You're so right. While I deeply appreciate the cheap rent where I live, it's the constant things-in-disrepair inside and outside the building that is endlessly frustrating.
Not that I or my landlord feel any kinship- heaven help me! - but he does tend to bond with his other tenants of the broken wing variety. They never complain and he likes that.
Gawd. The stories.

[Sue Woods]

You're so right. While I deeply appreciate the cheap rent where I live, it's the constant things-in-disrepair inside and outside the building that is endlessly frustrating.
Not that I or my landlord feel any kinship- heaven help me! - but he does tend to bond with his other tenants of the broken wing variety. They never complain and he likes that.
Gawd. The stories.

I can relate. I had one landlady who tried to sue me (unsuccessfully, thank you Landlord/Tenancy Branch) for ten grand to replace her entire kitchen. Excuse me, my memory failed me. Her suit was for $9,999. I later found out that she in infamous around town for sueing everyone who moves out due to lack of basic upkeep/repair. Her mantra must be "if you throw enough mud at the wall"......

So there's no question there exist sleazy types who only care to have others pay off their mortgage. Not the socially responsible owners who will keep rent fair/reasonable. Indeed, they often try to get the MOST the market will bear.

I wish there was a place to list these folks so others do not have to go through the stress of moving and abuse of frivilous legal action. A slum landlord registry as it were. Hmmm. Maybe thats an idea for Dean and Co.

[mat]

Allot of people - with different opinions. Thanks Sue for coming in on this.

My opinion is that for secondary suites and 'rooms' there should be a CRD ruling that applies to accreditation, taxes, grants and review. There is little point, other than political, for one municipality to apply a ruling, knowing it will affect a neighbour - and this especially true for student listings.

There is a Federal tax grant offered today for home renovations - be well assured many will use this to open basement and upper suites, and this can be done without local approval (under the current terms) - it shows a real disconnect between federal policy and local reality.

[Ms. B. Havin]

Allot of people - with different opinions. Thanks Sue for coming in on this.

My opinion is that for secondary suites and 'rooms' there should be a CRD ruling that applies to accreditation, taxes, grants and review. There is little point, other than political, for one municipality to apply a ruling, knowing it will affect a neighbour - and this especially true for student listings.

There is a Federal tax grant offered today for home renovations - be well assured many will use this to open basement and upper suites, and this can be done without local approval (under the current terms) - it shows a real disconnect between federal policy and local reality.

Hang on a sec. I'm not against secondary suites, but... What do you mean by a "CRD ruling"?

I attended the meetings for city of Victoria when that municipality was first proposing to legalize secondary suites, and you wouldn't have believed the neighborhood opposition (from the CAs). Not all of them were opposed, but some were, and it was fierce.

In addition, there are municipalities cheek to jowl that disagree with one another on secondary suite policy.

At the same time, we can agree (can't we?) that cities / municipalities already have too few powers to determine their own fate(s), right? The municipality already has to operate with few powers, sometimes with CAs at its throat for trying to enact progressive policies.

So can you imagine if an unelected fourth level of government like the CRD came along and told neighborhoods and municipalities to accept its (CRD's) ruling?

I don't see how that could fly, and I don't see how that would be democratic, either.