295 replies to this topic

[Mike K.]

I suppose you could cash the cheques elsewhere, didn't think of that. But once you are audited the CRA will have access to Money Mart's data and can cross check individuals, no? And once they verify your home has a secondary suite (which they'll confirm on their own if they so choose) it's no longer a mystery. The CRA has the authority to go into whatever records it wants and conduct as thorough an investigation as it deems appropriate.

I'm just not sure a lot of people risk it unless they get paid in cash, and even then the tenant may be recording at their bank what their withdrawals are for.

[jklymak]

If you get audited, I can't believe the CRA is not going to audit everyone at your address.  So unless your tenant pays in cash and registers their address elsewhere, its going to be pretty hard to hide a regular monthly cash withdrawal.  I have trouble imaging most landlords don't declare their income.  

Edited by jklymak, 14 October 2014 - 01:59 PM.

[Bingo]

It's kind of a mess. Now we're in a damned if we do and damned if we don't situation. I have friends who would go broke in six months if they didn't have that suite rental income.

 

The municipalities created this mess by turning a blind eye to illegal suites unless a neighbour complained, and the homeowners starting putting them in in droves when their investments tanked during the recession, and now the whole neighbourhood has them.  The students had cash in their jeans, and the homeowners in turn gave them a reduced rent. And from what I see here on VV in other threads is that the Victoria economy is in good shape. But you can also see examples in Victoria where our politicians have squandered the TAX money that many of us have willingly coughed up.

 

Secondary suites forever, live long and prosper.

[LocalMom]

What happens when one complains of a secondary suite? There are a few in our neighbourhood but they are mostly professional young couples so not a nuisance in the least. Although I DO get annoyed with the amount of on-street parking when we are on a cul-de-sac and parking is a premium to being with.

[MarkoJ]

What happens when one complains of a secondary suite? There are a few in our neighbourhood but they are mostly professional young couples so not a nuisance in the least. Although I DO get annoyed with the amount of on-street parking when we are on a cul-de-sac and parking is a premium to being with.

 

I know in the municipality of Victoria they don't do anything about complaints, unless it's a major safety issue in regards to the secondary suite.  Last I heard the Victoria only has less than 200 legal suites on record, probably quite a few of those homes built in last 10 years.

 

The only place I've heard of suites getting shut down are Oak Bay and View Royal.

[concorde]

Much as I want to disagree with concorde I am not sure can. What he seems to be saying is that taxation should be based on accurate valuation of properties for property tax purposes (which seems to be happening already) and accurate reporting of income from these suites for income tax purposes.

yes, you summarized it perfectly

 

Let's look at it from another perspective. If the corporate tax rate commercial landlords pay on rental income is around 12%, and that's after deductions of which there are likely many every month (maintenance, municipal costs, taxes, insurance) then I don't see how we should expect 100% of secondary suite owners to disclose their rental income. Now I'm not arguing one way or the other, but I'm just saying, getting taxed at 40% on the $750/month or getting taxed 12% on $750-$300 in expenses is not an apples-to-apples comparison.

 

For the most part though, I'd say home owners do disclose the income. How can you hide income via cheque or direct deposit? There's no way to get around it.

commercial landlords pay around 26% in taxes, I think you are trying to quote the small business rate which is around 13-14% I think

 

yes that rate is after expenses, but if my property doubles in value in say 10 years I am subject to capital gains where a homeowner with a suite is exempt from capital gains

 

In regards to the CRA, they are not stupid and in my opinion during an audit you are guilty until proven innocent.

[Mike K.]

You pay capital gains on a commercial property before you sell it?

 

Regarding complaints, as Marko said, a complaint has to involve some instance of a safety violation. If you suspect illegal wiring was done in the home and you have some measure of proof or a serious concern, that's enough to trigger a response. The City will send bylaw officers and employees out relatively quickly to inspect, and if it's a minor thing (i.e. correct wiring but not permitted) it will take a long time for the city to require permitting/inspections/modifications. You're better off talking to the home owner to see if they wouldn't mind allowing one of their tenants to park on their driveway, or something to that effect.

[jonny]

You pay capital gains on a commercial property before you sell it?

 

Absolutely!

[Mike K.]

In what form, as in higher taxes?

[jonny]

In what form, as in higher taxes?

 

Generally you pay income tax on 50% of a capital gain. That goes for both individuals and corporations. So if you have a $100 capital gain (let's say you sell some stock), $50 of that gets added to your taxable income and taxed at your highest marginal tax rate.

 

"Principal residences" are exempt from capital gains taxes.

[Mike K.]

Ah, I see. Thanks for that.

[tedward]

... if my property doubles in value in say 10 years I am subject to capital gains where a homeowner with a suite is exempt from capital gains.

 

Here is where we disagree I think. I am happy to encourage home ownership and provide some incentives.

 

"Principal residences" are exempt from capital gains taxes.

 

I have no problems with continuing to exempt "principal residences" from capital gains taxes. And yes, if you want to buy an apartment building and live in the penthouse while renting out the rest of the building I have no objection to you getting the same exemption for that building.

 

The idea that somehow 100 people with "mortgage helpers" in their homes represents an unfair threat to your renting out 100 apartments is laughable given the vacancy rates in this town.

[MarkoJ]

Looks like secondary suite bylaw now permits suites north of McKenzie as well -> http://www.saanich.c...suitenorth.html

[concorde]

The idea that somehow 100 people with "mortgage helpers" in their homes represents an unfair threat to your renting out 100 apartments is laughable given the vacancy rates in this town.

I never said it was a threat, they just get large advantages by their landlords not paying proper income and property taxes.  I'm sure everyone here would love to get an extra $1000 a month tax free

[tedward]

I never said it was a threat, they just get large advantages by their landlords not paying proper income and property taxes.  I'm sure everyone here would love to get an extra $1000 a month tax free

 

So you are arguing against the "primary residence" exemption to encourage home ownership?

[Baro]

Could they just divide up the square footage of the house into the primary residence and the rental unit for tax purposes?

[concorde]

If say 33% of the house is rented out and 67% remains principle residence and when you sell you make a total profit of 300,000 over the original purchase price, then $100,000 should be taxed.  Of course under capital gains rules only half of the gain is taxable

[MarkoJ]

If say 33% of the house is rented out and 67% remains principle residence and when you sell you make a total profit of 300,000 over the original purchase price, then $100,000 should be taxed.  Of course under capital gains rules only half of the gain is taxable

 

In that case 33% of the mortgage interest should be tax deductible too....

[concorde]

^yes

[Mike K.]

And 33% of all maintenance, utilities, etc, no?