138 replies to this topic

[Victoria Watcher]

n August, Saanich council voted to move forward with staff recommendations for permitting garden suites – small, detached rental structures – in the municipality.

At the time, Mayor Fred Haynes said he was “very pleased” to see council supporting a “flexible” housing solution that will permit “multi-generational family living” and aging in place while helping homeowners supplement their mortgages.



https://www.vicnews....public-hearing/

[TwilightZoneVictoria]

Unless the structure is already there garden suites kind of seem like an expensive use of real estate. Suppose if you're not going to use your lawn anyway or build an addition its a moot point

[Victoria Watcher]

some people like the idea of a completely separated unit. so not just a basement suite or addition. Pretty soundproof in two different buildings.

[Nparker]

How has the uptake been for garden suites in the CoV? Has it solved the "housing crisis" as promised?

[Victoria Watcher]

It costs, on average, $160,000 to $180,000 to build a garden suite, which Kardum points out is much less than buying a condo. Kardum has built many garden suites in Victoria, where they have been allowed in all single-family housing zones since 2017. The City of Victoria has approved 94 garden-suite applications, 58 of which have been completed.

 

 

https://www.timescol...tion-1.24205277

[Mike K.]

58 out of 7,000 eligible properties.

You’re likely to see this materialize when someone is building a brand new residence or renovating an existing home.

[GetLisaSomeHelps]

58 out of 7,000 eligible properties.

You’re likely to see this materialize when someone is building a brand new residence or renovating an existing home.

 

A lot of people just will never want to build one, but IMO the value is definitely there if one is at a "Buy a rental property vs Build a garden suite" decision.

 

Potential Income Statement of a garden suite (assuming 35% down, 3.5% interest only payments, 200k construction cost)

 

Rent: $18000

Mortgage Interest: -$4600

Property Tax: -$1800

Contingency Fund (say 10% of rents): -$1800

Insurance: -$600 (?)

Gross Annual: $9,200 

Tax (40% on 11k for simplicity): -$4,400

Net: $4,800

Return: 6.85%

 

Property will appreciate in value over time as well increasing that return and we know how rock solid real estate has been in Vic.

 

edit: also assuming garden suite is serviced completely separately from the primary residence so utilities are not included in rent.

Edited by GetLisaSomeHelps, 18 September 2020 - 09:19 AM.

[Mike K.]

There’s also the down side of having someone living on your property. That could go in one of several ways, and believe me, things can go pretty sour pretty fast.

The old guys tell me you should budget eight months of the year over the long term as income generating months. That’s pretty eye-opening when you consider the majority of small time or new landlords hope to break even with a full 12 months of rental income!

[GetLisaSomeHelps]

There’s also the down side of having someone living on your property. That could go in one of several ways, and believe me, things can go pretty sour pretty fast.

 

Of course. That's why I said a lot of people would never want to build one.

 

 

The old guys tell me you should budget eight months of the year over the long term as income generating months. 

 

Yup, that's why you sock away 10-15% of rents. Repairs & Maint will eat away at that too of course.

[GetLisaSomeHelps]

Personally, I would never want a garden suite on my principal residence (Mainly due to added risks), but for single/DINKs who want to be land barons it's not a bad move IMO.

[Victoria Watcher]

There’s also the down side of having someone living on your property. That could go in one of several ways, and believe me, things can go pretty sour pretty fast.

 

well tens of thousands of people in this city have people living IN their house (basement suite).  so some people are OK with it.

[JohnsonStBridge]

Garden suites are going to cause a lot of unintended tax consequences for owners. The above analysis ignores the cost of self assessing GST upon construction and capital gains upon eventual disposition as a result of giving up a portion of the property's principal residence exemption.  

[GetLisaSomeHelps]

Garden suites are going to cause a lot of unintended tax consequences for owners. The above analysis ignores the cost of self assessing GST upon construction and capital gains upon eventual disposition as a result of giving up a portion of the property's principal residence exemption.  

 

Wasn't the GST included in the cost of construction/permit fees/etc? Or is it 200k+ GST?

 

As for the capital gains tax...that's just taking gravy off the fries. You still get $0.78 on the dollar.

[Jackerbie]

My neighbourhood (in Richmond) is currently in the process of begging the City to permit garden suites. Informal polling showed that potential rental income was the most important factor to only 10% of those in favour. The majority wanted to move a family member in, typically a grandparent. Garden suites are better known as "granny flats" in a lot of places.

[Victoria Watcher]

My neighbourhood (in Richmond) is currently in the process of begging the City to permit garden suites. Informal polling showed that potential rental income was the most important factor to only 10% of those in favour. The majority wanted to move a family member in, typically a grandparent. Garden suites are better known as "granny flats" in a lot of places.

 

they have a similar program somewhere in ontario.  only 10% are rentals.  the rest are family (seniors or youth) use.

[GetLisaSomeHelps]

My neighbourhood (in Richmond) is currently in the process of begging the City to permit garden suites. Informal polling showed that potential rental income was the most important factor to only 10% of those in favour. The majority wanted to move a family member in, typically a grandparent. Garden suites are better known as "granny flats" in a lot of places.

 

huh. that makes a lot of sense for functional families (plus makes a lot of sense from the cap gain tax implication sense as well), but it didn't pop to mind, probably because my parents are estranged and I'd rather get a divorce than have my in-laws live in my backyard (lol). 

Edited by GetLisaSomeHelps, 18 September 2020 - 01:45 PM.

[LJ]

Wasn't the GST included in the cost of construction/permit fees/etc? Or is it 200k+ GST?

 

As for the capital gains tax...that's just taking gravy off the fries. You still get $0.78 on the dollar.

Today's capital gains tax, by next year you will be lucky to get $0.50.

[JohnsonStBridge]

Wasn't the GST included in the cost of construction/permit fees/etc? Or is it 200k+ GST?

 

As for the capital gains tax...that's just taking gravy off the fries. You still get $0.78 on the dollar.

 

When constructing a garden suite for rental purposes you must pay GST on the FMV of the land and building to the CRA. GST paid on construction costs is an input credit you can claim against the GST you must remit to the CRA. Capital gains gains is still an incremental cost compared to alternative real estate investing options that allow you to retain your full principal residence exemption.

[Mike K.]

Do we know what the municipal land value lift would be for property tax purposes?

[GetLisaSomeHelps]

When constructing a garden suite for rental purposes you must pay GST on the FMV of the land and building to the CRA. GST paid on construction costs is an input credit you can claim against the GST you must remit to the CRA. Capital gains gains is still an incremental cost compared to alternative real estate investing options that allow you to retain your full principal residence exemption.

Thanks for clarifying the GST aspect for me and I obviously didnt understand fully how it would impact the PR exemption. Appreciate it.

So yea, garden suites - not so good if using as a way to "supplement" your income.