Condo Investors Beware: CRA has a moving target on your back

Once again the Canadian government has found a way to penalize hard working small investors, who have purchased a condo pre construction.

This is the same government agency that over the past few years have aggressively been attacking both unsuspecting and savvy condo investors, who have opted to sell their purchase contract before the condos actual registration date (the time it’s transferred from the developer to the Buyer), and through the process collecting large amounts of revenue through unpaid taxes and fines.

For the record, I am a believer that you should always pay taxes due under the Canada Revenue Agency tax laws. My ire rests when the greed and bullying that gets carried out by the CRA extends to the unsuspecting person who actually didn’t do anything wrong (or so they thought?) and have become easy targets will very little recourse to fight back.

Once again they are in attack mode on investors of condos that unbeknownst (but doesn’t matter under CRA laws) to them, have committed tax fraud.

There was a period in time a few years back where some developers were offering rental guarantees on pre construction projects to drum up sales, offering purchasers a two year guarantee on rental income if they bought a unit. A recent article in the Financial Post can be found here explaining the issue.

Now you may fall into the camp of, ‘well, these investors should have know better’ and that’s an argument that is certainly subjective in nature. Being both an investor in real estate and one who has helped multiples of clients over the years in the purchase of condos for investment (although most have been through the resale market which have almost always offered better deals) I see another side.

Anyone who has paid attention to Toronto’s residential rental market for at least the past 25 years will agree, the bulk of housing made available to those looking to rent have come from the small condo investor. Purpose built rental housing has been (and still is in comparison) a mosquito on an elephants ass in comparison on units delivered.

Developers are well connected, savy investors often with politicians in their pockets at all levels of government. The individual investor who purchases a unit or two do not. Nor do they have extensive law and accounting firms on their payroll. This = easy targets.

The government has made it very clear that they are desperate for money, as all political parties have proven they are inept at managing our money (yes, it’s our money. Money we pay to keep this city/province/country operating.)

And it’s only going to get worse.

Select Realtors I’ve spoken with (along with myself) recently received a letter from the Federal Conservative party and one which was tweeted out by them about the Federal Liberals plan to tax homeowners 50% capital gains on the sale of their principle residences. You can see CTV news reporting of it here

I’m really not a fan personally of any politician or political party today and this has been well documented. But make no mistake one thing we know is that regardless of who is in power, once a tax is put in place, rarely if ever is it removed by another party who becomes the ruling party.

Government looks at us like their sheep and they are the shepherds. At their will, they arbitrarily decide what to do with us. This is becoming very clear when it comes to taxing on housing.

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