Category Archives: foreign investors

Tax implications for selling a U.S. property

I’m considering selling my property in the U.S. I know I’ll need to pay capital gains on the appreciated value but do I claim the gains in U.S. or Canadian currency?

—Paul and Barb, Fort McMurray, Alta.

Timing is everything, in both comedy and taxes. According to Philippe Brideau, spokesperson for the CRA, both the cost of the property to buy and the proceeds of the sale must be converted into Canadian dollars using the exchange rate at the time of each transaction. You then report the capital gain, or loss, on your tax return based on “the difference between those two Canadian dollar amounts.” But the CRA isn’t the only tax collector to consider. The U.S. also cares about that property sale, explains Kim Moody of Calgary-based Moodys Gartner Tax Law. “A Canadian needs to first report a gain or loss in the U.S. by filing a U.S. tax return—form 1040NR—and paying any applicable U.S. taxes.” Expect to pay a withholding tax to the Internal Revenue Service, which you claim as a foreign tax credit on your Canadian tax return. Now, if this is a place in the sunny south, I hope you get to enjoy one last season down there.

Source: MoneySense.ca – Bruce Sellery February 2016

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A turret is on your wishlist, you say? Here’s your chance (plus, it comes with a massive house)

Royal LePage

Someone who wants to entertain family and friends in a warm and inviting environment — and be surrounded by exceptional craftsmanship — will enjoy this home, says listing agent Anita Rapp of Royal LePage Real Estate Services. “No luxury detail has been overlooked and many of the furnishings were custom made to blend seamlessly with the open family-friendly floor plan.”

For example, a curved couch was designed and built to fit into the window-wrapped turret and will be left for the new owner to enjoy.

The custom-built brick-and-stone home offers more than 7,000 square feet of living space including a finished lower level that has heated floors and a fireplace in the recreation room. A large, classic skylight sends natural light downstairs through the staircase opening.

Royal LePage

Royal LePage The 7,000-square-foot house is on a 74×176 irregular lot in an exclusive neighbourhood.

 

A grand entrance is sure to impress guests. The foyer — at 28×17-feet — has heated marble flooring and white wainscotting. The living room has a fireplace; the dining room also has wainscotting. Both rooms have coffered ceilings that lend a grand feeling; other rooms have elaborate tray ceilings. The main floor is lush with extensive mouldings and a warm palette.

Outfitted for casual dinners or entertaining a crowd, the kitchen has a breakfast area with a rich wood built-in desk with storage and bookshelves and a walkout to a deck.

The 74×176-ft. irregular lot has a completely fenced yard with lush gardens, a pool and a waterfall feature, Rapp says.

Royal LePage

Royal LePage The master ensuite is very spacious and features the same detailing as the rest of the house.

 

The library, family room and master bedroom each has a fireplace for quiet relaxation in front of the fire. A cathedral ceiling lends an airy feeling to the master suite. His-and-hers closets keep fashion plates happy. The large ensuite has an inlay marble floor, furniture-like cabinetry, a standalone tub surrounded by windows, a large glass shower and separate WC.

Each of the bedrooms has a four-piece ensuite, so bathroom lineups are non-exisitent.

A games room with a dance area provides a fun place for young and the young at heart to boogie, and overnight company can enjoy the guest suites. A wine cellar helps makes entertaining a breeze, and to work off the extra glass of red, a gym beckons upstairs.

“Many dollars have been spent on sensational upgrades,” Rapp says.

“My favourite spaces are the family room, with its enormous bowed window overlooking the stone patio and resort-like pool area, and the master bedroom, which has the look and feel of a five-star spa with heated, inlaid marble flooring, a deep soaker tub and a steam shower,” Rapp says.

St. Andrews Windfields
21 Don Ridge Dr. (York Mills Road and Yonge Street)
Asking price: $5.95 million
Taxes: $27,273 (2015)
Bedrooms: 2; Bathrooms: 7
MLS# C3368728

Royal LePage

Royal LePage The tree-cloaked rectangular pool features a trio of waterfalls, a spa and several seating areas.

Source: Connie Adair, Special to National Post | February 8, 2016

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Snowbirds rush to sell U.S. homes to profit from tanking loonie

Winnipeg snowbirds Greg and Erina Barrett are spending their last winter in their Arizona home. They just sold it for a big profit.

Greg Barrett and his wife, Erina, wouldn’t call themselves savvy investors. But the snowbirds have just made a killing in the U.S. real estate market.

They join a growing number of Canadians who bought U.S. homes for cheap and are now selling them to take advantage of rising U.S. house prices and a tanking loonie. Even with added costs such as a possible capital gains tax, many Canadians are still coming out far ahead.

“It just worked out for us and we’re blessed,” says Barrett, a 75-year-old retired social worker.

In 2010, the loonie was virtually at par and the U.S. housing market had crashed when the Winnipeg couple bought an Arizona home to escape Canadian winters.

“It was a fabulous deal,” says Barrett from their three-bedroom bungalow in San Tan Valley near Phoenix.

Recently, he and his 73-year-old wife contemplated selling to lighten the burden as they age. When they crunched the numbers, they couldn’t resist taking the plunge.

Thanks to the rebounding U.S. real estate market, they have just sold their Arizona home for 65 per cent more than what they originally paid.

Add the exchange rate with the loonie hovering around 71 cents US, and you could say the couple hit the jackpot.

“In Canadian terms, it’s double the boost,” says Barrett. “I’m walking on sunshine, and don’t it feel good,” he adds, quoting a favourite pop song.

snowbirds Greg Barrett Erina

The Barretts pose in front of the Arizona home they just sold. The Canadian couple must move out at the end of the month, but plan to rent to get their taste of sunshine in coming winters. (CBC)

Swamped with sellers

The Barretts’ Arizona real estate agent, Diane Olson, says she’s swamped with calls from Canadians itching to sell their U.S. properties to cash in.

“They are just saying, ‘It’s such an awesome and great opportunity.’ They were not counting on the foreign exchange going to where it is,” says the agent, who specializes in Canadian clients.

Olson says she has 29 Canadian-owned Arizona homes either on the market or about to be listed.

“I am zooming, zooming, it’s crazy!” she says while driving on a Phoenix freeway, heading to her fourth meeting that day with a Canadian client.

Diane Olson

Diane Olson stands in front of one of her many real estate signs in Arizona advertising a Canadian-owned home for sale. (CBC)

From buying frenzy to selling spree

It’s a reversal from 2010, when the loonie was around par. In 2011, it would hit $1.05 US. At the same time, U.S. real estate prices had taken a dive, triggered by the 2008 subprime mortgage scandal and financial crisis.

So Canadians — from snowbirds to investors — swooped into hotspots like Arizona and Florida to grab a piece of sunny real estate for a steal.

According to the American National Association of Realtors survey, for the year ending in March 2007, Canadians accounted for 11 per cent of U.S. home sales to international clients. But as the loonie climbed, so did Canadian deals.

From March 2011 to 2012, Canadian sales more than doubled to 24 per cent, totalling an estimated $15.9 billion US.

“It was a buying frenzy,” says Olson. “You could buy a brand-new house on the outskirts [of Phoenix] that was nice for $80,000 [Cdn].”

Fast forward to 2016. Thanks to a strengthening economy, U.S. house prices have shot up 30 to 50 per cent, says BMO economist Robert Kavcic.

Add the loonie’s recent decline, and some Canadian sellers of U.S. homes are making big profits, even after any tax hits. “They have made out like bandits,” says Kavcic.

Canadians fleeing Florida

In Florida, Brent Leathwood is also seeing a surge of Canadians cashing out. The real estate agent says that when the loonie was stronger — from 2009 to 2013 — virtually all his Canadian clients wanted to buy.

Now, he says, about 80 per cent of them want to sell their homes in the Sunshine State.

“They’re making a pile of money, some of these people,” he says.

But Leathwood adds it’s not just big profits that are encouraging people to sell.

He says there’s a high price to pay these days when hanging on to U.S. property. Suddenly everything from American property taxes to electricity bills have become more expensive.

“A lot of these people are feeling squeezed by the ongoing monthly costs of maintaining a residence as the exchange rate continues to go against them,” says Leathwood.

Both he and Olson expect the selling frenzy to continue as long as the loonie stays low.

“There’s going to be a wave of money going back to Canada,” says Leathwood.

The Barretts plan to keep some of their money parked down south.

They still want to spend their winters in Arizona, but from now on, they’ll rent — with a lot less responsibility and a lot more cash.

“I’m sitting here in paradise and I’m making money. It’s just an amazing thing,” says Greg Barrett.

Source: Sophia Harris, CBC News Posted: Feb 01, 2016

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Suspicious transactions tied to foreign buyers

Vancouver-based banks reported more suspicious mortgage applications coming from mainland China than any other country.

Banks are required to report any suspicious activity to the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC), and the Globe and Mail received that data through an access of information act. It shows that Vancouver banks reported suspicious transactions originating from mainland China 17 times more often than transactions originating from any other country.

According to the Globe’s findings, financial institutions in Vancouver, Richmond, West Vancouver, and North Vancouver, reported more than 8,600 suspicious transactions to FinTRAC between January 2012 and July 2015.

Of those transactions, 5,895 came from unknown origin and 1,660 were made by Canadian citizens.

Of the remaining 1,045 flagged transactions, 83% (865 reports) came from mainland China.
These reports are purportedly triggered when the sum is larger than $10,000, when third parties send frequent wire transfers to clients, or when multiple deposits from someone other than the account holder are made.

Attorney Christine Duhaime told the Globe that while it could not be determined whether the incoming suspicious funds were used to purchase real estate, one could “surmise pretty accurately that if the funds are from China and involve large volumes, they are for real estate purchases, because there is not much else foreign nationals from China buy in Canada that would trigger a [suspicious transaction report].

Potential money laundering in Canadian real estate – including from China – has been a topic of growing interest.

The FinTRAC data publication comes on the heels of a recently released CMHC report on the amount of foreign condo investment in Vancouver and Toronto.

Foreign condo owners own 3.5% of units in Vancouver and 3.3% in Toronto; up from 2.3% and 2.4% a year ago, respectively.

The methodology is somewhat incomplete but a step in the right direction in determining how much those major markets are being influenced by foreign money.

 

 

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CBC INVESTIGATES: Marco Kozlowski’s investor seminars use testimonials revoked by clients whose real estate deals collapsed

Marco Kozlowski’s free real estate seminars promise big profits using testimonials from past participants, some of which were filmed before any money was actually made.

Promotional testimonials from clients praising his methods are a key part of his marketing campaign, but CBC News has learned that at least four of the people featured in the testimonials have requested they no longer be used because they’re not accurate.

The Black Eyed Peas blast from the speakers. A charismatic tanned Californian says just $3,500 U.S. can change your life, at a November seminar hosted by Kozlowski’s company, At Will Events.

Participants are told they can get get rich with no money down and no credit by buying cheap houses from desperate Americans.

The free seminar at a Vancouver hotel is one of four CBC News attended where a charismatic speaker tries to recruit students for Marco Kozlowski’s three-day training course. Each time, video testimonials from clients who say they cashed in big time are played.

One video features Kirpal Bhogal.

Bhodal from youtube

A still image from Kirpal Bhohal’s video testimonial played at Kozlowski’s seminar. (MarcoKozlowski/youtube)

“On the second day of Marco’s training, we purchased a property for 5,000 and sold it for 62,000,” says the Toronto area man, attesting to the apparent profit he made with Kozlowski’s guidance.

The well-dressed man at the front of the room, Lance Robinson, stops the tape and asks who is ready to “invest” in the next step of the course.

“We’re gonna surround you with multi-millionaires at a three-day event,” he says.

Several people pay the tuition, having no idea that Bhogal’s success story wasn’t completely true.

Testimonial filmed before deal closed

A CBC news investigation has discovered that Kozlowski is using testimonials by Bhogal and at least three other students who say they are not accurate.

Testimonial brochure

This testimonial appears in brochure handed out at free seminars in Vancouver and Toronto in November 2015, despite Kirpal Bhogal’s request it not be used. (At Will Events Brochure)

Bhogal has confirmed to CBC that he more than once requested his testimonials not be used.

“This video was recorded just after signing the contract but before closing,” wrote Bhogal in a post on Kozlowski’s YouTube channel, which features one of two video testimonials Bhogal shot.

Lance and Marco

Marco Kozlowski, left, with Lance Robinson, who spoke on behalf of Kozloski at free seminars to recruit students for Kozlowski’s $3,500 US course, in Vancouver. (Ron Usher)

“The deals did not close; No profits were materialized.”

In a statement to CBC News Nov. 14, 2015, Kozlowski said he was not aware one of Bhogal’s deals had fallen through.

But an email suggests Kozlowski knew months ago that Bhogal was unhappy with his experience.

“Despite my verbal request and email earlier, my testimonial recorded at your office, is still being widely publicized,” wrote Bhogal to Kozlowski, May 15, 2015.

When CBC inquired why Bhogal’s testimonial was still being used, Kozlowski emailed this response.

“The testimonial is not entirely inaccurate. Mr. Bhogal made money on his first transaction,” wrote Kozlowski.

Bhogal questions whether he made any profit on that transaction, because Kozlowski applied the proceeds toward Bhogal’s tuition fees for advanced training.

“I have now instructed that his testimonial not be used in any form,” said Kozlowski.

Despite that assurance, a printed version of Bhogal’s testimonial was still being distributed at a seminar in Toronto two days later.

‘It’s not my testimonial’

Another former student who paid to attend Kozlowski’s weekend course in Toronto was shocked to see her face on one of Kozlowski’s ads in August of 2014.

Shauna

A woman who never made an offer on a home was shocked to see her photo used in a testimonial, claiming a $132,000 profit. (Facebook)

“It was … saying that I made a $132,000 profit,” says Shauna Walker, furious her photo was shown beside a photo of a cheque.

“It’s not my testimonial and I never made a dollar,” she told CBC News.

cheque

Montage of advertisements showing what appears to be the same cheque for $150,329.92 used in three different testimonials. (Natalie Clancy)

“I emailed him and said this has to stop,” she said.

Kozlowski replied, “Seems an eager marketer put your head on someone else’s deal. That cheque and profit was from another Shauna.”

Three months later, her ad appeared again in a newspaper, prompting her to complain once more.

“I’ll break some heads. Sorry. Never happen again. Pinky promise,” wrote Kozlowski, Nov. 5, 2014.

An image of the same cheque appears beside other testimonials in ads published in Vancouver, Toronto and Montreal. Walker’s ad has not reappeared.

‘Many red alerts’

“I’ve attended the seminars,” says Ron Usher, a lawyer who has been tracking Kozlowski’s advertisements.

“There are many red alerts for people,” says Usher, who tried to warn Vancouver investors to stay away from a recent seminar before Kozlowski’s staff asked him to leave.

Ron Usher

Lawyer Ron Usher has been tracking what he calls misleading advertising and unrealistic promises made at seminars to recruit students. (cbc)

He says if Kozlowski has helped so many students, as he claims, why would he use a discredited testimonial?

“I just wonder why you would need to do that if there are so many successful stories?”

CBC News put that question to Marco Kozlowski, who responded, “We have many success stories … and there is no need to to use Mr. Bhogal’s testimonial.”

Kozlowski was asked to provide contact information for such students, but has not done so yet.

CBC News did speak to six Kozlowski seminar participants who said they had no complaints about their experience, including one who appeared in a testimonial.

Testimonials altered for different markets

A review of several advertisements shows other discrepancies. Testimonials from three people list them as being from different cities.

For example, “Steeve R”  is listed as living in Markham in a Toronto paper. The same photo and testimonial appears in a Montreal paper listing him as from Montreal. In other ads, he’s listed as living in Surrey and Edmonton.

Where is Steeve from

Montage of ads with testimonials from Steeve R. who is listed with various home towns in several different newspapers. (cbc)

Mistakes blamed on marketing company

Kozlowski says the discrepancies were made by a firm that has since been fired.

“The ads were the responsibility of the marketing company and neither I, nor my staff reviewed their work,” said Kozlowski.

‘Suspicious’ ads could lead to penalties

Brenda Pritchard, a lawyer specializing in advertising, says any advertiser who uses false or misleading testimonials could be prosecuted criminally or civilly under the Canadian Competition Act and face fines up to $10 million.

“It does look extremely suspicious, if you have one person’s name and picture pretending to live in different jurisdictions,” Pritchard said.

Brenda Pritchard

Advertising lawyer Brenda Pritchard says the Canadian Competition Bureau can prosecute companies that use false testimonials. (cbc)

“It’s whether or not these people actually used the service, got their results that they are representing here … all of these things have to be true and currently true.”

When asked about whether his advertising could be in violation of Canadian laws, Kozlowski wrote, “I have every intention of complying with all federal, provincial and local laws and regulations.”

 

Source: Natalie Clancy, CBC News Posted: Nov 24, 2015 2:37 AM PT

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Canadian real estate magnate to help house refugees

A Canadian real estate magnate is working to provide temporary housing for Syrian refugees.
Property developers Ian Gillespie, founder of Westbank Developments, is renovating and furnishing a 12-unit property in Vancouver to provide temporary accommodations to refugees awaiting permanent homes in British Columbia, according to a CBC News report.

“For me, it started with what I’m best able to do,” Gillespie told CBC News. “Some can volunteer time, donate money. …We’re in the property business, so it seemed an obvious place to start.

Gillespie said that his company did an audit and found that the building – which was awaiting demolition to make way for a major redevelopment by the company – was sitting empty. He called the Immigrant Services Society and offered a minimum commitment of four months’ use, according to CBC News.

“I don’t even think he finished his sentence before I said yes,” the Immigrant Services Society’s Chris Friesen told CBC News.

Gilliespie, meanwhile, told CBC that he was disappointed by some of the negative reactions to the refugees.

“Some of the dialogue you’re hearing isn’t particularly Canadian. I think a lot of people need to show some leadership and turn the conversation into a positive,” he said. “We had a well-earned reputation for being good citizens. I think we lost some of that and have lost the concept of (all of us) being immigrants. We are one of the most multicultural cities in the world.”

Gillespie told CBC that Canada has a responsibility to help where it can.

And to those who might be fearful, grow up,” he said.

Source: Canadian Real Estate News – Ryan Smith November 23, 2015

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White lies on loan applications creating compliance nightmares

One of the speakers at this week’s Canadian Mortgage Conference, Chris Mathers – a 20-year veteran of the RCMP and president of KPMG’s Corporate Intelligence Inc. – cautioned brokers and underwriters that trying to duck around compliance issues can lead to much larger problems down the road.

A serious problem Mathers has seen pop up recently is when the person seeking the loan is an Iranian or Syrian national, as it draws concerns from compliance in regards to potential terrorism.

“Once they see that, then compliance gets involved,” Mathers told MBN. “Meanwhile, the underwriter is trying to get the deal done. So then they ask, ‘How can I get compliance off my back? I know, I just won’t tell them the guy is from a country of interest.’”

Unfortunately, when the loan application does come under a compliance review and it is discovered that the information has been omitted, that a much greater problem is created – all because the broker and/or underwriter wanted to smooth out the process.

“The compliance rules in this country have become so draconian and onerous, that it incents people in the industry to screw around with them,” he says. ”Are they being criminals? No! They are trying to make a living.”

Mathers likens compliance to a trip to the dentist, something that no one enjoys but is a necessity.

“No one says ‘Hey, it’s the compliance guy – we’re so happy to see you!’” he says. “They are a pariah.”

And while many Canadians may view the war against ISIS as involving planes and troops overseas, it is a war that is being waged and funded right here in Canada – which makes following the rules of compliance so necessary during the loan application process.

“The money that is being brought over to this country, we need to be concerned about the provenance of that money,” says Mathers. “They are financing their operations through crime, so if any of that money ends up in Canada and is used to purchase property, then we have an issue.”

Source: MortgageBrokerNews.ca Donald Horne | 19 Nov 2015 

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