The Weekly 411:

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💰 B.C. Real Estate Hit by $1.3B Tax Bill

🏢 Canadian Rental Market Report

🏗️Canadian Building Permits Jump 13.4% in March

📉 Toronto Condo Investors Face Negative Cash Flow

🏠Home Sells Fastest in Brampton: Days on the Market in the GTA

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🏠 B.C. Real Estate Hit by $1.3B Tax Bill

• CRA uncovered 1.3B in unpaid taxes in B.C.'s real estate sector

• Real estate audits target both personal transactions (buying/selling property) and professional activities (realtors, homebuilders).

• Areas investigated include: 

  • Misusing principal residence exemption to avoid taxes.

  • Unreported capital gains from property sales.

  • Non-residents investing in Canadian property without proper tax reporting.

  • Hiding property ownership through complex share transfers and corporate structures.

• The nature of non-compliance differed between provinces: 

  • Ontario: Mostly unpaid GST/HST on new homes or misused rebates.

  • B.C.: Primarily income tax evasion, suggesting under-reported real estate income

Why It Matters: The increased focus on audits means a higher chance of tax filings being reviewed. If the CRA finds any discrepancies, you could face significant back taxes and penalties. Investors may need to invest more in professional advice from accountants and lawyers to ensure their tax filings are accurate.

🏗️Canadian Building Permits Jump 13.4% in March

• Residential permits increased 18.1% with single-family permits up 14.5% and multi-family permits up 22.5%.

• Ontario and BC led the increase, with Ontario seeing a 25.5% rise and BC a 14.5% rise.

• The residential sector accounted for 67% of total permits, with the non-residential sector down 2.5% 

Why It Matters: A surge in building permits, especially for residential units, can be seen as a sign of faith in the real estate market. Developers are unlikely to invest in permits and construction unless they believe there will be future demand for housing. This increase suggests they anticipate a strong housing market in the coming years and are willing to make long-term bets on its growth.

📉 Toronto Condo Investors Face Negative Cash Flow

• Most investors who bought Toronto condos in 2022 to rent them out are losing money every month.

• The average cash flow position for newly completed condos closed in 2022 was negative $223.

• The situation is even worse for resale condo investors, where the average cash flow position is negative $537

Why It Matters: Investors are losing money because the rental income they receive is lower than the mortgage, property taxes, and maintenance fees, which could lead to a decrease in rental supply in the future, as fewer investors will buy pre-construction condos.

🏠Home Sells Fastest in Brampton: Days on the Market in the GTA

• Brampton: 7 days

• Mississauga: 8 days

• Hamilton: 9 days

• Burlington: 10 days

• Oakville: 11 days

• Ajax: 12 days

• Whitby: 12 days

• Pickering: 13 days

• Toronto: 15 days

• Oshawa 15 days

• Markham 16 days

🏢 Canadian Rental Market Report 

• National Average:

  • Up 9.3% year-over-year to $2,188.

  • Up 0.3% month-over-month.

  • 32% increase since April 2021.

• Purpose-built vs. Condo Rentals:

  • Purpose-built rents increased 13.1% to $2,124.

  • Condo rents increased 3.8% to $2,331.

• Major City Rents:

  • Toronto: Down 2.3% to $2,757.

  • Vancouver: Down 7.8% to $2,982.

  • Edmonton: Up 13.3% to $1,507.

  • Calgary: Up 8.6% to $2,089.

  • Ottawa: Up 2.5% 

  • Montreal: Up 8.6% 

🖼️ Image of The Week

They say a picture is worth a thousand words... So, every week, we share one image that describes how we feel about the news that week.