Realtor Brian Keller has been a landlord for 23 years and, after reporting losses on his 2021 tax returns relating to his rental business he received a questionnaire from the CRA asking how he planned to turn his rental operation into a profitable enterprise.Illustration by The Globe and Mail
There are hundreds of thousands of rented homes that do not turn a profit for their owners, but if you’re a landlord looking to the Canadian Revenue Agency for a tax break on those losses you can expect to have to answer some tough questions on your investment.
Realtor Brian Keller has been a landlord for 23 years and, after reporting losses on his 2021 tax returns relating to his rental business he received no updates until almost a year later when a six-page questionnaire arrived in the mail.
“Provide a detailed projection of how you intend to develop your rental operation into a profitable enterprise,” the letter from CRA reads, among other things.
“I can’t believe the audacity of Revenue Canada to ask me for a business plan,” Mr. Keller said. “And they want it in 20 days. This is almost an act of intimidation.
“I understand audit and ‘Hey, show us your expenses’ … but I’ve never had a letter from the government saying ‘provide a detailed projection.’”
Mr. Keller has owned multiple residential rental properties in Ontario since 2000, starting with a couple of houses in the Barrie, Ont., area. While most years were profitable, from time to time he has reported and claimed losses on his taxes related to management of his rentals.
This is the first year he has received a letter of this kind.
“Those letters have been around for years and years, that’s nothing new,” said George E. Dube, CPA, CA, who specializes in real estate taxes at the BDO Canada accounting company. “For the most part, Revenue Canada is pretty reasonable with the rules for real estate investors. [For example,] they will allow us to deduct the costs of interest on mortgage payments.”
According to Mr. Dube, the CRA’s main goal in asking questions like those posed to Mr. Keller is to assess what kind of business the person is actually in. “Were you really in the business to generate rental income, or were you in the business of buying these [rentals] to sell them down the road? Did you buy the apple tree to pick the apple and sell the apple or did you buy it to cut it down for logs?” Mr. Dube said.
In other words, if your investment is a condominium where rents and expenses don’t cover your carrying costs but you are hoping for windfall profits when you sell the asset, then, from CRA’s perspective, you are a property speculator with a side hustle as a landlord.
Mr. Keller says his losses come from non-paying tenants and long delays at Ontario’s Landlord and Tenant Board that have resulted in more than $12,000 in unpaid rent.
In 2023, Statistics Canada reported that data from tax filings showed 1.35 million Canadian households reported income from rentals in 2020 and 76.3 per cent said their operations were profitable. That leaves about 320,000 individuals with rental income in the red.
A recent report from market research firm Urbanation and CIBC showed that even newly completed condominiums in the Toronto region were often unprofitable. The survey looked at 6,378 new condominiums completed in 2022 that were then rented on the local Multiple Listings Service. Of all the new units with a mortgage, only 48 per cent were making enough money to cover the costs of ownership.
About 39 per cent of the condos in the Toronto region are owned by investors who rent them out, according to Urbanation. The report says that while rental rates soared in 2022, so did mortgage rates, particularly affecting those who borrowed with a variable rate loan.
“The distribution of newly completed condo rentals by cash flow position shows that the highest concentration (14 per cent) of investors was losing $1,000 or more each month, with a one-third share of investors experiencing negative cash flow of $400 or more,” the report reads.
Mr. Dube said the CRA will often demand answers from landlords claiming losses who are also renting to a relative (on the suspicion that the losses stem from below-market rents.) But in most other cases, if a landlord can’t show they have any plans to make their units profitable, the losses will be denied.
“Why should the government of Canada or the taxpayers fund your lifestyle?,” said Mr. Dube. He warns that it is better to avoid filing claims that are likely to later be denied. “This starts to become a bit punitive: maybe we’re five years down the road and you’re paying back those taxes, plus some interest to Revenue Canada and other penalties.”
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
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