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The CRA's Pursuit Of Real Estate Data Goes South Of The Border – Tax – Canada – Mondaq News Alerts

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Canada:

The CRA’s Pursuit Of Real Estate Data Goes South Of The Border

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Canadian residents pay income tax on their worldwide income. In
an effort to crack down on unreported offshore income, the Canada
Revenue Agency (the “CRA”) recently announced that it
will start a cross-border investigation in the United States.

The investigation will look through the past six years’
worth of real estate transactions, from 2014 to 2020, in search of
any American “real estate and real property data where a
Canadian resident is the owner or party to the purchase, sale or
transfer.” CRA will seek information such as municipal
addresses, owner names, square footage, sales histories, and
property tax assessments.

CRA said in its notice, titled Bulk United States Real Property
Data Re: Canadian Residents, that “[t]his information will
enhance the Agency’s ability to administer tax programs and to
enhance the various tax Acts in order to protect Canada’s
revenue base and to support the Agency’s business and research
processes.”

Lost tax revenue in the real estate sector has been a key issue
for CRA. CRA estimates that the amount of unpaid taxes in the real
estate sector is in excess of $1 billion. As we discussed in our
previous blog post, CRA’s $1 Billion Real Estate Nut: Tough to
Crack
, CRA has become increasingly aggressive in its real
estate audits in the last five years.

In its endeavour to identify and tax Canadians’ worldwide
income, CRA has authority, through Canada’s tax treaty with the US, to seek assistance
from our neighbour south of the border.

Canadian taxpayers who are ultimately discovered and reassessed
as a result of this upcoming investigation can face significant
penalties and interest. For instance, a taxpayer who has knowingly
failed to disclose foreign property worth over $100,000 on a T1135
form may be subject to a penalty equal to 5% of the cost of that
property, if the form is overdue by more than 24 months. These
penalties can accumulate quickly if the failure to file, for
example a T1135, occurred for a number of years.

Concerned taxpayers with unreported income may consider
proactively disclosing their information to the CRA before any
reassessment, through the CRA’s Voluntary Disclosure Program.

That program has two tracks: (1) the General Program and (2) the
Limited Program. The General Program provides greater relief from
penalties, interest, and criminal prosecution. The Limited Program
provides limited relief where there is an element of intentional
conduct on the part of the taxpayer. Taxpayers will not face
criminal prosecution nor be charged gross negligence penalties, but
will be charged other penalties and interest.

CRA considers several factors in deciding which of the two
tracks is suitable, including whether the disclosure was only made
after a CRA statement regarding its intended specific focus of
compliance (for example, the launch of a compliance project).

Accordingly, now that CRA’s announcement has been made about
its US investigation, voluntary disclosure applications regarding
real estate in the US may be caught under the Limited Program.

Whether you are seeking proactive assistance in filing a
voluntary disclosure with respect to unreported income or property
outside of Canada or if you have already been contacted by
CRA’s audit division, the specialists at TaxChambers LLP can
help.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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Real estate sales in southern Alberta significantly increase over summer – Global News

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Despite the COVID-19 pandemic, real estate sales are picking back up after a few slow months in the southern Alberta region.

According to the Lethbridge and District Association of Realtors, the number of sales in June increased by 12 per cent compared to the same time last year and by 16 per cent in July.

Monthly reports published by the association also show that the total residential average price increased by 10 per cent for the month of June, but dipped down to 0.5 per cent in July.

Read more:
Alberta overhauls real estate regulator in wake of prior dysfunctional board

“We saw this big increase in June and July where we’ve been swamped,” Lethbridge and District real estate board president Justin Myer said. “I think it was just that people that were waiting, they’re now back in the market. It was not surprising to see it. We kind of figured those people still need to buy, still need to sell, but they put their lives on pause [during the pandemic].”

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“A couple of things that could be driving that, certainly, some of the lowest interest rates we’ve seen with the Bank of Canada trying to stimulate the economy,” Economic Development Lethbridge CEO Trevor Lewington said.

“Maybe an incentive for people that are working and that do have a income, and that aren’t concerned about the future, perhaps to make that final investment or to move to another home.”

Read more:
Edmonton’s real estate market looks to bounce back after sales drop due to COVID-19

When it comes to inventory in the real estate market in the region, that number has dropped by more than 10 per cent for both June and July when compared to 2019, which may lead to some added competition when placing offers.

“With it being so low, I think there’s going to be this fight for good inventory, and when a good house hits the market people will go for it. It still feels like it’s going to be busy for a little while and inquiries for listings haven’t slowed down for us,” Myer said.

Although, when asked how long this upward trend could be maintained, Lewington has some serious doubts about its longevity.

“I’m a little concerned about the fall honestly. Many people have been enjoying payment holidays and deferrals for property taxes and utilities, even for credit cards; a lot of those programs end in September/October,” he explained.

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Extra safety precautions during viewings of listings are still being taken. Those who are looking are being asked to wear masks, practice physical distancing and refrain from touching surfaces during visits.

© 2020 Global News, a division of Corus Entertainment Inc.

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Toronto's real estate market smashes July sales record – Yahoo Canada Finance

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A "For Sale" sign stands in front of a home that has been sold in Toronto
(REUTERS/Mark Blinch)

The Greater Toronto Area’s housing market seems almost immune to the crippling economic effects of COVID-19 right now.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="July was a record-breaking month, with 11,081 homes sold, according to new data from the Toronto Regional Real Estate Board (TRREB). That’s a 29.5 per cent increase compared to the same month last year.” data-reactid=”24″>July was a record-breaking month, with 11,081 homes sold, according to new data from the Toronto Regional Real Estate Board (TRREB). That’s a 29.5 per cent increase compared to the same month last year.

“Sales activity was extremely strong for the first full month of summer. Normally we would see sales dip in July relative to June as more households take vacation, especially with children out of school,” said TRREB president Susan Patel, in a release.

“This year, however, was different with pent-up demand from the COVID-19-related lull in April and May being satisfied in the summer, as economic recovery takes firmer hold, including the Stage 3 re-opening. In addition, fewer people are travelling, which has likely translated into more transactions and listings.”

Daniel Foch, broker at Foch Family Real Estate, says the market isn’t as hot as some people want to claim it is. He says crashing stock markets when the pandemic first began led to something of a flight to quality into real estate. 

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“I think that we're also seeing an increase in foreign capital spending in the GTA on a similar principle – that Canadian real estate is a flight to quality in a global context. Because real estate is a much less liquid product with a long-run sales cycle, it perpetuated the consumer sentiment of market growth and resilience we were seeing in early March,” Foch told Yahoo Finance Canada.” data-reactid=”28″>“I think that we’re also seeing an increase in foreign capital spending in the GTA on a similar principle – that Canadian real estate is a flight to quality in a global context. Because real estate is a much less liquid product with a long-run sales cycle, it perpetuated the consumer sentiment of market growth and resilience we were seeing in early March,” Foch told Yahoo Finance Canada.

“I think the big 6 banks, Bank of Canada, and the federal government also instilled confidence in the consumers that they’re basically willing to prop up housing by any means necessary.”

Foch says those factors make him believe their is systemic risk. He also says the strength is limited to certain types of homes and regions.

TRREB says sales of low-rise homes, particularly outside of the City of Toronto, lead the way with 7,504 homes sold in the 905 area code.

Detached homes saw the biggest jump in sales (43.7 per cent) and average selling price (16 per cent).

Foch says while there’s been movement into the suburbs, it’s not systemic yet.

“I’d say it seems to be about 30% driven by seeking greater comfort work-from-home, 30% driven by people conceding that they may not be on an airplane within 24 months and want to live in a vacation-esque locale, and the remaining 40% is a blend of financial stress, deformation of households (millennials moving back in with parents),” he said.

The MLS Home Price Index (HPI) Composite Benchmark was up 10 per cent compared to July 2019. A shift into higher priced homes pushed the average selling price 16.9 per cent higher, to a new record high of $943,710.

Foch says a lot of buyers are emotional instead of rational.  

“There seems to be impulsiveness, ignorance towards the economy and downside risk, especially in regards to illiquidity risk in some of the fringe GTA transactions taking place right now. I think it shows me that people are feeling pretty invincible, supported by the government, and are confident in the asset,” he said.

“I would go as far as to describe it as brash, and brashness does scare me a little.”

The biggest price increases were in South Simcoe County (14.12 per cent), Orangeville (13.91 per cent), and Durham Region (12.27 per cent).

Foch says he thinks over the long-term Toronto real estate will be fine.

“But, at some point, investments will behave like investments, which means they’ll ebb and flow and bubble and correct, and they’ll also be subject to diminishing returns.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.” data-reactid=”42″>Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Download the Yahoo Finance app, available for Apple and Android.” data-reactid=”43″>Download the Yahoo Finance app, available for Apple and Android.

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Toronto housing market roars back to life in July — with prices shooting up by 17% – Toronto Star

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Pent-up demand from COVID-19 has helped Toronto’s resale home market roar back to life this summer.

The Toronto Region Real Estate Board (TRREB) reported 16.9 per cent year over year average price growth and a 29.5 per cent uptick in sales in July.

The number of new listings also rose 24.7 per cent annually, but it wasn’t enough for the growth in sales, making for a tighter market this year than last. Active listings also shrank 16.3 per cent compared to July 2019, the real estate board said on Thursday.

Real estate board president Lisa Patel said travel restrictions that have seen fewer people take summer holidays have likely translated into more listings and sales.

“Normally, we would see sales dip in July relative to June as more households take vacation especially with children out of school. This year, however, was different with pent-up demand from the COVID-19-related lull in April and May being satisfied in the summer, as economic recovery takes firmer hold,” she said.

The increase to an average price of $943,710, including all types of single-family houses and condos, was about $12,500 more than June’s record-breaking average when prices topped the April 2017 peak. It was also well above the June 2019 average price of $806,971.

There were 49.5 per cent more homes sold in July than June this year, said the real estate board.

“Competition between buyers continued to increase in many segments of the GTA ownership housing market in July, which fuelled a further acceleration in year-over-year price growth in July compared to June,” said the real estate board’s chief market analyst Jason Mercer.

The growth was led by detached houses which had a 25.5 per cent price gain in the city of Toronto to an average of $1.54 million. In the 905 communities, detached homes were selling for 14 per cent more than last July with an average price of $1.06 million.

Sales of detached homes across the GTA rose 43.7 per cent. There were only 27.5 per cent more sales in the city of Toronto, compared to 48.3 per cent in the 905 areas.

Condo sales 6.7 per cent regionwide with a 4.7 per cent year-over-year rise in the city and 11.7 per cent more sales in the outlying communities.

Condo prices grew 8.8 per cent across the Toronto region to an average price of $635,778. Prices on condos rose slightly more in the 905 with a 10 per cent year-over-year gain.

There was an uptick of only 4.7 per cent in Toronto condos compared to 11.7 per cent more sales of those units outside the city.

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The average selling price this year to date is $903,607.

The real estate board has said that its original pre-COVID forecast of 10 per cent price growth for 2020 could still be realized, but it has cautioned that the optimism depends on whether or not the virus surges again in the fall.

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