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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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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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Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

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TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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Homelessness: Tiny home village to open next week in Halifax suburb

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HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

The Canadian Press. All rights reserved.

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Here are some facts about British Columbia’s housing market

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Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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