Sun

Canadians snowbirds are flocking south to take advantage of a strong Canadian dollar and weakened U.S. housing market.

Many Canadian snowbirds want to take advantage of the strong Canadian dollar to buy American vacation homes. As added incentive, real estate prices have fallen in many areas of the U.S.

Baby boomers reaching retirement age are finding a buyer’s market for homes in southern states such as Florida, California, Texas and Arizona.

Here are some pros and cons of buying a vacation home in the U.S.

You could be buying at the bottom of a market downturn. If you hold on to your U.S. property for the next 10 or 20 years, you would hopefully sell at a profit. Later in retirement, these sales proceeds could nicely replenish your retirement savings, perhaps at a time when you are faced with rising health-care costs.

Pro: Escape winter cold

You can golf during the winter. Living in a warm climate means you would have minimal heating costs.

Con: Health insurance

U.S. health care is costly if you are sick or have an accident. Every time you cross the border to go to your American vacation home be sure that you have adequate health insurance. Premiums rise dramatically with age and could eventually become prohibitively high.

Con: U.S. withholding tax

When you sell your U.S. vacation home be prepared for red tape. Normally 10 per cent of the gross sales proceeds must be withheld by the buyer and remitted to the Internal Revenue Service. This tax can be refunded if it exceeds your tax liability when you file a U.S. income tax return to report your capital gain.

To file a U.S. tax return you must first obtain an Individual Taxpayer Identification Number.

You must also report the capital gain, in Canadian dollars, on your Canadian tax return. Remember to convert the U.S. dollar purchase price and sales proceeds at separate currency exchange rates, one for the time of purchase and one for the time of sale.

Con: U.S. estate tax

If you die while you own your U.S. real estate, your executor would normally have to file a U.S. estate tax return. As well, to be able to sell your property your executor would normally have to “reseal Letters Probate.”

Suppose most of your property is located in Saskatchewan, for example, but you own a vacation home in Arizona. The Saskatchewan court document called Letters Probate only gives your executor authority over Saskatchewan property. More probate fees would have to be paid in Arizona to give your executor authority to deal with your property in that state.

Con: Lack of liquidity

You or your executor must be patient, in a normal real estate market, if you expect to receive fair market value from a sale. Unlike a mutual fund portfolio, you may not be able to turn your vacation home into cash in a hurry if the need arises.

Most professional advisers are not well versed in cross-border estate and tax planning strategies. U.S. advisers primarily deal with U.S. citizens while Canadian advisers know Canadian property rules.

A good resource for financial planning advice on cross-border issues is a book called The Canadian Snowbird in America by Terry Ritchie. He has been working with Canadian snowbirds for 20 years. His book is a valuable guide for Canadians who spend time or invest in the United States.

You can visit Mr. Ritchie’s website at www.transitionfinancial.com to learn about the facts, myths and scams that face snowbirds.

In summary, buying a vacation home in the U.S. at a bargain price is probably best seen as a lifestyle decision. Considering the red tape involved in selling, don’t view the purchase solely as an opportunity to make a quick profit.

Terry McBride is secretary of the local chapter of Advocis (The Financial Advisors Association of Canada). He works at Raymond James Ltd., a member of the Canadian Investor Protection Fund. Raymond James Ltd. does not endorse, warrant or guarantee the services or information offered at the above mentioned website.

A recommendation of any strategy would only be made following a personal review of an individual situation. Seek independent advice for your tax-related questions.

© The Vancouver Sun 2008

Rules change will ease personal planning

John Bermingham
Province

British Columbia‘s 19,500 realtors will now be able to hang out their shingles as corporations.

B.C. has become the first province to allow individual real-estate licences, starting Jan. 1, 2009.

The finance ministry changed the regulations to allow realtors become personal real-estate corporations, and run their practices as businesses.

Currently, B.C.’s licensed realtors operate as either employees or self-employed/individual contractors, working for real-estate brokerages.

Under the new rules, personal real-estate corporations will still need to be licensed, are subject to regulation by the B.C. Real Estate Council and will have to adhere to consumer protection standards.

The changes were hailed by the B.C. Real Estate Association, which represents 17,000 realtors.

Kelly Lerigny, past president B.C. Real Estate Corp., said the profession had been asking for the change since 2003.

“It’s wonderful to see government has come through,” said Lerigny yesterday. “The change is going to improve the tax planning for realtors.”

Lerigny said the option of having a personal corporation will help reduce the swings in commission income, when the housing market is hot or cool.

“They can do better planning from year to year,” she said.

It also has the potential to reduce taxes for realtors, she said, depending on their income levels.

High earners will be able to structure their practice like a business.

“They will do quite well and should be able to structure it like other professions,” she said.

The B.C. Real Estate Council, which regulates realtors, said it won’t affect the regulatory framework.

“I don’t think it’s going to really affect the individual consumer,” said the council’s executive officer, Robert Fawcett.

All realtors still have to affiliate with a brokerage, which will contract the realtor and his or her personal real-estate corporation.

And not all realtors will choose to form a corporation, he said.

New real-estate licensees must also wait two years before they can apply for corporation status.

Fawcett said mini-brokerages, which were originally set up to reduce the taxes for high-earning realtors, will probably now disappear.

“It might change the landscape a little bit,” said Fawcett.

© The Vancouver Province 2008

Vancouver, Abbotsford among western centres setting national pace

Paul Luke
Province

Vancouver, Canada’s Pacific metropolis, will be the country’s fourth-fastest-growing urban centre. Province file photo

Fifth-ranked Abbotsford, with fine mountain views, is hot on its heels.

The Vancouver area’s robust economy will give it Canada‘s fourth-fastest urban-growth rate this year, the Conference Board of Canada says.

And Abbotsford is hot on its heels with the fifth-ranked growth rating.

After expanding by a modest three per cent last year, metropolitan Vancouver‘s real GDP growth is expected to accelerate in 2008, the board said yesterday.

That expansion will lift the Vancouver area from its 10th-place finish last year, the board said in forecasting the economic outlook for Canada‘s 27 largest metropolitan areas.

“Strong consumer spending and a flurry of non-residential construction projects will propel real GDP growth to 3.3 per cent in Vancouver in 2008,” the board said.

“However, increasing prices, which will erode affordability even further, will squeeze housing demand.”

The Vancouver area’s services sector should post decent gains, its goods-producing industries will rebound and employment and personal income should post healthy increases this year, the board said.

The board warned that as Olympics-related construction dries up in the medium term, non-residential construction could become weaker than expected, hurting output in the construction sector beyond 2010.

Abbotsford, which grew by 3.3 per cent last year, will maintain that growth rate this year.

“Strong retail-trade activity and a rebound in the manufacturing industry will more than offset slower growth in the services sector and weakening residential construction,” the board said.

The gap between economic growth in western Canadian cities versus eastern ones is expected to narrow this year, but “only slightly,” the board said.

Cities east of Manitoba will score four of the top 10 positions in its 2008 outlook, up from two in its ranking of last year’s economic growth.

However, the West still has a lock on the top five spots in this year’s expectations.

Calgary has the highest expectations for this year.

“With real gross domestic product [GDP] growth forecast to reach 4.2 per cent this year, Calgary is expected to match its growth performance in 2007 when it was the third-fastest growing Census Metropolitan Area [CMA] in the country behind St. John’s [N.L.] and Saskatoon,” the board said.

Edmonton is second in the 2008 outlook, for many of the same reasons Calgary is first. Edmonton‘s growth for this year is pegged at four per cent, up from 3.6 per cent last year.

Winnipeg had its fastest growth in 10 years last year at 3.9 per cent, the board said. It is expected to see GDP growth of 3.4 per cent this year, good for third best in the country.

As for eastern cities, Quebec City is sixth, Toronto is seventh and Halifax is eighth on the 2008 prospects list.

“Although the rise in the Canadian dollar has wreaked havoc on Toronto‘s manufacturing sector, resilient consumer spending has helped the services sector pick up some of the slack,” the Conference Board said.

Victoria is ninth on the list and Kitchener, Ont., is 10th, both with expected growth rates of 2.7 per cent this year.

On the periphery of the top 10 are Ottawa-Gatineau at 11th and Saskatoon at 12th.

© The Vancouver Province 2008

Tony Gioventu
Province

Part one of a five-part series on strata insurance

Dear Condo Smarts: I have been renting out my strata unit since 1975. Over that period, I’ve been fortunate to have only three tenants. However, my recent tenant has been troublesome and caused a great deal of damage in our building.

He decided to undertake some repairs to the unit plumbing and install taps and hook into the drain for a washing machine and dryer. I’m sure your readers can imagine what’s happened. There’s been a major flood and damage to over half of the suites in our eight-floor building.

I had only recently inspected the unit and all was well, but within a day of my last visit, I gather the strata corporation received complaints about noise and construction going on in the unit. Unfortunately, no one ever investigated the complaints and we, as the owners, were never contacted until the damage was done.

The tenant has secretly moved out and we’re advised that we have to pay the $25,000 deductible. We thought the deductible was a common expense of the strata. Can they make us pay for something that we are not responsible for?

— Dave Harris, White Rock

Dear Dave: Whether it is an insurance claim, bylaw violation or some other action required by the strata corporation to enforce its bylaws or rules — and this often includes the recovery of damages associated with insurance claims — landlords need to know they may likely be on the hook for the costs if their tenant is unwilling or unable to pay.

Landlords need insurance coverage, just as the owners who live in their strata lots do. While the amount of contents owned by the landlord might be minimal, they still need coverage for improvements made to the strata lot, to protect themselves should a liability suit be brought against them and, lastly, for coverage if the strata corporation’s deductible is assessed to them.

Russ McMurchie of Coastal Insurance warns that not all policies provide adequate coverage for the strata corporation’s deductible, but that it is available.

When owners rent their units out, they should know what the strata corporation’s deductible is, especially for water damage, and they should make sure that their unit-owner policy has adequate coverage. Exemptions under landlord policies may include home-based businesses, illegal activities such as grow ops or meth labs, human-rights claims or, in some cases, unauthorized alterations to property resulting in damages and claims. Some landlords simply add an extension to their homeowner policy rather than purchase a separate rental-type policy to cover the risks.

Be honest about your intentions when purchasing your insurance and remember, no two policies or conditions are the same. If you’re renting to a long-term tenant or renting for a short term, such as a vacation rental, policy limitations and conditions may vary significantly. Bottom line: Are you properly covered?

Tony Gioventu is executive director of the Condominium Home Owners Association (CHOA). Contact CHOA at 604-584-2462 or toll-free at 1-877-353-2462, fax 604-515-9643 or e-mail [email protected].

© The Vancouver Province 2008

Sun

Only eight opportunities remain to purchase at Polygon-s Sakura

A new landmark is approaching completion in the heart of Vancouver’s most desirable uptown neighbourhood of South Granville. Ready to move in to this summer, Sakura, by Polygon, is an exclusive boutique highrise at the corner of 11th Avenue and Bitch. Designed by the award-winning architect Nigel Baldwin, Sakura will capture stunning city, mountain and water views from its lushly landscaped grounds.

“.A serene and private setting, spec­tacular views. luxury finishes… these are just a few of the reasons why Sakura is so appealing to our purchasers,” said Sales Manager Laura Cavanagh. “With only eight homes remaining, the response has been  overwhelming with locals and international purchasers. Our buyers recognize that Sakura provides the opportunity to purchase a luxury condominium in a location second to none.^“

Located on a quiet tree-lined street, Sakura will leave you captivated with its stylish Northwest-inspired architec­ture, beautiful cherry blossom canopy and innovative landscape design. This exclusive collection of homes offers spacious two bedroom plans ranging up to approximately 1_,500 square feet in size_– Inside, the are notable for the creative use of space, abundant natural light and tasteful finishing details. Impressive over height ceilings and soaring glass window-walls create an open and airy ling space, while the expansive kitchens, featuring high‑quality appliances, custom-designed natural wood cabinetry and extra-wide grantite countertops make dining at home a luxury. Every detail at Sakura has been chosen with consummate attention to comfort, quality and beauty,

The South Granville neighbourhood is undeniably on Canada’s leading edge of art, fashion, culture and cuisine. A vibrant pedestrian shopping district with a distinct uptown

Flair, this area is home to dozens of exceptional designer boutiques home decor shops, antique stores, bistros and restaurants.

“Wish homes at Sakura scheduled for completion this Summer, new homeowners will soon by able to enjoy all this neighbourhood has 10 offer,” adds Cavanagh.

Peace of mind is paramount at Sakura with a full-time resident concierge. Sakura also incorporates Polygon New Generation highrise design principles with rainscreen window-walls and reinforced concrete construction. Every home is also backed by the ^‘travelers Guarantee Company of Canada and Polygon’s dedicated customer service team.

The remaining homes are open by appointment only, with prices from $748,000 to $1,988,000. For an appointment to view, call 604-738-8713

Sun

The national housing agency has a worksheet for the house-hunter that has a don’t-leave-home-without-it promise to it. Canada Mortgage and Housing Corp.’s Home-Hunting Comparison Worksheet is an easy-to-use downloadable form that allows house-hunters to keep track of the pluses and minuses of the homes on their shopping lists.

Among other things, the worksheet allows you to make note of a home’s proximity to neighbourhood amenities — schools, transportation, shopping and the like; to rate a home’s interior and exterior attributes; and to tally a home’s annual costs.

To download the CMHC worksheet, visit cmhc.ca on the Internet.