6 ms·

A step in the right direction. However, the rule ought to be pretty simple: if it's your tax residential address, it's your home. Anything else isn't. If peopl

by crdb 10y ago

A step in the right direction. However, the rule ought to be pretty simple: if it's your tax residential address, it's your home. Anything else isn't. If people want to invest in stuff, let them go for stocks, where their capital will at least be supposed to create value.

cwmma 10y ago
Is a 'tax residential address' that a Canadian thing your guaranteed to only have one of world wide and it would never make sense to live at an address other then your 'tax residential address' for legitimate reasons ?
- crdb 10y ago
  Well, I can't speak for Canada, but in most countries I've lived with the exception of the UK (non-dom rules) global income is taxed in your primary residence. So if your main economic activity is in Singapore and you declare your residence there so as to take advantage of its lenient tax rates (for example no capital gains tax), your Canadian home is not your primary tax residence and you should get hit by the land tax. Conversely if you declare that you live in Canada whereas you're busy making a million a year in Dubai, that million ought to be taxed according to Canadian tax law as if you resided there. There's plenty of rules already in existence to determine what is your primary tax residence as far as taxes are concerned, precisely to stop, say, a French resident from incorporating in Switzerland, getting paid into the structure, and not paying tax on his income (he can always try not to declare it, but then he becomes a criminal hoping that the rule of law is not thorough).
  - hackerboos 10y ago
    Claiming a property as your main residency is not the same as claiming to be resident in Canada for tax purposes. You need only stay in a property for 1 day a year, you need to spend much longer in Canada (183 days in that tax year). This allows foreign based property speculators to avoid capital gains on property.
    - crdb 10y ago
      Right, then let me reword, since I used the wrong wording: if you are resident in Canada for tax purposes, wherever you are resident is tax free if you own it. Otherwise - including a single day residency a year - it is taxed.
- hackerboos 10y ago
  That's the problem. This was recently pointed out by the Globe and Mail investigation into real estate tax evasion in Vancouver. Many people are claiming a property as their main residence whilst not staying in said property for more than a few weeks a year (main residence for these people is abroad). The unpopular solution would be to charge capital gains on all property, irrespective of being your primary residence. That would certainly cool a speculative market but I doubt such a measure would be supported by Canadians.
  - crdb 10y ago
    > real estate tax evasion in Vancouver If your problem is tax evasion, the solution is enforcement. If it is a big problem, it will pay for itself when solved.
    - Kadin 10y ago
      Calling it "tax evasion" is probably incorrect, since foreign owners are exploiting the rules in a way that is technically correct, but not anticipated. The solution is first to fix the rules, and then, of course, to enforce them. Obviously the long-term solution is to assume that people will always exploit any tax law as aggressively as they can, and that there's a basically-unlimited supply of people looking to park money in low-tax jurisdictions if they are allowed to do so. I don't think this was necessarily widely appreciated when many jurisdictions' tax laws were written.
      - hackerboos 10y ago
        No it is evasion. CRA have launched an investigation. http://www.theglobeandmail.com/news/politics/cra-launches-review-of-bc-real-estate-speculators/article31847258/ http://www.theglobeandmail.com/news/politics/cra-launches-re...
- bbrazil 10y ago
  In Ireland that's called a "principal private residence" or PPR. There are cases where it'd make sense to live elsewhere though not legitimately, for example the rent-a-room scheme (can rent a room for up to 1k/month tax free) only applies in your PRR. So if you actually lived elsewhere that's a significant fraudulent tax saving if you're a one-property landlord.
ctdonath 10y ago
If people want to invest in stuff, let them invest wherever they want. A person with money has a better idea what to do with it than legislators & voters having no personal stake therein (or, worse, ulterior motives detrimental to the investor).
- Pxtl 10y ago
  The investor may have ulterior motives detrimental to the voters, and property in a big city is so heavily supported with taxpayer-funded services that the public has an interest in making sure it's used properly.
- crdb 10y ago
  This used to be my position as a committed (or idealistic, young) libertarian, but, following the principle that you should be able to do anything so long as it does not infringe another individual's rights: - there is such a thing as the commons; - there is a cost to the government to protect your rights which is much higher for land than "virtual" assets and the cost to investors ought to reflect it. Commons: I like that Singapore, for example, is taxing drivers around $90,000 per 10 years for the privilege of riding a car. The air is much cleaner and streets freer of traffic. Both of these were damaged by too many car owners. Similarly, the supply of land is limited whilst population can grow ad infinitum, creating ever upwards pressure on land prices. Cost: in terms of individual rights, the army, police and justice defend your right to own that land free of damage, spurious lawsuits to drain your resources, land grabs by powerful men, and foreign invasion forces. This forms the basis of modern society and the implementation of your individual rights. The cost is proportional to land area but not as strongly correlated with company size in the equity case (you might have a few more problems but not proportionally to market capitalisation, and they involve court cases rather than policing, with most of the high costs - lawyers - born by private parties). In theory, any land owners ought to be taxed, however, I make an exception for one's primary home (tax residence) considering that all citizen are naturally short housing (they need a place to live) and buying a home puts them in a housing neutral position and also has many positive effects on the commons (people are more invested in the future of their country if they own their home, less likely to move somewhere else, etc.). Vancouver is a great example of citizen who have created ideal conditions for home ownership by participating in building a peaceful, prosperous economy which respects individual rights. Foreigners have accordingly swarmed to take advantage of the fact they were not charged for the benefits arising from ownership. This has caused citizen - beyond the first generation of land owners - to be penalised for having built their own country up, as they end up unable to afford to live in it, burning up valuable income into paying high rents and house prices. A tax - which should offset what Canadians would pay elsewhere on productive activities, like income - is one of the best way to correct this imbalance, by charging the cost of enforcing individual rights to those who benefit from it.
themartorana 10y ago
Holding onto vacant property creates huge monetary value.
- themartorana 10y ago
  I don't understand how my comment above got down-voted. In a pure economic sense, holding property creates scarcity, and prices rise. It's wildly unbalanced value, but its value nonetheless.
briandear 10y ago
It could be argued that owning real estate does create value.
- hx87 10y ago
  Living in, renting out, and /improving/ real estate creates value. Using it as an idle store of value does not.
  - anthonybullard 10y ago
    But don't you have to wonder what in the institutional structure of the locality creates market conditions that allows one to use homes as an idle store of value? Sounds to me like a late order effect of restrictions in supply. Up to certain extremes, if such restrictions did not exist, then increases in property values would lead to a stimulation in supply bringing the prices back to a more equilibrium state. San Francisco, and the Bay Area as a whole, is dealing with such issues as well. Vast restrictions on supply on a multi-decade timespan have created an anti-virtuous cycle of rising property values followed by more support for supply restrictions by incumbent property holders followed by further increases in property values and on and on. Foreigners are an easy political target since they are usually unable to participate in the political process. "Other" bias also has strong rhetorical power unfortunately. But the real solution seems to lie somewhere in institutional reform around property rights protection(ie, use/build as of right).
    - hx87 10y ago
      Certainly true. Proposition 13 removes another check on NIMBYism and property price boosterism, since without it the owners will have to pay a high proportion of their non-property wealth in taxes unless incomes rise by a similar amount.
freehunter 10y ago
Doesn't that make vacation homes illegal? Or owning rental property? Around here, even middle class folks can have a cabin on a lake up north that they visit once or twice a year.

by crdb 10y ago

cwmma 10y ago

Is a 'tax residential address' that a Canadian thing your guaranteed to only have one of world wide and it would never make sense to live at an address other then your 'tax residential address' for legitimate reasons ?

crdb 10y ago
Well, I can't speak for Canada, but in most countries I've lived with the exception of the UK (non-dom rules) global income is taxed in your primary residence. So if your main economic activity is in Singapore and you declare your residence there so as to take advantage of its lenient tax rates (for example no capital gains tax), your Canadian home is not your primary tax residence and you should get hit by the land tax. Conversely if you declare that you live in Canada whereas you're busy making a million a year in Dubai, that million ought to be taxed according to Canadian tax law as if you resided there. There's plenty of rules already in existence to determine what is your primary tax residence as far as taxes are concerned, precisely to stop, say, a French resident from incorporating in Switzerland, getting paid into the structure, and not paying tax on his income (he can always try not to declare it, but then he becomes a criminal hoping that the rule of law is not thorough).
- hackerboos 10y ago
  Claiming a property as your main residency is not the same as claiming to be resident in Canada for tax purposes. You need only stay in a property for 1 day a year, you need to spend much longer in Canada (183 days in that tax year). This allows foreign based property speculators to avoid capital gains on property.
  - crdb 10y ago
    Right, then let me reword, since I used the wrong wording: if you are resident in Canada for tax purposes, wherever you are resident is tax free if you own it. Otherwise - including a single day residency a year - it is taxed.
hackerboos 10y ago
That's the problem. This was recently pointed out by the Globe and Mail investigation into real estate tax evasion in Vancouver. Many people are claiming a property as their main residence whilst not staying in said property for more than a few weeks a year (main residence for these people is abroad). The unpopular solution would be to charge capital gains on all property, irrespective of being your primary residence. That would certainly cool a speculative market but I doubt such a measure would be supported by Canadians.
- crdb 10y ago
  > real estate tax evasion in Vancouver If your problem is tax evasion, the solution is enforcement. If it is a big problem, it will pay for itself when solved.
  - Kadin 10y ago
    Calling it "tax evasion" is probably incorrect, since foreign owners are exploiting the rules in a way that is technically correct, but not anticipated. The solution is first to fix the rules, and then, of course, to enforce them. Obviously the long-term solution is to assume that people will always exploit any tax law as aggressively as they can, and that there's a basically-unlimited supply of people looking to park money in low-tax jurisdictions if they are allowed to do so. I don't think this was necessarily widely appreciated when many jurisdictions' tax laws were written.
    - hackerboos 10y ago
      No it is evasion. CRA have launched an investigation. http://www.theglobeandmail.com/news/politics/cra-launches-review-of-bc-real-estate-speculators/article31847258/ http://www.theglobeandmail.com/news/politics/cra-launches-re...
bbrazil 10y ago
In Ireland that's called a "principal private residence" or PPR. There are cases where it'd make sense to live elsewhere though not legitimately, for example the rent-a-room scheme (can rent a room for up to 1k/month tax free) only applies in your PRR. So if you actually lived elsewhere that's a significant fraudulent tax saving if you're a one-property landlord.

ctdonath 10y ago

If people want to invest in stuff, let them invest wherever they want. A person with money has a better idea what to do with it than legislators & voters having no personal stake therein (or, worse, ulterior motives detrimental to the investor).

Pxtl 10y ago
The investor may have ulterior motives detrimental to the voters, and property in a big city is so heavily supported with taxpayer-funded services that the public has an interest in making sure it's used properly.
crdb 10y ago
This used to be my position as a committed (or idealistic, young) libertarian, but, following the principle that you should be able to do anything so long as it does not infringe another individual's rights: - there is such a thing as the commons; - there is a cost to the government to protect your rights which is much higher for land than "virtual" assets and the cost to investors ought to reflect it. Commons: I like that Singapore, for example, is taxing drivers around $90,000 per 10 years for the privilege of riding a car. The air is much cleaner and streets freer of traffic. Both of these were damaged by too many car owners. Similarly, the supply of land is limited whilst population can grow ad infinitum, creating ever upwards pressure on land prices. Cost: in terms of individual rights, the army, police and justice defend your right to own that land free of damage, spurious lawsuits to drain your resources, land grabs by powerful men, and foreign invasion forces. This forms the basis of modern society and the implementation of your individual rights. The cost is proportional to land area but not as strongly correlated with company size in the equity case (you might have a few more problems but not proportionally to market capitalisation, and they involve court cases rather than policing, with most of the high costs - lawyers - born by private parties). In theory, any land owners ought to be taxed, however, I make an exception for one's primary home (tax residence) considering that all citizen are naturally short housing (they need a place to live) and buying a home puts them in a housing neutral position and also has many positive effects on the commons (people are more invested in the future of their country if they own their home, less likely to move somewhere else, etc.). Vancouver is a great example of citizen who have created ideal conditions for home ownership by participating in building a peaceful, prosperous economy which respects individual rights. Foreigners have accordingly swarmed to take advantage of the fact they were not charged for the benefits arising from ownership. This has caused citizen - beyond the first generation of land owners - to be penalised for having built their own country up, as they end up unable to afford to live in it, burning up valuable income into paying high rents and house prices. A tax - which should offset what Canadians would pay elsewhere on productive activities, like income - is one of the best way to correct this imbalance, by charging the cost of enforcing individual rights to those who benefit from it.

themartorana 10y ago

Holding onto vacant property creates huge monetary value.

themartorana 10y ago
I don't understand how my comment above got down-voted. In a pure economic sense, holding property creates scarcity, and prices rise. It's wildly unbalanced value, but its value nonetheless.

briandear 10y ago

It could be argued that owning real estate does create value.

hx87 10y ago
Living in, renting out, and /improving/ real estate creates value. Using it as an idle store of value does not.
- anthonybullard 10y ago
  But don't you have to wonder what in the institutional structure of the locality creates market conditions that allows one to use homes as an idle store of value? Sounds to me like a late order effect of restrictions in supply. Up to certain extremes, if such restrictions did not exist, then increases in property values would lead to a stimulation in supply bringing the prices back to a more equilibrium state. San Francisco, and the Bay Area as a whole, is dealing with such issues as well. Vast restrictions on supply on a multi-decade timespan have created an anti-virtuous cycle of rising property values followed by more support for supply restrictions by incumbent property holders followed by further increases in property values and on and on. Foreigners are an easy political target since they are usually unable to participate in the political process. "Other" bias also has strong rhetorical power unfortunately. But the real solution seems to lie somewhere in institutional reform around property rights protection(ie, use/build as of right).
  - hx87 10y ago
    Certainly true. Proposition 13 removes another check on NIMBYism and property price boosterism, since without it the owners will have to pay a high proportion of their non-property wealth in taxes unless incomes rise by a similar amount.

freehunter 10y ago

Doesn't that make vacation homes illegal? Or owning rental property? Around here, even middle class folks can have a cabin on a lake up north that they visit once or twice a year.