5.2 - Taxes on Real Property

Question 1

If you owe GST it is a Debt to CRA, when is it payable?

Answer 1

payable immediately - dispute later

Question 2

who has the obligation to pay GST?

Answer 2

buyer

Question 3

does GST apply to the amount of the deposit when it’s due?

Answer 3

no - taxable on closing date

Question 4

what is GST paid on?

Answer 4

purchase price, components of purchase price

Question 5

how long after assessment do you have to dispute a tax?

Answer 5

90 days

Question 6

who pays the GST if self-supply property?

Answer 6

if builder/tenant moves into new build, seller pays GST and can’t charge buyer later

Question 6

what is the chain of tax disputes?

Answer 6

1. CRA
2. Tax court of Canada
3. Federal court of Appeal
4. Supreme Court of Canada

Question 7

what is the input tax credit?

Answer 7

GST deduction a person can claim on their GST return for the amount of GST paid by that person on the acquisition of COMMERCIAL property or services

Question 8

who is responsible for reporting GST in input tax credit?

Answer 8

buyer

Question 9

what are tax rebates?

Answer 9

a form of tax recovery that allows non-businesses to recover GST paid with respect to certain transactions

Question 10

how long does an individual have to file a rebate application form?

Answer 10

within 2 years of purchase

Question 11

when is PTT paid?

Answer 11

before you purchase a home

Question 12

what does PTT apply to?

Answer 12

any transfer of an interest that is registered at the Land Title Office Includes: sale of a fee simple interest, agreement for sale, a life estate, and a Crown grant.

Question 13

how is PTT calculated for commercial property?

Answer 13

PTT is generally calculated with reference to ALL fixtures, including some machinery or equipment and may also be subject to PST

Question 14

how much is foreign buyers tax?

Answer 14

20% of fair market value + ptt payable

Question 15

what (where) does foreign buyers tax apply to?

Answer 15

residential properties in
- greater Vancouver regional district
- Fraser Valley
- capital

Question 16

if a property has both Resi/Comm parts, which portion is subject to foreign buyers tax?

Answer 16

residential only

Question 17

what are the 2 main conditions for the application of the foreign buyers tax?

Answer 17

1. nature and location of property (only residential)
2. identity of buyer (whether foreign national, foreign corporation, or trustee)

Question 18

qualifications for FTHB program?

Answer 18

house under $500k & 0.5 hectares
first home purchase anywhere in the world

Question 19

how much taxes have to be withheld for non-residents who sell property?

Answer 19

25%

Question 20

newly built home exemption program requirements (2)?

Answer 20

property must become buyer’s principal residence & have fair market value of $750,000 or less

Question 21

what is capital gain?

Answer 21

profit earned from the sale of a property or other investment

Question 22

how much of the profit earned on a sale of a property is taxes? (2)

Answer 22

50 (cap gain) or 100% depending on whether it’s true capital gain or business income

Question 23

how can property be exempt from capital gain taxation?

Answer 23

if entire property is your principal residence

Question 24

what does capital gains tax apply to?

Answer 24

property earning revenue (rentals - full/partial)
long-term investment
purchase to “flip” for a profit

Question 25

what is business income?

Answer 25

money earned from any activity done for the purpose of making a profit.

Question 26

what rate is business income taxable at?

Answer 26

individual or corporate tax rate

Question 27

is flipping real estate a business venture?

Answer 27

yes. 100% taxable.

Question 28

main differences between business income vs capital gain?

Answer 28

how long owner holds property
intention/motive of owner
financing method
frequency of similar transactions by owner

Question 29

net taxable value formula

Answer 29

(taxes/mill rate) * 1000

Question 30

what is net taxable value (definition)?

Answer 30

the actual value of the real property as determined by the assessor, less any exemptions that apply

Question 31

what is the mill rate (definition)?

Answer 31

tax rate applied to each $1,000 of net taxes