5.2 - Taxes on Real Property Flashcards
If you owe GST it is a Debt to CRA, when is it payable?
payable immediately - dispute later
who has the obligation to pay GST?
buyer
does GST apply to the amount of the deposit when it’s due?
no - taxable on closing date
what is GST paid on?
purchase price, components of purchase price
how long after assessment do you have to dispute a tax?
90 days
who pays the GST if self-supply property?
if builder/tenant moves into new build, seller pays GST and can’t charge buyer later
what is the chain of tax disputes?
- CRA
- Tax court of Canada
- Federal court of Appeal
- Supreme Court of Canada
what is the input tax credit?
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
who is responsible for reporting GST in input tax credit?
buyer
what are tax rebates?
a form of tax recovery that allows non-businesses to recover GST paid with respect to certain transactions
how long does an individual have to file a rebate application form?
within 2 years of purchase
when is PTT paid?
before you purchase a home
what does PTT apply to?
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.
how is PTT calculated for commercial property?
PTT is generally calculated with reference to ALL fixtures, including some machinery or equipment and may also be subject to PST
how much is foreign buyers tax?
20% of fair market value + ptt payable
what (where) does foreign buyers tax apply to?
residential properties in
- greater Vancouver regional district
- Fraser Valley
- capital
if a property has both Resi/Comm parts, which portion is subject to foreign buyers tax?
residential only
what are the 2 main conditions for the application of the foreign buyers tax?
- nature and location of property (only residential)
- identity of buyer (whether foreign national, foreign corporation, or trustee)
qualifications for FTHB program?
house under $500k & 0.5 hectares
first home purchase anywhere in the world
how much taxes have to be withheld for non-residents who sell property?
25%
newly built home exemption program requirements (2)?
property must become buyer’s principal residence & have fair market value of $750,000 or less
what is capital gain?
profit earned from the sale of a property or other investment
how much of the profit earned on a sale of a property is taxes? (2)
50 (cap gain) or 100% depending on whether it’s true capital gain or business income
how can property be exempt from capital gain taxation?
if entire property is your principal residence
what does capital gains tax apply to?
property earning revenue (rentals - full/partial)
long-term investment
purchase to “flip” for a profit
what is business income?
money earned from any activity done for the purpose of making a profit.
what rate is business income taxable at?
individual or corporate tax rate
is flipping real estate a business venture?
yes. 100% taxable.
main differences between business income vs capital gain?
how long owner holds property
intention/motive of owner
financing method
frequency of similar transactions by owner
net taxable value formula
(taxes/mill rate) * 1000
what is net taxable value (definition)?
the actual value of the real property as determined by the assessor, less any exemptions that apply
what is the mill rate (definition)?
tax rate applied to each $1,000 of net taxes
