New Tenant Eviction Rules Cleared up for you

Landlords VS Tenants 

Rental application contains do you smoke?

Photo Cred CHFI

Larry the Landlord Renting to Smokers?

No matter your opinion on the No Smoking Bans in public places; Landlords in Toronto are also faced with the reality that after renting to Smokers the condo unit or townhouse will be less desirable to subsequent tenants.

Landlords will very often need to repaint, rebroadloom and may very well need to replace fabric draperies.

http://www.realequity.ca/cases/smoking.pdf

The Landlord Tenant Boards decision interprets the "wear and tear" that 20 years ago would have been Normal to now be Tenant Damage.

You can and will be held liable for repairs.

Condo Flipping and Revenue Canada

I did not declare it was rented.  We flipped that unit No one will know.

Condominium Flips and CRA
Peter Clark  partner with Heenan Blaikie’s Taxation Law Practice Group. In his post, Peter discusses the potential tax implications of condominium flips.
 The Problem: We have heard that CRA is undertaking an “audit project” that is targeted at condominium flips. CRA is particularly interested in situations where the initial purchaser of the unit sells the unit without ever moving in or perhaps moves in for a short period of time and then sells the unit.  In either case, CRA will likely argue that the unit did not qualify as a “capital property” or as the purchaser’s “principal residence”.  If CRA is successful in denying capital treatment or principal residence treatment, then 100% of the flip profit is subject to tax as ordinary income.  CRA can also impose penalties and arrears interest if you profited from the transaction and did not report it on your tax return.
Quick flips can also create HST problems. You can lose the HST new housing rebate that you may otherwise have been entitled to.

Damage Control: Taxpayers who realized taxable income on an unreported condominium flip may be able to make a voluntary disclosure to CRA.  This will avoid penalties, but not tax and arrears interest. 

 Around our office recently a number of agents were discussing  University Students being audited on their TAX Credit claims.  One of the audit questions was who received the rent claimed.  Simply Put who was the Landlord?

This creates a number of separate issues;   Builder / Developers are providing purchaser lists when requested to CRA as they are claiming back HST.  It is not difficult in an era of electronic filing to look up the original contract name then cross reference the final purchaser.  ( Each Flip is responsible for LTT).

What is the lesson here?

Buying a Condo - Is It really a deal anymore?

Condos are usually considered starter residences with studios, one bedrooms and lofts being most desired. Singles tend to be the predominant purchasing group.  As you gather and collect things for life you also gain a spouse and child. Things constantly change.

We were expecting retirees to downsize and  occupy smaller units, but they are embracing the housing they have and renovating to make their houses suitable for long term occupancy. This includes stair glider systems, wheelchair ramps and lifts at the front entrance plus other bath and lift aids. Walk in and Sit down Shower Conversions.

In a condo we agree to follow the Rules and Regulations. Declare Tenant Occupancy,  you get to do what you want inside not on the outside; Pet Restrictions, No wild parties, no excessive noise, Parking in new buildings is often limited. TTC ridership is encouraged. Auto Sharing?

Many decisions and obligations are made for you  so really you are making a lifestyle selection.  You have the right to pay maintenance fees. The costs for heat and hydro, water and garbage removal, (a house's garbage pick up is included, condo's pay tipping) additional amenities like a concierge can easily run to 58 cents per square foot.  The bigger the building, the better the sharing, but now you have more suites per floor in higher structures. Do you have a Rec center?

What will be the Future Values?

We have had an unprecedented run up in values that has continued unabated since 2000.  (There was  a blip in 2008 that recovered almost immediately in 2009). These exceptional growth years are expected to soften slightly going into 2014.  (PDF from CMHC)  As tenant demand decreases first prices will soften for rents, then prices will begin to adjust for unit costs. Toronto currently has 1.1% vacancy. 

CMHC projects average values at $420 - $495 per square foot as sustainable and supported by the Toronto condo resale market.   If you are buying at higher values you need to examine your addition amenities.

Annual appreciation on condos has been about 5 % per year on average. As buildings age they tend to stay within the rate of inflation for per square foot prices while maintenance fees continue to increase. Mandatory Reserve Fund studies are revisiting the minimum required contribution limits at 10% as inadequate. This is forcing many Condo Corporations to make the hard realistic choices they have evaded. 

So what's my conclusion?

I could never afford to live in the location I have; at High Park over looking Lake Ontario, in a single detached home, (The Opening Video scene is shot from my condo window) If It was not in a condominium. The same very quickly applies to being in the downtown core.  With larger units, 3 bedrooms plus den, does not appear to have sustained demand due to cost. IE 1.5 million plus.

If you want the lifestyle and location, it's great.  As an investment, with the additional expense of upkeep, maintenance fees and services, condos may not deliver the promised return. 


What do you think?

Landlords refused use of Credit Scores by OHRC

Are the banks using Credit scores and payment history to decide your credit worthiness?  The Beacon score decides the interest rate and the risk the lender is willing to take.

Landlord or Investors not allowed to ask credit details?    UMMM  Sorry.  That is just plain wrong.  http://www.ohrc.on.ca/en/book/export/html/4826

Local Tribunals and Commissions start off being well meaning but seriously have exceeded their mandate.

Is it reasonable for the OHRC to impede the [investors] Landlords lawful right to select a Tenant?

Add your comments..

David Pylyp on Google+

License Toronto Landlords

Toronto has not yet joined other municipalities to license Landlords but that may be short lived as the City looks for new sources of Revenue. The average tax appears to be at $825.00 per unit.

Condo Units in a Building are exempt.

Compulsory licensing for small landlords is rapidly spreading throughout Ontario, having come into effect most recently in Waterloo on April 1 and North Bay on May 1. Other Ontario cities which have already implemented a licensing regime are Guelph, London, Mississauga and Oshawa.
The idea appears to be contagious, and many other cities are looking at the concept, including Hamilton and Kitchener.
Waterloo’s licensing regime is typical. Licensed rental properties in homes or townhouses can have no more than four bedrooms, but units in apartment buildings and condominiums are strangely exempt.
Landlords are required to pay application and annual fees of as much as $825 to rent bedrooms in houses and townhomes.
Regulated units are theoretically subject to higher standards for health and safety, and landlords are subject to a criminal records check. The new bylaws set maximum occupancy limits (apparently regulating how many people can sleep in one bedroom), and minimum distances separating one licensed building from a neighbouring one.
Previously required fire inspections have been eliminated, and landlords now have to self-certify compliance with six different bylaws, including, strangely, fence bylaws, as well as building, fire, electrical and health codes.
The ability of Ontario municipalities to implement landlord licensing came into force in 2007 with changes to the province’s Municipal Act, which allowed municipalities to regulate businesses and business transactions.
Many observers — including this one — are concerned that the new regulatory scheme is either a municipal money grab, or a crude attempt to regulate and limit housing for students and large families. Both groups are often classified as low income. In Waterloo, for example, two tenant families with three children each cannot live in houses within 150 metres of each other.
A North Bay city statement about its new bylaw says that the purpose of regulation includes ensuring that rental properties “do not create a nuisance to the surrounding neighbourhoods, and . . . protect the residential density, amenity, character and stability of the residential areas.”
Similar arguments were used to justify restrictive property covenants based on race and religion prior to the 1950s. In a horrendous 1949 decision of the Ontario Court of Appeal, the judges wrote that a restriction on title to land preventing purchase by those of “Jewish, Negro or coloured” race or blood was just to assure that the residents were “of a class who will get along together.”
It seems that in Waterloo, North Bay and elsewhere, today’s students and large families are being treated like yesterday’s minorities.
In fact, the Ontario Human Rights Commission (OHRC) is currently investigating whether rental housing licensing bylaws in North Bay and Waterloo create discriminatory barriers to rental housing.
Bob Aaron is a Toronto real estate lawyer. He can be reached by email at bob@aaron.ca, phone             416-364-9366       or fax 416-364-3818.
Visit the Toronto Star column archives at http://www.aaron.ca/columns for articles on this and other topics or his main webpage at www.aaron.ca.

Are you interested in acquiring tenants for a unit in Toronto?    Give me a call at             647 218 2414      

+David Pylyp