Toronto King Portland Centre and Kingly Condos | 57.6m | 15s | Allied | Hariri Pontarini

LMVDR said:
The headline isn’t misleading at all. 1000 rental units (so far) have been converted to condo units. Obviously some developers believe that the new rent control laws will impact their future cash flows enough that their ROI on the project drops below an acceptable rate of return or at least below that return earned from selling the units individually as condos.

Think of it this way- if developer thought it would invest say $1 million of equity in a rental building and generate $1 million of profit (whether on paper or if it sold the building on completion) now the developer is looking at it and seeing it can only make some $750k of profit from the project. The future cash flows that it is projected to receive from the project are negatively impacted by the new rent controls.

However the condo market appears to still be strong so developer can still generate $1 million profit going that route and furthermore the developer has no political risk that further rental regulation negatively impact the value of its asset.

Compounding this problem further is the fact that interest rates have risen about 1% since last year already which also negatively impact the value of the asset all things being equal.

So have the new regs made the rental market tighter by decreasing the amount of new rental stock in the GTA/Ontario?

Without question to some extent at the very least. However, the degree of that impact is probably fairly small as the quantum of new rental housing being initially proposed and now canceled is not significant in the overall rental housing universe.

If the government (City/Province) actually want new rental housing they need to offer a better package of incentives for private developers or throw huge amounts of capital at the problem themselves, neither which appear politically tenable in today’s environment.
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Nowhere in my post did I say the headline was misleading. What I said was that the more surprising thing is that thousands more planned rentals are still going through… and that would be the more interesting headline.

It's no surprise that there have been some rental plans cut with the expansion of the controls, but when they were first announced, some in the development industry were saying all planned rentals would be cancelled. I don't have an issue with anything else in your post, it's spot-on otherwise!

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With Justin Treadeau and Bill Morneau's upcoming tax reform proposal, the incorporated landlords rental income "passive income" will be taxed much higher to a point that running rental business is no longer justified and make sense. As a result, further decreasing supply on rental units and further pushing up monthly rent. Double Whammy!
 
Jowblow333333 said:
With Justin Treadeau and Bill Morneau's upcoming tax reform proposal, the incorporated landlords rental income "passive income" will be taxed much higher to a point that running rental business is no longer justified and make sense. As a result, further decreasing supply on rental units and further pushing up monthly rent. Double Whammy!
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That's highly speculative, and the degree to which those taxes will increase will vary based on a number of factors. The amount of fear-mongering around those proposed tax changes is insane.
 
ADRM said:
That's highly speculative, and the degree to which those taxes will increase will vary based on a number of factors. The amount of fear-mongering around those proposed tax changes is insane.
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If Justin and Bill implement what they have proposed, small landlord who is incorporated will see tax bill increase from 50% to 73%. Will find out soon!

"The government says its aim is to target high-income Canadians who incorporate in order to reduce their taxes through one or more of three currently legal practices: income sprinkling; passive investments; and converting business profits into capital gains instead of paying them out as dividends or salaries."

http://www.cbc.ca/news/politics/tax-changes-fiscal-update-1.4297371
 
Jowblow333333 said:
If Justin and Bill implement what they have proposed, small landlord who is incorporated will see tax bill increase from 50% to 73%. Will find out soon!

"The government says its aim is to target high-income Canadians who incorporate in order to reduce their taxes through one or more of three currently legal practices: income sprinkling; passive investments; and converting business profits into capital gains instead of paying them out as dividends or salaries."

http://www.cbc.ca/news/politics/tax-changes-fiscal-update-1.4297371
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You just proved the point I was trying to make. As you noted, the proposal targets high-income earners and, as is the case in our current tax system, the amount those people are taxed will vary based on how much they make. If they're not high-income earners, they won't be affected.

If your "small landlord" happens to make two million dollars a year, yes, it's quite possible that he or she will pay significantly more taxes which, IMHO, is fine. But it's way too much to say "greedy Feds are grabbing my money again, everything's going to go to shit, we're basically Venezuela now, and there won't be any rental properties for anyone anywhere anymore", which is basically what I'm taking from, to quote you directly, "...will be taxed much higher to a point that running rental business is no longer justified and make sense. As a result, further decreasing supply on rental units and further pushing up monthly rent."
 
ADRM said:
You just proved the point I was trying to make. As you noted, the proposal targets high-income earners and, as is the case in our current tax system, the amount those people are taxed will vary based on how much they make. If they're not high-income earners, they won't be affected.

If your "small landlord" happens to make two million dollars a year, yes, it's quite possible that he or she will pay significantly more taxes which, IMHO, is fine. But it's way too much to say "greedy Feds are grabbing my money again, everything's going to go to shit, we're basically Venezuela now, and there won't be any rental properties for anyone anywhere anymore", which is basically what I'm taking from, to quote you directly, "...will be taxed much higher to a point that running rental business is no longer justified and make sense. As a result, further decreasing supply on rental units and further pushing up monthly rent."
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high income, low income.... it is all relative. So you are suggesting the higher taxes Justin and Bill impose, more rental units will supply into the market ? I see it as inverse relationship.
 
Jowblow333333 said:
high income, low income.... it is all relative. So you are suggesting the higher taxes Justin and Bill impose, more rental units will supply into the market ? I see it as inverse relationship.
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I'm saying it's certainly much too early to be drawing any sort of conclusion about or if there will be any effects at all, at the very least, and my personal prediction is that there will be no demonstrable link at all.
 
Jowblow333333 said:
With Justin Treadeau and Bill Morneau's upcoming tax reform proposal, the incorporated landlords rental income "passive income" will be taxed much higher to a point that running rental business is no longer justified and make sense. As a result, further decreasing supply on rental units and further pushing up monthly rent. Double Whammy!
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This is nonsense. The tax changes will have no impact on purpose-built rentals, and virtually no impact on condo rentals either, since their owners are most likely paying themselves through dividends rather than actual income.

Jowblow333333 said:
If Justin and Bill implement what they have proposed, small landlord who is incorporated will see tax bill increase from 50% to 73%. Will find out soon!
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Again, complete lie. They aren't going to see their personal tax bill increase by one cent. What they might see is more taxes on their passive investment income, but that has nothing to do with the apartment rental itself - the rental is not passive at all. What this means is that if they choose to leave the money they make from renting out the apartment in the corporation (instead of paying it out to themselves), they'll pay higher taxes on any capital gains and dividends that they get from investing that money, but they won't pay any additional taxes on the rental income itself.
 
LMVDR said:
Extremely outdated (2009) paper with stale data now irrelevant.
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It most certainly is not.

Let's be clear, there has not been significant rental construction in 2 generations in Ontario.

The reduction that may currently be happening is off a very small number to start.

The current new construction is almost entirely contemplated as high-end-of-market.

Which is to say rents at or above $2,000 per month for a 1 bdrm.

Meaning they will have no material affect on the supply of affordable rental housing to the average person.

My point in citing the report was not to suggest these were contemporaneous causes of the current downtown.

Rather, it was to suggest that the current downturn is meaningless in the discussion of adequate supply of housing meeting the needs of median-income (or below) residents.

The drastic change in new supply coming on stream was in the 1970s, not in the last six months.

That change occurred in/around the time of rent control being introduced, but it also happened throughout the western world and was a product of various other factors noted in the report.

Rent control likely was a contributing factor, but hardly the key.

Natural rent control occurs when supply is adequate, and landlords compete.

The market is currently incapable of increasing supply enough, at a price point many can afford, to deliver a competitive market place.

To bring that about would require a whole different set of policy changes, some, but not all of which, are identified in the cited report.
 
amnesiajune said:
This is nonsense. The tax changes will have no impact on purpose-built rentals, and virtually no impact on condo rentals either, since their owners are most likely paying themselves through dividends rather than actual income.



Again, complete lie. They aren't going to see their personal tax bill increase by one cent. What they might see is more taxes on their passive investment income, but that has nothing to do with the apartment rental itself - the rental is not passive at all. What this means is that if they choose to leave the money they make from renting out the apartment in the corporation (instead of paying it out to themselves), they'll pay higher taxes on any capital gains and dividends that they get from investing that money, but they won't pay any additional taxes on the rental income itself.
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Not quite accurate. The rental income could very easily be passive. It depends how the asset is held and the owner’s principal business. These taxes are frightening the hell out of the business community for good reason.

Taxes are ridiculously high now as it is. Hard work, risk and success are not rewarded in this country they are labeled as greed and wealth is vilified.

What the PM and the FM are proposing is tantamount to theft and if implemented as proposed these tax measures are going to chase away an enormous amount of investment in this country. These two clowns are dangerous to the country’s economic well being.
 
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