Recently, I read about a vagary of Canadian tax law that piqued my interest.
I know, I know: “Canadian tax law.” I’m a lot of fun at parties, I assure you. But hear me out on this one.
I read about it in the context of the big federal election up North (next week). It turns out there’s been a running debate over whether capital gains from the sale of a primary residence should be taxed, or not taxed (traditional situation, mostly), or whether there should be a middle ground.
From what I hear, it’s not so much a big revenue-driving push, but instead a plan to make it less attractive for people to buy houses, renovate them, move into them for a bit to get favorable tax treatment, and then quickly flip them.
Much like here in the good ol’ US of A, Canadian real estate prices have largely gone through the roof: up 25% between February 2020 and February 2021.
That means the meat of the proposal is basically a limit on how often a Canadian can pull off a flip without having to pay tax on the profit.
Canadians will sort this out for themselves next week, at least in part. But it reminded me of a “trend that makes you go hmmm” in American real estate.
This report came from the Wall Street Journal a while back, suggesting that more and more real estate agents were using Hollywood-style computer-generated imagery in their listings: making brown lawns look green, stag[ing] rooms with virtual furniture ... and even perform[ing] full-blown HGTV-style makeovers with clicks of a mouse."
At the outset, this seemed kind of self-defeating: I mean, any real estate agent who tricks me into coming to an open house, only to see it’s nowhere near as nice as the magic CGI photos made it look, will not be doing a deal with me. Time wasted all around.
Alas, the trick isn’t meant for people like you and me.
Instead, as the WSJ pointed out, the more common targets of this manipulation were high-volume investors using software to analyze listing photos to make all-cash offers, sight unseen, on a large number of properties.
The potential impact is bigger than you might think. Go back to 2017, and about 35% of home buyers made an offer on at least one property sight unseen. I imagine it has to be an even higher number now, as a result of Covid.
Anyway, I don’t know the answer here. Tax capital gains? Don’t tax them?
Laugh wryly when you realize the fair market value of your home just ticked up a point or two because some Wall Street guy got duped into buying a bunch of shacks down the street that looked on MLS as if they were straight out of House Beautiful?
Who’s to say? But as far as pictures go, I think the best advice is what you’ll find on the totally non-doctored real estate photo below.
(Enable images if you can’t see; otherwise, none of this will make sense.)
7 other things worth your time
More than 7 million ballots in the Gavin Newsom recall election have already been received by California elections officials ahead of today’s election date. First results should be ready around 8 pm Pacific. (SFGate)
About 250 members of the Massachusetts National Guard have been activated to help with the state’s shortage of school bus drivers. (CBS Local Boston)
Congressional leaders and top security officials say the US Capitol will be well-prepared for a far-right rally expected for the area on Saturday, including plans to reinstall perimeter fencing that was up for months after the Jan. 6 insurrection. (NPR)
A cryptocurrency called Litecoin spiked and fell sharply after a false press release was circulated suggesting Walmart would accept it as currency. (Mashable)
Meet the parents who are desperately looking for clinical trials for a Covid-19 vaccine that their under-12 year-old children could get into. (Axios)
The first week of NFL games generated not only touchdowns but also a record volume of legally placed sports bets, according to a geolocation company. A Canadian tech company said Monday that it recorded 58.2 million betting transactions across 18 states and Washington, D.C.—a 126% increase from the same period of the 2020 NFL season. (CBS News)
The Evangelical Lutheran Church has installed its first transgender bishop. The Rev. Megan Rohrer will oversee nearly 200 congregations in Northern California and northern Nevada. “My call is ... to be up to the same messy, loving things I was up to before,” Rohrer told worshippers. (AP)