All Forum Posts by: Roy N.

John hit on the CRA term for capital depreciation (incl. terminal losses), but it does not equate to the straight-line depreciation found in the U.S.A.     Here most real estate would be depreciated at an annual rate of 4%.  While this eventually becomes negligible, it theoretically never ends ;-)    Additionally, any capital improvements you make to the property would be added to your current costs-basis during the year they are made.   

You also need to keep recapture in your thoughts when decided whether or not to take a capital cost allowance deduction.  For capital assets such as vehicles, appliances, computers, etc which become worthless after a number of years and are typically disposed at the end of their useful life, taking a CCA deduction is always a good idea.    For things like property, where you are more likely to sell the asset when you are finished with it, your accumulated CCA will need to be unwound and added back to your income in the year of sale ... hence you need to plan for such events.

Echo the best advice above:  Go see your accountant.

@Aaron P.

Privacy law in Canada is such that it is unlikely you will able to purchase ready-made lists of mortgage delinquencies, etc.   The municipal / provincial tax authority is unlikely going to make such information available to you aside from what is published for tax sale.

Most probably, you will need to build your own lists (by driving/cycling/running neighbourhoods, combing through the public portion of the provincial land/tax registries, etc) or take a more blanket approach - i.e. Canada Post has a offering which will allow you to target a postal code / neighbourhood.

 There are sub-forums for each province and territory.

Greg:

Purchasing such lists does not fly in Canada, and not in much of Europe from my experience.   Due to tighter privacy laws, it would be both impractical to create and illegal to sell such a list. 

Dan:  What double tax?   I've posted clarification on property taxes in NB on another thread recently, so will not go into it here.  The short of it is, there is a rebate of the provincial portion of the property tax to owner occupants (they have to apply for it to get it). While this rebate is significant, it is not 50% of the full tax rate on residential properties.

Is the tank buried or in the basement/mechanical room of the building?   If buried, I would either have an EIA performed (your lender may request one given the tank has been disclosed) or, at the least, have the tank inspected.  If there is any chance the tank may have leaked, then you want the Vendor to handle its removal.

Inside tanks are easier to assess, empty and remove, but even then if I were to be assuming responsibility for its decommissioning and disposal, I'd discount the costs from my offer.

Better read my earlier post above where I dispel the myth of the taxes being double for non-owner-occupants.   Taxes are indeed less for owner occupants (due to a rebate), but not half of the full rate.

Property taxes in NB for "out of towners" are no different than what is paid by those of us who live here. 

@Greg Gangle

Keep in mind that the BP calculators are U.S.A. biased/specific.  Financing (from originating fees to how interest is calculated and financing terms) will be different here.  {I see that the calculators are still {incorrectly} classifying CapEX as an expense}

When modelling a project like this, I tend to be very conservative {upside surprises are more enjoyable than downside ones}.  While I would keep the 3% growth rate for expenses, I would assume a 0 - 1.5% revenue (aka rent) growth.  Our specific markets are all cash-flow and forced appreciation plays, so I would peg market appreciation at 0% (sometimes even negative 1%) and never more than the rate of inflation.   If you are in a market (southern Ontario, Charlottetown) experiencing substantial market appreciation, then modelling an early exit based upon price growth is a viable exit.

@Myles MacMillan

The private mortgage insurers were given charters to take some of the load/risk away from the taxpayer.  They operate under the same regulations.