Weekly stats update courtesy of the VREB.
|Wk 1||Wk 2||Wk 3||Wk 4|
|Sales to New Listings||50%||
|Months of Inventory||
Listing season is upon us. January is when the listings start to pile on for the spring while the sales rush doesn’t really hit until February. Hence the halving of the sales to list ratio from December. Sales are a bit sluggish though, at about 20% behind last year’s sales rate. Too early in the month to come to any conclusions about that though. But I suspect every single month this year will be trailing last year on sales.
In other news, CuriousCat has followed up on the extensive discussion we had in the fall on whether capital gains will apply to the portion of your house that is a suite. And the answer is a (edit: somewhat – see comments) clear yes. So if you have a suite and sell your house, you will very likely need to pay capital gains tax on the proportion of the increased value of your house that is attributable to your suite. In other words, if you bought a 2000 sqft place with an 800 sqft suite for $500,000 and sell it for $800,000, you will have a capital gain of $120,000 upon which tax must be paid ($60,000 would be added to your income). That’s a pretty significant amount and depending on your income you could end up with a $30,000 tax bill. The CRA has a full worked example here (you can ignore the CCA which most people won’t be claiming on a rental).
What is the effect of this on the Victoria market? I suspect very little. First of all very few amateur landlords will think ahead far enough to how much tax they may owe when selling, so it likely won’t influence their buying decision. Secondly, the only reason the capital gains bites so hard right now is because of the massive increases in property values we’ve seen. If property prices were appreciating at a more moderate pace the capital gains tax would also be less significant.
What do you think? Does the fact that you’ll have to pay capital gains change your thoughts on suites at all?