+25 Year Amortization for Mortgages

[bootsie]

I know of a few young people that have recently purchased houses with 35 or 40 year amortization periods for the same reasons mentioned by Bruce (higher incomes expected within a short time). The problem is, they all purchased more home than they would have with a traditional 25-yr so it didn't necessarily make it more affordable to buy but more affordable to buy something bigger / more expensive than they needed.

When asked, my advice was that there's nothing wrong with renting until you can afford what you want with a more traditional mortgage but it's hard not to be a home owner when all of your friends are...

It's no wonder homes are becoming unaffordable for so many Canadians...

[arthur]

Rented to kids, Rent Cheques will come in Girl Friend's names.

Higher quality RE tends to hold up better and, Yes, they are getting a nicer place than they personally can afford, but they will get our money eventually, might as well be now.

I find it ridiculous that old people are sitting on millions and relatives are waiting for them to die.

[brucecohen]

Rented to kids, Rent Cheques will come in Girl Friend's names.

Higher quality RE tends to hold up better and, Yes, they are getting a nicer place than they personally can afford, but they will get our money eventually, might as well be now.

But even with rent at FMV, you still have a negative carry. I've lost track of the status of the REOP test. ISTM tax court judges kept striking it down and the govt kept bringing it back. I'd run the plan past a tax pro before assuming ongoing interest deductibility.

Where in Toronto are you going to find two "higher quality" condos for < $500K? Are you talking bachelor units?

BTW, remember that as owner you're responsible for the monthly condo maintenance fee plus property taxes. A hefty bite on top of the mortgage payment, especially if it's a high-rise with a swimming pool and concierge.

[arthur]

BC, I think we can find a 1 bedroom for about $250,000, not a Tridel building, but certainly the location at Yonge and Easy, just have to wait, but they are out there.

We are in no rush, maybe within next 12 months.??

[randomwalker]

I am looking long term, I don't care about a few years out, a way to put some cash to work, money flow is there, it just will go to a differant destination.

Not sure what your definition of "long term" is but current demographic trends can't support a secular bull-market in residential real-estate. Every succeeding generation since the last war has had fewer children than the one before it. There are solutions but no one is talking about them.

Shannon Proudfoot, The Gazette
Published: Friday, September 21

"Not enough, Canada records highest fertility rate in years, but still too few babies born. Canada recorded its highest number of births and peak fertility rate of the last seven years in 2005, according to a report released Friday by Statistics Canada. However, the country's fertility rate is still well below replacement levels."

http://www.canada.com/montrealgazette/n ... 1b&k=47807

===============================================

"Median age reaches all-time high
New census data on age and sex show that as of May 15, 2001, the median age of Canada's population reached an all-time high of 37.6 years, an increase of 2.3 years from 35.3 in 1996. This was the biggest census-to-census increase in a century."

http://www12.statcan.ca/english/census0 ... canada.cfm

[lystgl]

I am looking long term, I don't care about a few years out, a way to put some cash to work, money flow is there, it just will go to a differant destination.

Not sure what your definition of "long term" is but current demographic trends can't support a secular bull-market in residential real-estate. Every succeeding generation since the last war has had fewer children than the one before it. There are solutions but no one is talking about them.

Shannon Proudfoot, The Gazette
Published: Friday, September 21

"Not enough, Canada records highest fertility rate in years, but still too few babies born. Canada recorded its highest number of births and peak fertility rate of the last seven years in 2005, according to a report released Friday by Statistics Canada. However, the country's fertility rate is still well below replacement levels."

http://www.canada.com/montrealgazette/n ... 1b&k=47807

===============================================

"Median age reaches all-time high
New census data on age and sex show that as of May 15, 2001, the median age of Canada's population reached an all-time high of 37.6 years, an increase of 2.3 years from 35.3 in 1996. This was the biggest census-to-census increase in a century."

http://www12.statcan.ca/english/census0 ... canada.cfm

12 - 20 million illegal Mexican aliens in the US now and apparently migrating north. Do you really think we're going to have a population deficit particularly if climate change is real? Standing room only. (':)')

[randomwalker]

12 - 20 million illegal Mexican aliens in the US now and apparently migrating north. Do you really think we're going to have a population deficit particularly if climate change is real? Standing room only. (':)')

As I said "there are solutions" lol. But you do raise an interesting point that begs the question, but not for this thread, Why the increased level of securuity at northern U.S. border crossings when for economic reasons their southern border remains so porous?

[patriot1]

12 - 20 million illegal Mexican aliens in the US now and apparently migrating north

You are not going to get "wink-wink" tolerance of illegal immigration in Canada like in the US. Canada has a very large and growing legal immigrant community who become voting citizens in 3 years, and they are not going to stand quietly by and let illegals undercut them in the job market and compete for social services. No way no how. Zero tolerance for illegal immigration is a vote-getter for all sectors of the electorate. There is no Hispanic voting base in Canada to speak of.

How you stop illegal immigration? Simple, you just stop them from getting jobs or social services. Then there's nothing for them to come for.

If the Canadian government decides the country needs more people, it will increase legal immigration, as it always has.

patriot, you cannot cover all RE as a Bear Market, some areas will continue to grow, the demographics are skewed a certain way.

Ok, so what areas in Toronto, or Southern Ontario for that matter, "continued to grow" during the RE crash in the early 1990's?

[dakota]

Arthur wrote

I find it ridiculous that old people are sitting on millions and relatives are waiting for them to die

Well it is their money and their decision on what they will do with it and when.

[WishingWealth]

arthur:
'I find it ridiculous that old people are sitting on millions and relatives are waiting for them to die.'

Did you print your post for the benefit of your father?

WW

[arthur]

WW, My Dad and I have had this talk many times, and his mind is a closed subject on the issue.

We are all aware of what will happen, but I do not understand why not let yourself see what you have given, accept the thanks of the beneficiaries, why wait??

I have told him, at least 12 more years, I want that letter from Her Majesty, from the PM, could care less.

I just bought him a pile of CD's, English Artists from the 40's, they are still in their wrappers and he keeps listening to them on scratchy vinyl.

He just bought a 2007 Caravan, but he insisted they put a cassette player in it.

[kcowan]

As long as you are at the will of the CRA to make this work financially. I would defer until you have solid evidence that the losses can be used to reduce regular income.

CRA have been continually tightening what can be used to reduce regular income, e.g.
office in home is not allowed
margin loan interest is not allowed.

ISTM that mortgage interest on rental properties is a sitting duck. You might win in court but that will not stop CRA from disallowing it. Can you demonstrate with credibility when you expect the properties to generate positive cashflow? If it is longer than 5 years, you may have a problem.

[lystgl]

CRA have been continually tightening what can be used to reduce regular income, e.g.
office in home is not allowed

huh?

Tax tip

February 11 2005
Work from home and save

Did you know...

Under certain conditions, if you are self-employed and use part of your home to run your business, you can deduct a corresponding part of the operating costs of your home. For example, if your home office takes up 10% of your total floor space, you can deduct 10% of your home maintenance costs, such as heating, electricity, and cleaning materials.

Any expenses that are directly related to the business, such as supplies and travel, are also deductible. Your home office can be a segregated area, or a room in your home that is devoted entirely to your business.

For more information, visit www.cra.gc.ca/tax/business/menu-e.html.

[AltaRed]

I think keith means CRA will not allow a deduction against your other (regular) income, rather than just a deduction against your home business generated income.

[lystgl]

I think keith means CRA will not allow a deduction against your other (regular) income, rather than just a deduction against your home business generated income.

Well, I know they have an "expectation of profit", but until that expectation comes to fruition, or they get tired of you reporting a loss, I was under the assumption that you could.

stand corrected. just looked it up(':oops:')

[bootsie]

Are you saying that you can't claim a loss on rental income and deduct that from your regular income? I don't think this is the case - my father has done it numerous times and I plan to this year as well.

[lystgl]

Are you saying that you can't claim a loss on rental income and deduct that from your regular income? I don't think this is the case - my father has done it numerous times and I plan to this year as well.

Given the benefit of AltaRed's clarification and a reread of Kcowan's post, I think he's saying that, going forward, it would be imprudent to count on such an exemption remaining in place indefinitely.

[kcowan]

I used to use my home office expenses to reduce regular income. Then they disallowed it. I expect that rental income losses are at risk in the future of being disallowed. It is a matter of degree and how many people are taking advantage of it. Granted they are not now. And in tests in court, the taxpayer has won. But CRA continues to challenge the taxpayers, playing the law of averages.

But to set up you life so that the deductions is crucial might be a little risky going forward. OTOH you can structure your life to make it happen with certainty and just hope you never get audited or challenged.

[dakota]

kcowan wrote

I used to use my home office expenses to reduce regular income. Then they disallowed it

It was my understanding that if you had an office in your home to earn a living then it was deductible but if it was an office for your own pleasure it was not

[Nemo2]

It was my understanding that if you had an office in your home to earn a living then it was deductible but if it was an office for your own pleasure it was not

Can one use 'office' and 'pleasure' in the same sentence?

[patriot1]

I think keith means CRA will not allow a deduction against your other (regular) income, rather than just a deduction against your home business generated income.

Well of course not, they are not going to let people claim a big chunk of their house as an "office" and then use this to create losses from running some supposed "home business" to write off against their real income.

If you are running a real business with a real office in your house, that's another story.

No different than the ban on "hobby farm" expenses and such.

[dakota]

It was my understanding that if you had an office in your home to earn a living then it was deductible but if it was an office for your own pleasure it was not

Can one use 'office' and 'pleasure' in the same sentence?

Depends on what you do there


PS Ever hear of the "casting couch"?

[Nemo2]

It was my understanding that if you had an office in your home to earn a living then it was deductible but if it was an office for your own pleasure it was not

Can one use 'office' and 'pleasure' in the same sentence?

Depends on what you do there


PS Ever hear of the "casting couch"?

Touché.

[dakota]

Nemo2 wrote

Touché.

How do you get an accent on the "e"?

[Nemo2]

Nemo2 wrote

Touché.

How do you get an accent on the "e"?

http://www.starr.net/is/type/altnum.htm