[SPEAKER_03]: Hello.

[SPEAKER_03]: Hello.

[SPEAKER_03]: Hello.

[SPEAKER_03]: This is the Vancouver Weather State podcast.

[SPEAKER_01]: And welcome back to Vancouver real estate podcast.

[SPEAKER_01]: I'm your host Adam Sclina and I'm your other host Matt Sclina.

[SPEAKER_01]: And Matt should say host, but also realtors with Oakland Realty and downtown Vancouver.

[SPEAKER_01]: Super excited for today.

[SPEAKER_01]: We've got Nav Panu.

[SPEAKER_01]: He's a partner at DMCL focusing on Canadian tax.

[SPEAKER_01]: And Mohammed Shaheed.

[SPEAKER_01]: He's the senior manager of the Canadian tax group at DMCL.

[SPEAKER_01]: Both of these guys really, really understand the Canadian tax system.

[SPEAKER_01]: and with a slant as well in kind of people with large portfolios including real estate.

[SPEAKER_00]: Yeah, this was, uh, strapping.

[SPEAKER_00]: This, this one gets deep.

[SPEAKER_00]: I feel like I'm going to listen back to this one three four five times potentially two to three times a year.

[SPEAKER_00]: Yeah, just to to remind myself of all the tax tips because we dig deep.

[SPEAKER_00]: And I feel like we don't start with, you know, usually Adam, we structure the show where we go broad.

[SPEAKER_00]: Then we dig deeper deeper.

[SPEAKER_00]: I feel like this one we get right into it.

[SPEAKER_00]: We go deep immediately and there's so many takeaways.

[SPEAKER_00]: Pretty sophisticated conversation, I would say, but yeah, tons of takeaways.

[SPEAKER_01]: You know, a lot of people out there when people start talking about tax, their eyes glaze over myself included sometimes.

[SPEAKER_01]: These guys were fired up about tax and tax planning.

[SPEAKER_01]: So it was a really great conversation.

[SPEAKER_01]: I was on the edge of my seat the entire time.

[SPEAKER_01]: I think there's going to be a ton of takeaways for people [SPEAKER_00]: Yeah, and just to be clear, they're very sophisticated, yes, not you, not you or me, right before we get to that mad.

[SPEAKER_01]: Of course, we have the segment that remains nameless.

[SPEAKER_00]: That's right.

[SPEAKER_00]: The second last show of the year, the segment that remains nameless.

[SPEAKER_00]: Here's one for you, Adam.

[SPEAKER_00]: So [SPEAKER_00]: October to November.

[SPEAKER_00]: I think everybody was, you know, I don't know if anyone was all that excited to see the stats come out.

[SPEAKER_00]: I don't think anybody thought there would be anything all that exciting.

[SPEAKER_00]: But there was 2,737 MLS sales in the Vancouver region in November.

[SPEAKER_00]: Okay?

[SPEAKER_00]: 2,737 in the Vancouver region was an 18% drop over October in terms of the number of sales.

[SPEAKER_00]: My question for you Adam is, what is the typical drop?

[SPEAKER_00]: Because 18% drop you're like, okay, but we're going into Christmas, sales slow down November and into December.

[SPEAKER_00]: But is an 18% drop typical?

[SPEAKER_00]: Well, Adam, I'll tell you it's not, but here's the question.

[SPEAKER_00]: What is the typical drop from [SPEAKER_01]: Okay, what sees what's a sensational kind of percentage wise.

[SPEAKER_01]: Oh, that's it.

[SPEAKER_01]: Yeah, I've never thought about that.

[SPEAKER_00]: And you know what you know what I will say.

[SPEAKER_00]: I mean, pump my own tires a little bit.

[SPEAKER_00]: I did come up with this question myself.

[SPEAKER_00]: But I want to show to the gang over at Renny because this is based on some of the stats they're producing and it's a great email is to sign up for.

[SPEAKER_00]: show them to those guys.

[SPEAKER_00]: Any guesses?

[SPEAKER_00]: Well, before you get to your guess at him before you get to your guess.

[SPEAKER_00]: Let's talk about a couple of our listings.

[SPEAKER_00]: You know what?

[SPEAKER_00]: I feel like there's we're getting to that time a year where not a lot is happening.

[SPEAKER_00]: I did just want to point out, I think we talked about this listing a few weeks back, 410, 430 Hastings at Mosaic Building.

[SPEAKER_00]: I think the only bootie concrete building in all of Burnaby, I might be wrong about that, but right in the heights.

[SPEAKER_00]: That listing over at Vancouver Real Estate Podcast.com, Adam is under contract.

[SPEAKER_00]: The last weeks listing that we talked about 2503-1283 House Street.

[SPEAKER_00]: This is a two-bed, one-bath, 632 square feet at Tate on Howell, right next to the Beach District, Yale Town, Fantastic Views, Fantastic Floor Plan.

[SPEAKER_00]: correctly, it garner's attention.

[SPEAKER_00]: Let's say, right.

[SPEAKER_00]: The, this is, we've had an overwhelming response to 12.

[SPEAKER_00]: Yes, or 25, 3, 12, 8, 3, house street, not under contract yet, but next time I talk to you, it may very well be.

[SPEAKER_00]: If you want to see that or anything else or jump on that, [SPEAKER_00]: Hot property, Vancouver Real Estate Podcast.com.

[SPEAKER_00]: What you're there at, I'm going to click sell with us, where you can download the sold plan, start on launch date, get your property ready for sale, the spring market's coming, and get its sold for top dollar, Vancouver Real Estate Podcast.com, sell with us.

[SPEAKER_01]: Okay.

[SPEAKER_01]: Well, ma'am, my guess is going to be, I'm going to say a 7% drop is what would be typical.

[SPEAKER_00]: So we're more than doubled in, [SPEAKER_00]: That's depressing, Adam, if it's correct, it is not correct.

[SPEAKER_00]: It's 9%, it is double, exactly.

[SPEAKER_00]: So again, pretty close.

[SPEAKER_00]: I would say you're now [SPEAKER_00]: You're about eighty one eighty two percent if I'm if I'm keeping a score you're up at eighty six you're dropping did I just still you're just dropped a couple percentage points you're going to finish off is that a B plus you might finish off the year at a B plus but we still have one of the most great I've ever gotten all right let's do it.

[SPEAKER_00]: Speaking of grades though, Nas and Moe, these guys are web smart.

[SPEAKER_00]: This is a great conversation, and I feel like we had them in the studio, so it was old school and riveting stuff.

[SPEAKER_00]: Maybe we should just launch into our talk with these guys.

[SPEAKER_01]: I can't wait.

[SPEAKER_01]: This is, honestly, even if you're not an accounting person or a tax person, this one is really, it's a gripping conversation.

[SPEAKER_01]: EMCL, great stuff.

[SPEAKER_01]: Enjoy.

[SPEAKER_05]: Okay, so we're here with Moshehid.

[SPEAKER_01]: He is a senior manager in Canadian tax and Nav Paneu.

[SPEAKER_01]: He's the partner in Canadian tax both from DMCL.

[SPEAKER_01]: Thanks so much for taking the time today, guys.

[SPEAKER_01]: Good.

[SPEAKER_01]: Problem.

[SPEAKER_00]: Yeah, maybe for listeners, can you start by telling our listeners a little bit about yourself?

[SPEAKER_00]: Maybe Mo?

[SPEAKER_00]: Sure.

[SPEAKER_04]: Yeah.

[SPEAKER_04]: So, like I said, we're from DMCL, I'm a senior tax manager.

[SPEAKER_04]: I've been back at DMCL for a few years.

[SPEAKER_04]: I also articleed at DMCL and then I left for a little bit and my experience has been mostly in Canadian tax, a little bit in international tax as well.

[SPEAKER_04]: And now I primarily focus on [SPEAKER_04]: intergenerational wealth transfer that we're dealing with right now and succession planning.

[SPEAKER_00]: Right on, just so to curiosity.

[SPEAKER_00]: inner generation wealth transfer we've talked a lot about that on the show.

[SPEAKER_00]: Is it a growing field?

[SPEAKER_04]: It is because, you know, our parent's age, they're sort of on that retirement phase and there's a lot of businesses that are going through that phase right now.

[SPEAKER_04]: And so it's a big piece of what we do and, you know, there's now new tax rules that we're exploring for clients that allow us to do this a little bit more [SPEAKER_04]: It's definitely a growing field.

[SPEAKER_04]: Right on this.

[SPEAKER_02]: And Nav?

[SPEAKER_02]: Yeah, so I'm also in Canadian tax.

[SPEAKER_02]: I've been in an ad at for about 11 years now.

[SPEAKER_02]: And I primarily work out of our Suri office.

[SPEAKER_02]: I do very similar work to Mo.

[SPEAKER_02]: So I have a background in private enterprise.

[SPEAKER_02]: So I was mostly helping small-to-medium-sized businesses.

[SPEAKER_02]: And I really focus on mostly corporate reorganizations, estate planning.

[SPEAKER_02]: But again, now we're seeing a lot of other different types of transactions.

[SPEAKER_02]: Seeing a lot of stock option planning.

[SPEAKER_02]: A lot of people want to get their employees into their businesses.

[SPEAKER_02]: That's the current trend.

[SPEAKER_02]: So, you know, we see a, we probably touch everything, I'd say, yeah, a little bit of everything at DMCL.

[SPEAKER_02]: Yeah.

[SPEAKER_04]: And that's kind of the good thing about DMCL as well is because we're on mid-sized firm, but we've got clients and across all different industries.

[SPEAKER_00]: Yeah.

[SPEAKER_00]: Right on.

[SPEAKER_00]: So, so maybe as a starting point, you know, we have a lot of, [SPEAKER_00]: real estate investors will listen to the show if somebody comes to you and they're just they're just starting out on the course of potentially buying one two three four five properties like what tax advice would you give to somebody kind of key considerations early days as a real estate investor.

[SPEAKER_02]: I can take that one.

[SPEAKER_02]: So I think early on, if somebody comes to me and says potentially they want to grow a real estate empire that might be different, but early on a fine, depending on where their capital is coming from, if it's just an individual or husband and wife, we may suggest to them just to do it personally.

[SPEAKER_02]: And that advice may change.

[SPEAKER_02]: And again, if they continue to grow and they have more and more properties, we do have an option to tax the for that and put it into a corporation.

[SPEAKER_02]: So starting out in the visual, I would say so because there's that burden of if it's in a corporation, you have to file with the CRA, you get scrutinized by the CRA, there's heavy incorporation costs, there's annual fees to upkeep as well as you have to hire a firm to do the corporate tax transfer.

[SPEAKER_02]: And so it can be kind of burdensome, especially if they don't plan on continuing that growth, right?

[SPEAKER_02]: They may be better off just having it personally and having a bit more leeway.

[SPEAKER_02]: Again, another key point is that usually when people only have one property and it choir another, [SPEAKER_02]: Oftentimes, they kind of, they move between them.

[SPEAKER_02]: I've seen a lot of times clients buy another property in this thing.

[SPEAKER_02]: Okay, well, let's go live in that one.

[SPEAKER_02]: Let's go rent out our old house and then that arrangement will change as an corporation too, because now you're getting to personally use sessions for primary residents.

[SPEAKER_00]: Exactly.

[SPEAKER_00]: Only by a corporation.

[SPEAKER_04]: Exactly.

[SPEAKER_04]: I just wanted to ask you just one more thing to that is, I think one of the first things that you have to ask clients who are trying to build real estate empires, you know, what other sources of income do they have?

[SPEAKER_04]: Because I think that's really important, and NAF touched on this as well, like, you know, yes, you could buy it personally, but if you already are kind of at like high level of income, then maybe after you buy a couple, then you could think about the tax deferred transaction, then NAF's talking about it, having it in the corporation, and you can sort of leave the cash and the income in the corporation.

[SPEAKER_04]: If you don't actually need the cash and you already are a [SPEAKER_00]: So maybe just taking a step back for listeners that don't understand the benefits of having real state in a corporation or why you'd even incorporate in the first place.

[SPEAKER_00]: Can we get kind of sure down to like brass tax?

[SPEAKER_00]: What is a benefit of having a corporation involved in the first place?

[SPEAKER_02]: Yeah, the biggest benefit of IC of a corporation's flexibility.

[SPEAKER_02]: Oftentimes, when you buy a piece of land, that land title is registered to the individual.

[SPEAKER_02]: And any time that land has to have to move between people, we have property transfer tax here in BC.

[SPEAKER_02]: And that gets triggered on every transfer.

[SPEAKER_02]: That changes when it's within a company and now you're dealing with shares.

[SPEAKER_02]: And shares can quite easily be manipulated.

[SPEAKER_02]: You can exchange them for other class of shares.

[SPEAKER_02]: You can bring in new shareholders.

[SPEAKER_02]: You can introduce family trusts.

[SPEAKER_02]: What you can do with your wealth when you have it within a corporation, it becomes a lot more flexible.

[SPEAKER_02]: And so that to me I'd say is the biggest benefit of incorporating is that you can have ultimate flexibility to introduce shareholders make changes as you please.

[SPEAKER_00]: So from a, see, generational wealth kind of perspective, right, you're trying to build something.

[SPEAKER_00]: You have a couple kids, you want to pass it on to.

[SPEAKER_00]: Yeah, so when they're not all, they buy into the, hold a go or whatever, you have, [SPEAKER_04]: So we could do like a state freezes, right?

[SPEAKER_04]: So if Mom and Dad are, you know, have built a company with four or five properties and it's worth whatever, four or five million dollars and they're thinking, you know, we want to pass this on to our kids.

[SPEAKER_04]: Like NAF touched on with the corporation.

[SPEAKER_04]: It's just, it's so much more flexible because what we do is called an estate free.

[SPEAKER_04]: So if freezes the value and the mom and dad's hands at the time, they've sort of decided to pass on the wealth.

[SPEAKER_04]: and then the future growth of the properties can then just go to the new shareholders, which could be the kits.

[SPEAKER_04]: That way what we've done is like Navoluta to earlier is you haven't really paid additional property transfer tax because the title has changed.

[SPEAKER_04]: The title of the properties is going to continue to stay in the corporation versus if you held them personally and you wanted to pass them on, [SPEAKER_04]: then now you would have changed it title and potentially property transfer tax.

[SPEAKER_00]: What about when you say a state freeze?

[SPEAKER_00]: Am I wrong in in thinking that I have a holding a hold code with whatever assets in it?

[SPEAKER_00]: Yeah.

[SPEAKER_00]: I decide when I'm 75, I want to transfer this to my daughter.

[SPEAKER_00]: Can I not just sell her all the shares or transfer all the shares to her?

[SPEAKER_02]: You could, but it would [SPEAKER_02]: And the big thing for us when we're at state planning is where careful of your eventual passing is when you pass whatever you own, there'll be a deemed disposition on your death.

[SPEAKER_02]: And so if you do have a real estate empire and it's worth tens of millions, for example, [SPEAKER_02]: That's going to be deemed to be disposed of on your death.

[SPEAKER_02]: And the common misconception we get is people think to us, okay, we want to save tax.

[SPEAKER_02]: How do we not pay tax?

[SPEAKER_02]: Ventuality as you will pay tax?

[SPEAKER_02]: What we can offer most of the time is deferral.

[SPEAKER_02]: How far can you kick that can down the road?

[SPEAKER_02]: Yeah.

[SPEAKER_02]: And in the interim, use that tax that you're not paying to accumulate more wealth.

[SPEAKER_01]: Right.

[SPEAKER_01]: What about people that own property individually or personally?

[SPEAKER_01]: Would they sell their personal properties to the corporation or how does that work?

[SPEAKER_01]: Is there a benefit of getting those initial say three properties that you own personally in the corporation?

[SPEAKER_02]: Yeah, definitely can be.

[SPEAKER_02]: And that can be easily done.

[SPEAKER_02]: We do have a mechanism called a section 85 transfer.

[SPEAKER_02]: And there's certain property that we can move to a corporation.

[SPEAKER_02]: And in consideration, the person that's transferring it will get shares, additional shares of that corporation.

[SPEAKER_02]: And so it can be done.

[SPEAKER_02]: And the benefit, it could be for a variety of reasons that are not tax-related.

[SPEAKER_02]: It could be for financing reasons when you have multiple corporations, maybe get easier to get lending down the road.

[SPEAKER_02]: And also people just like to kind of keep their stuff together as well sometimes.

[SPEAKER_02]: You may have a reason to leave it out.

[SPEAKER_02]: If again, like I mentioned, if you're moving it, moving it in and out of the property, does it really make sense to roll it into a corporation where there is a personal aspect to it?

[SPEAKER_00]: And is there like you said tax deferral before?

[SPEAKER_00]: But is there any like day-to-day benefit?

[SPEAKER_00]: So long-term flexibility is one reason to incorporate.

[SPEAKER_00]: Can you talk a little bit about the different?

[SPEAKER_00]: how much you're paying in tax on rental income for instance.

[SPEAKER_04]: That's a really good question.

[SPEAKER_04]: And that goes back to my earlier comment about, you know, finding out how much the individual makes.

[SPEAKER_04]: So for example, right now, the highest rate in BC is 53.5%.

[SPEAKER_04]: And in a corporation, if you're earning rental income, we call that it's basically passive income.

[SPEAKER_04]: So at the highest possible rate, [SPEAKER_04]: So there's approximately a 3% sort of savings of having all the rental income inside of corporation.

[SPEAKER_04]: I mean, it gets a little bit nuanced because part of that 50.7 can be refunded by the corporation if you actually pay a dividend out to the shareholders.

[SPEAKER_04]: But just ignoring all of that, if all you had was a person in the highest tax bracket making 53.5% and if they decided to move [SPEAKER_04]: You can leave it inside a corporation, and it only pay tax at 50.7%.

[SPEAKER_04]: So day to day, like your question, you're getting a deferral of like 3% tax savings on an annual basis.

[SPEAKER_02]: Another key thing we see with corporations, at least in our world, is a lot of these individuals that are acquiring or want to build the real estate empire, they generally have a fund source coming from somewhere.

[SPEAKER_02]: And a lot of times they have other corporations, and they're earning business income from another business at good point.

[SPEAKER_02]: And that business, when we talk about the mode reference passive income, but active business income in Canada is only taxed at 11% [SPEAKER_02]: And after that, it's taxed at 27%, so the rates are actually a lot lower, and so for somebody that owns a business and they're accumulating wealth at a corporate level, we can move those funds through a dividend, a tax-re-dividend, to another real estate corporation that they also control and start investing in real estate.

[SPEAKER_00]: So this is just to be clear a big one, right?

[SPEAKER_00]: Because if you have income, active business income [SPEAKER_00]: You never get hit with that personal tax, exactly transferring it for a down payment on another property.

[SPEAKER_02]: And the key thing is you can transfer it to another corporation that you control tax-free.

[SPEAKER_01]: What about what if I own the real estate personally?

[SPEAKER_01]: So say I have a rental property I own personally, and I have business income in a corporation.

[SPEAKER_01]: Can I sell my real personal real estate?

[SPEAKER_01]: It's good.

[SPEAKER_01]: Very first to the law.

[SPEAKER_01]: Well, no, I mean, I think specifically of people out there that might have business income might have a health coin.

[SPEAKER_02]: I actually recommend that quite often because a lot of times when people build a lot of wealth at the corporate level, the question always becomes, how do I get it out to myself personally?

[SPEAKER_02]: So if you have wealth personal that you can transfer into corporation, then actually allow you then to extract some of that cash out as consideration for the transfer out.

[SPEAKER_03]: Yeah.

[SPEAKER_04]: The only thing I would be careful of is if you're going to be transferring, say, rental properties, who are a company that has active business income, we have these rules that basically, because like Nav mentioned, on the first 500,000, you only pay 11% tax.

[SPEAKER_04]: That's the BC rate right now, right?

[SPEAKER_04]: And, but if you have passive income in that same core, or even an additional core, [SPEAKER_04]: After $50,000 of net passive income, the small business deduction actually starts to grind a little bit.

[SPEAKER_04]: Once you get to about $150,000 of passive income, you actually end up losing the small business rate, and then you're paying tax on the active business income, which is 27%.

[SPEAKER_04]: So you do have to be careful of where you're moving the properties, but if you're making good income and you've got your rental properties in our generating over $150,000 of passive income, [SPEAKER_04]: I think you're going to be okay anyways.

[SPEAKER_04]: Right.

[SPEAKER_04]: Right.

[SPEAKER_04]: So there's you don't want to look at just tax all the time.

[SPEAKER_04]: Like there's so many other like flexibilities of having like now's been mentioning.

[SPEAKER_04]: So I think it's there's more to it than just the tax rates and the grind down of the small business rate.

[SPEAKER_04]: It sucks, but you know, it is what it is, but there's other reasons for why you should do certain things.

[SPEAKER_01]: We've gotten very deep into it.

[SPEAKER_01]: I'm very, very early about ten minutes.

[SPEAKER_01]: Yeah, I know.

[SPEAKER_01]: I want to kind of pull back a little bit.

[SPEAKER_01]: So common mistakes you see real estate investors make when they're starting out from a tax perspective.

[SPEAKER_02]: I kind of mentioned them on already, and it's when you own a variety of properties and you start moving in and out of them.

[SPEAKER_02]: So principle residents, when you move out of it and you start renting it, in the CRA size, technically that's a change in user property.

[SPEAKER_02]: And when you have a change in user property, you're deemed to have dispose of that property.

[SPEAKER_02]: Okay.

[SPEAKER_02]: Fair market value.

[SPEAKER_01]: So because we get this question a lot from clients and from people that listen to this show.

[SPEAKER_01]: So how does that work?

[SPEAKER_01]: So I'm so stay for example.

[SPEAKER_01]: I'm living in my property.

[SPEAKER_01]: I want to leave a trail of revenue properties behind me as I move through the market.

[SPEAKER_01]: I now rent out my one bed that I had lived in.

[SPEAKER_01]: What happens with the capital gain exemption?

[SPEAKER_01]: How does this play out on the ground?

[SPEAKER_02]: So for the, you need for the principal residence.

[SPEAKER_02]: So your principal, yeah, that's right.

[SPEAKER_02]: You have a few options.

[SPEAKER_02]: I mean, one of them, what you could do, and this is also advantageous sometimes, is to let it trigger that it's a deemed disposition.

[SPEAKER_02]: And now when you go to file your tax return, you're going to file what's called the 291, which will dispose of that principal residence.

[SPEAKER_02]: There's no tax when you file that form 291, but now you also get a step up in your overall cost of that property, because it would have been considered to have been disposed at that fair market value at that time.

[SPEAKER_02]: And so that's option one.

[SPEAKER_02]: Option two is you can say, okay, well, I'm going to move out, but I want to maintain that old property as my principal residence.

[SPEAKER_02]: And so there's an election you can file with the CRA to say for the next four years, I'm going to keep that old property of my principal residence.

[SPEAKER_02]: I'm not going to dispose of it.

[SPEAKER_02]: It's not going to get triggered if I file this election with you in the year that I make that change.

[SPEAKER_00]: You can keep a primary residence designation for four years without living in the property.

[SPEAKER_00]: That's correct.

[SPEAKER_04]: it allows you this election.

[SPEAKER_04]: So that's what he's saying is that was one of the common mistakes says, well, before we go back to the 291, it gets missed all the time.

[SPEAKER_04]: Because that was something that you never had to file prior to 2016.

[SPEAKER_04]: So when you prior to 2016, if you sold a principal resident, nobody cared.

[SPEAKER_04]: You know, you'd never have to file anything.

[SPEAKER_04]: And then they brought in these rules that you have to file this and you know, a lot of people still think that you don't have to file anything.

[SPEAKER_04]: Oh, it's my principal residence.

[SPEAKER_04]: Why should I have to file anything?

[SPEAKER_04]: I've always lived in it.

[SPEAKER_04]: But if you missed that form and we see that all the time that it's missed, there is a penalty.

[SPEAKER_04]: I don't remember exactly what the numbers are, but is it a hundred dollars per month that you're late or something like that?

[SPEAKER_04]: But there is a penalty.

[SPEAKER_04]: And a lot of people get caught under that.

[SPEAKER_04]: So I just want to make sure.

[SPEAKER_01]: It's essential if you're using five years later.

[SPEAKER_04]: Well, there's a cap.

[SPEAKER_04]: There's a cap, I think I don't know exactly what the cap is, but there is a cap on it.

[SPEAKER_04]: But if it's two, three grand, like, you know, why?

[SPEAKER_04]: Because it's just an easy form to file.

[SPEAKER_00]: So, just so I understand, what would be the circumstance in which you maintain your principal residents for four years or principal residents when you're not living there?

[SPEAKER_00]: Is it if you rent somewhere or leave the country?

[SPEAKER_02]: There could be, you could leave temporarily for, for work or something different, different province?

[SPEAKER_02]: Yeah, different province?

[SPEAKER_02]: Yeah.

[SPEAKER_02]: but also sometimes we want to maintain it because perhaps where you're moving, you may be moving for a certain reason, but there may be more value out of the original property to maintain your principal residence there.

[SPEAKER_00]: So you could hypothetically, 2017, the markets on a run, you move to left bridge.

[SPEAKER_00]: you can maintain your principal residence in downtown Vancouver.

[SPEAKER_04]: Yeah.

[SPEAKER_04]: You got to make sure you file that.

[SPEAKER_04]: Yeah.

[SPEAKER_04]: So that's the election that he's talking about again, it gets missed all the time, because you actually have to file it in the year you moved.

[SPEAKER_04]: Right.

[SPEAKER_04]: Or you had a change in use from your principal residence, too.

[SPEAKER_04]: You know, even if it becomes a rental property, [SPEAKER_04]: because if you don't file it in that year, again, it's similar to the 2021.

[SPEAKER_04]: There's filing penalties.

[SPEAKER_04]: But what we've actually seen in some scenarios, I'm sure you have, too, is you can actually late file it.

[SPEAKER_04]: It's at the CRA discretion, whether they accepted.

[SPEAKER_04]: You pay the penalties, and it's still outweighs the benefit of actually doing that and claiming the principal residence exemption for the additional four years.

[SPEAKER_04]: Right.

[SPEAKER_01]: But make sure you check BC Spectax and empty homes tax.

[SPEAKER_01]: Yes.

[SPEAKER_01]: before you have any grand ideas?

[SPEAKER_01]: Yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, they can see tags, but you know, that's so many other ones.

[SPEAKER_02]: That's a great example that you gave.

[SPEAKER_02]: Yeah, because in that case, why would you want to give up your real estate in Vancouver, head on, which is going to, yeah, you're guiding on the one that's going to grow more and yeah, and likely so you literally in any situation, whether it's Vancouver or Montreal or wherever you can be, which [SPEAKER_02]: Which market do I have been exactly for up to four years up to four years back then that's like why I doubt a lot of listeners know about that No, that's a well the the other nice thing about that other nuance is that it actually doesn't even even after four years I won't trigger the deemed disposition It would just won't count as your principal residence, but you can continue to own it until you sell it and there won't be another deemed disposition on it right [SPEAKER_00]: Right, what other mistakes so that's one feel like there's there's got to be a few others.

[SPEAKER_02]: There's some new ones now like we talked about the new flipping rules and so there's a federal flipping rule and now there's also a BC flipping rule and they apply in different cases and they apply differently as well.

[SPEAKER_04]: And the legislation is completely different.

[SPEAKER_04]: You have federal to the B.C.

[SPEAKER_04]: where it doesn't make any sense.

[SPEAKER_04]: But keeping you guys in business.

[SPEAKER_04]: Well, it's somebody's got to understand it.

[SPEAKER_04]: Yeah, but it's just confusing, right?

[SPEAKER_04]: Because like, like, you got to read the federal stuff.

[SPEAKER_04]: Then you understand the federal stuff.

[SPEAKER_04]: And you got to explain that to a client.

[SPEAKER_04]: And then you look at the B.C.

[SPEAKER_04]: one.

[SPEAKER_04]: And then you understand it.

[SPEAKER_04]: And then you're like, oh, these kind of contradict each other.

[SPEAKER_04]: Like, what's happening here?

[SPEAKER_04]: Like, why couldn't they just get on the same page?

[SPEAKER_00]: Right.

[SPEAKER_00]: Can you split it?

[SPEAKER_00]: Are you able to kind of spell out those?

[SPEAKER_00]: Like the different differences and how people are falling into the trap?

[SPEAKER_02]: Yeah, we went to a tax conference and they explained it really well.

[SPEAKER_02]: And they said anytime you have a client that has a piece of real estate, you need to look two years behind to see what's happened with that real estate.

[SPEAKER_02]: And you need to also [SPEAKER_02]: Because either way, you need to make sure that they're not going to fall into these rules.

[SPEAKER_02]: What I mean by that is the BC flipping tax, it's a two-year rule.

[SPEAKER_02]: And so they're looking for primarily properties that have been sold for profit any time within two years.

[SPEAKER_02]: And it's not been helped for that long.

[SPEAKER_02]: The federal one is one year.

[SPEAKER_02]: And so anytime that you change the property within one year, [SPEAKER_04]: they're going to basically say that that's a flipped property and it will only apply really when when there's a game right and it doesn't it all right that's it that's sorry to I don't that's a really good point because I think that was something that we were talking about when these rules originally came out so what they said is oh we're going to tax you if you make money yeah but if you have a loss we don't know what's going to happen [SPEAKER_04]: Like I don't know if they can claim that loss against like other income or like there hasn't been many commentary on that right.

[SPEAKER_02]: The reason why he's saying that is because for the federal one at least, as you know, when you sell a property, it's referred to as a capital gain.

[SPEAKER_02]: It's capital property to you and so capital gains are only tax at 50%.

[SPEAKER_02]: And so that is what typically happens when you sell any capital property, but when it's a flip property they actually change the characteristic of it and they call it inventory and inventory is tax that a hundred percent and what I normal normal income exactly and what I mean by a hundred percent is not that the rate is a hundred percent, but all of the money that you made is taxable gain yeah, whereas when it's a capital gain only 50% of what you made is.

[SPEAKER_01]: So there's been criticism and we've seen over the past few years of the flipping tax is being the government's way of inching in towards the principal residence tax exemption.

[SPEAKER_01]: Like are you seeing signs that the exemption might go away or chatter about that?

[SPEAKER_04]: Well, it's funny that you mentioned that because this budget that became out, there was some crazy rumors that they were gonna get rid of the principal residence exemption.

[SPEAKER_04]: I just can't imagine that they would do that like that's because so and like how would it grandfather it that that would be my question like so if somebody bought a house 30 years ago then they say you know now we're gonna get rid of the principal residence exemption So like does these people get grandfather?

[SPEAKER_04]: I'm assuming they're well because the proposals are always like whenever there's actual legislation and then there's royal consent [SPEAKER_00]: But then what happens to the future generation now we just we've just lost the ability to claim to principal residence exemption and we're going to pay tax on this like I just can imagine it's tough but you've not to get into politics but you'd imagine when the boomers are alive it's almost impossible to put this in because they've all seen a run up for last 30 years that would be like suicide.

[SPEAKER_00]: But at the same time there feels like there's generational [SPEAKER_00]: anger right now amongst younger people that are not are having trouble getting into the market.

[SPEAKER_00]: So the idea that like okay all the guys who have supposedly made all like bandits in the last 30 years get the exemption but anybody who's just getting into the market doesn't seem like that's tough as well anyway.

[SPEAKER_01]: And I just, and I just, because I, this, I don't know if we answered this clearly, but somebody out there's listening who's owned a property and then rented it out.

[SPEAKER_01]: But at what point is the, so would you be exempt with the exemption go until basically whatever the value is when you rent out the property?

[SPEAKER_02]: Until you, in the year that you move out, in the year that you move out, it will be deemed to have been disposed.

[UNKNOWN]: Okay.

[SPEAKER_01]: So you should contact either your agent or an appraiser to get that value during that year, so you correct.

[SPEAKER_02]: You know, I guess we could take one step back and talk about maybe a little bit of a what a principal residence is.

[SPEAKER_02]: Yeah.

[SPEAKER_02]: Yeah.

[SPEAKER_02]: And so principal residence can be anything from a house to a cottage.

[SPEAKER_02]: I think even maybe a motorhome condo, so those can be your principal residences and the one key distinction to make it your principal residence.

[SPEAKER_02]: And this is really important, especially if you own multiple properties, is that it has to be ordinarily inhabited.

[SPEAKER_02]: any year.

[SPEAKER_02]: Yeah, what does that mean?

[SPEAKER_02]: It's, it's very vague.

[SPEAKER_02]: And I think it's almost different.

[SPEAKER_02]: Yeah.

[SPEAKER_02]: And I'll give you, I'll give you an example.

[SPEAKER_02]: And so let's say you own a house and you own a summer home, a cottage, try it.

[SPEAKER_02]: Yeah.

[SPEAKER_02]: And every so often, maybe you go for Christmas, maybe you go during the summer and you stay there for a couple of weeks at a time.

[SPEAKER_02]: People would think, okay, well, I don't live there.

[SPEAKER_02]: I live in the Bloor Mainland.

[SPEAKER_02]: My Prince of [SPEAKER_02]: if you go by their language ordinarily inhabited, they're both your principal references.

[SPEAKER_02]: And so then it becomes a game of when you are selling either property when you think about how you want to apply your principal residence exemption, you can pick whichever has the best capital gain per year that you want to shelter and you can choose which property in which year you want to use that exemption on.

[SPEAKER_02]: And so that it becomes kind of an exercise to save the most tax, you can kind of figure out which is [SPEAKER_00]: So you could say, so you could go retroactively go back and go, okay, I think this year makes sense to be in the downtown condo, this year makes sense to be whatever in my Colona, yeah, it won't be summer home.

[SPEAKER_02]: It won't be retroactive because you don't know until you go and sell it, what that gain is going to be.

[SPEAKER_02]: Yeah, and then so you don't know how much you're going to shelter, but when it goes, when you go to file the actual [SPEAKER_04]: You can then decide your calculation and we've done this where it's like, okay, they bought the cottage in 2000 and now they're it's 2024 right, but they bought their principle residents that they're currently in the lower mainland in like 2010.

[SPEAKER_04]: So then you kind of work out the math because like Nass said, you could claim events for residents per year on property.

[SPEAKER_04]: So then when you do the calculation, you're like, okay, well, the first 10 years that I only had the cottage that I was living and I'm definitely going to use that.

[SPEAKER_04]: And then the next 10 years I had multiple properties.

[SPEAKER_04]: Let me do the math, which one increased in value more and how many years do I want to allocate to this property versus that property?

[SPEAKER_04]: And then you do the math and that's how you work it out.

[SPEAKER_00]: Or would you have to be [SPEAKER_00]: base very similar in terms of days of the year or spent at each problem.

[SPEAKER_02]: No, so that's it.

[SPEAKER_02]: That rule when you say ordinarily inhabited, it doesn't matter.

[SPEAKER_02]: If you spend 80% of your time, and 90% of your time in the lower mainland, and only 10% of your time at the condo, it does not matter.

[SPEAKER_02]: They're both your principal residences, and you can allocate as you please.

[SPEAKER_00]: Yeah.

[SPEAKER_00]: What about if you, and I'm thinking this is a lot of retirees right now, so you live [SPEAKER_00]: seven eight months of the year here and you are leaving to Palm Springs or Mexico or wherever else for and you're renting.

[SPEAKER_00]: Let's say you rent every year elsewhere for four or five six months.

[SPEAKER_00]: Is there any worry that your primary residence is not your primary residence when you're doing that?

[SPEAKER_04]: Yeah, I get into residency and that's a whole complicated issue of its own, like, you know, are you a Canadian resident, you're all time.

[SPEAKER_00]: So if you're, but if you're still a tax resident of Canada, yeah, you're primary resident, and you're out renting out your primary residence.

[SPEAKER_02]: It's just sitting bacon.

[SPEAKER_00]: Yeah.

[SPEAKER_01]: Yeah, you're okay.

[SPEAKER_01]: Yeah, you're okay.

[SPEAKER_01]: So, I'm thinking about a lot of people that live in Vancouver and the rest of Canada, maybe not so much, but most people, if they have a single family detached house, they have a suite.

[SPEAKER_01]: Okay, so how does it, or potentially even a lane way home, or multiple suites, right?

[SPEAKER_01]: So what happens if somebody rents a part of their primary residence and how does that change things?

[SPEAKER_01]: I think we should split that up, so you want to talk about your meat, and I'll take the lane way.

[SPEAKER_04]: Sure.

[SPEAKER_02]: Yeah.

[SPEAKER_02]: The sweet is an interesting one because a lot of times the way these banker homes are built, you don't really need to do anything through how to incorporate that sweet, you may need to add a kitchen or something, and there's always another entrance for somebody to use.

[SPEAKER_02]: And so that's a really key distinction.

[SPEAKER_02]: When it's your primary residence and you have a sweet, they almost think of it as kind [SPEAKER_02]: incidental situation.

[SPEAKER_02]: It's really just helping you get by and have that sweet there so they you can make your payments.

[SPEAKER_02]: And so it doesn't impact your ability to claim the entire property as your principal residence.

[SPEAKER_02]: The other benefit is that oftentimes in the Vancouver real estate because real estate's expensive and rent doesn't really keep up.

[SPEAKER_02]: I just created a bit of a rental loss for those people as well to be able to write off on their tax return.

[SPEAKER_02]: So it can be quite a lucrative situation, especially your mortgage interest gets written off as well.

[SPEAKER_02]: So oftentimes in that scenario, it's kind of a win-win for those cases.

[SPEAKER_02]: and most going to touch on this, but where it changes and where the CRA pays more attention is where the structural change to the property to be able to have this.

[SPEAKER_02]: Incorporate the sweet.

[SPEAKER_00]: What in story just before we get to Lainway Holmes, is there any distinction between legal suite and unauthorized suite, which is I think at the city level as opposed to the CRA, but yeah, I guess there are distinctions, but that doesn't fall too much into our [SPEAKER_04]: Sorry, and laneways.

[SPEAKER_04]: So structural changes, let's say.

[SPEAKER_04]: So laneways are actually different.

[SPEAKER_04]: And, you know, DMTL, we have a basically, there's actually an article on our website.

[SPEAKER_04]: So if you subscribe to it, you could get that article.

[SPEAKER_04]: And that you talk about laneway houses, and CRA is not happy with laneway houses.

[SPEAKER_04]: So if you have a laneway house on your principal resident, what they're saying is that we're not going to allow the principal residence exemption on the portion that's in laneway.

[SPEAKER_04]: So, I guess, and I haven't seen it right now, but if you were to sell your principal residence it had a lane weight, what you would have to do is you would have to pro-rate.

[SPEAKER_04]: So you would say, I sold for $2 million less to say, and my principal resident is like 80% of the total property.

[SPEAKER_04]: So the 80% I could claim my principal residence exemption on, then the remaining 20% that's where the lane weight potentially is, [SPEAKER_04]: That's where you're not going to be able to click claim your principal residence exemption and pay tax.

[SPEAKER_01]: And that would be on the improvement plus the land.

[SPEAKER_01]: Correct.

[SPEAKER_01]: So that's could be a pretty substantial hit.

[SPEAKER_04]: Yeah, that was one of the things we were talking about was, you know, we should talk about when you do sell even a rental property, the allocation between land and building and then the improvements you've made in to your property.

[SPEAKER_04]: So if it's a rental property, but even if you're laying away home and let's just say, you know, you put a bunch of money into it.

[SPEAKER_04]: When you go to sell, you actually have to allocate between land and building, right?

[SPEAKER_04]: And so how do we determine that allocation?

[SPEAKER_04]: I mean, I don't know about you now, but is it generally the BC assessment?

[SPEAKER_04]: You know, it kind of has that split on there.

[SPEAKER_04]: If you've got an appraisal report, maybe sometimes they do us a lead.

[SPEAKER_00]: But where would get tricky, not to cut you off, but is, you know, in my neighborhood, there's a lot of heritage homes, 1940s, bungalows.

[SPEAKER_00]: potentially decrepit hosts with a really brand new lane way, but back.

[SPEAKER_00]: Right.

[SPEAKER_00]: So then it's like the improvement costs is dramatically different.

[SPEAKER_04]: Yeah on the lane way.

[SPEAKER_04]: Yeah.

[SPEAKER_04]: Yeah.

[SPEAKER_04]: Yeah.

[SPEAKER_04]: Well, I mean, that would factor into your calculation for the capital gain on the lane way.

[SPEAKER_04]: Right.

[SPEAKER_04]: Because you can claim the principal residence exemption on the on the lane way house.

[SPEAKER_04]: So what you would do is you would have to figure out what your cost basis.

[SPEAKER_04]: Right.

[SPEAKER_04]: And and what is cost base.

[SPEAKER_04]: So cost basis.

[SPEAKER_04]: basically, you know, how much money have you put into the lane with who, right?

[SPEAKER_04]: So that becomes your cost base and then whatever you're selling it at, then you would have to basically allocate part of that proceeds to your building portion and then calculate your your capital game.

[SPEAKER_04]: Right, I think you had a really good explanation of like what adjusted ACB is, you know, we say that all the time as tax people and people sometimes don't understand it.

[SPEAKER_01]: So I think you had a really good explanation for when we were talking about our member, but [SPEAKER_02]: So whenever whatever money you've put into something that becomes your adjusted cost base, adjusted cost base is something that is of the individual or the person that put in the capital and most of the time where it's comes to be relevant is when you're factoring what your capital gain is going to be.

[SPEAKER_02]: And so whenever you sell something with the tax that you pay, the capital gain is calculated between what your fair market value is and what you're just a cost base for.

[SPEAKER_04]: So what you're selling for basically, if you're getting $2 million for the property, that's like your proceeds of disposition that we say in tax world or your fair market value, minus your ACB adjusted cost base.

[SPEAKER_04]: And one of the things that I just want to add onto the ACB thing is if you're making a lot of improvements, [SPEAKER_04]: you want to make sure you keep track of them and you keep all your receipts because that does become your ACB, your adjusted cost base.

[SPEAKER_04]: We actually went through and audit because this individual sold the property, she had a flood, you know, two, three years ago, she didn't have insurance, so she put a lot of money [SPEAKER_04]: into the property, getting it back up so she can live in it again, and so, and she actually did a good job of maintaining all of her receipts and keeping track, and because that becomes part of your ACB, so, you know, you want to make sure that if you have done any improvements, you keep your receipts.

[SPEAKER_02]: If you're just bringing it, if you're replacing a washing machine that functions the exact same, yeah, wouldn't say that's capital, it's repair.

[SPEAKER_00]: And what about, so if you're, you have a rental property and you have it for 20 years and you're just doing general kind of maintenance and improvement or not improvement, maybe maintenance, basically that doesn't apply.

[SPEAKER_02]: Typically, no, unless you can prove that there are some meaningful change, you know, maybe the appliance you had before had a life of three years.

[SPEAKER_02]: Now, you've got this brand new thing that will last 50 years.

[SPEAKER_02]: Well, potentially, that's an improvement.

[SPEAKER_02]: The better meant.

[SPEAKER_04]: Yeah, better meant.

[SPEAKER_04]: So like one example, there's a case lie.

[SPEAKER_04]: I don't exactly what it's called, but there was an example of roof.

[SPEAKER_04]: Yeah, it's just gonna say you know like so like if you actually just replace an old roof with the same roof Well, that's not a betterment right because all you've done is just you've taken one roof and just replace it with another one But like if you put in this new roof that like now said now instead of lasting it ten years is gonna last you like 40 years Yeah, well you can make the argument to CRA that that this new roof is a betterment [SPEAKER_02]: And it's not their technological advancements.

[SPEAKER_02]: It does, you know, it's capable of doing more things.

[SPEAKER_02]: Right.

[SPEAKER_02]: Like a heat pump potentially.

[SPEAKER_02]: Or yeah, yeah, yeah, yeah.

[SPEAKER_02]: I don't know much about Ruth's, but yeah.

[SPEAKER_02]: No roof.

[SPEAKER_04]: Well, there's like synthetic roots.

[SPEAKER_01]: Yeah, there's.

[SPEAKER_01]: What are people that now?

[SPEAKER_01]: And I'm thinking about the people that have built in the last few years that potentially the improvement is worth more than the actual market value.

[SPEAKER_01]: So thinking about people that have, like, say, houses that they, they're into it with the land plus the improvement for 3.3, but the markets only, they're at 2.8.

[SPEAKER_01]: Yeah, but don't tell it.

[SPEAKER_01]: Yeah, sure.

[SPEAKER_01]: But it sounds like they are in a position where they have to sell.

[SPEAKER_01]: Yeah.

[SPEAKER_01]: So how does like adjusted cost base work in a scenario like that?

[SPEAKER_02]: Yeah, I mean, well, if it's a rental property, for example, [SPEAKER_02]: really comes into question that portion between land building.

[SPEAKER_02]: And the reason I say that is because you can have a capital gain or a capital loss on land.

[SPEAKER_02]: But for the building portion, you can only have a capital gain on a building.

[SPEAKER_02]: You cannot claim a capital loss on a building.

[UNKNOWN]: And [SPEAKER_02]: I don't own rental properties because the building portion actually makes up part of your UCC we call it your underpriced application, that's right.

[SPEAKER_02]: And so that goes into a different category where you would claim something like the capital cost allowance you'd claim CCA on it and get a digitization in other words, monetization.

[SPEAKER_02]: Right.

[SPEAKER_02]: And so I know that's a little bit tricky to think about, but it's an important distinction.

[SPEAKER_02]: Because a lot of times, this does happen where people try to claim a loss on a building, but technically it goes into a completely separate pool.

[SPEAKER_02]: And so that's where you would want an accountant to help you figure it out, because that loss actually may not be as favorable as you think.

[SPEAKER_02]: Right.

[SPEAKER_04]: Because we're touching on Apple cost allowance, I think it's a very important sort of topic, especially if you have a rental property.

[SPEAKER_04]: Because like Nav sort of alluded to is that you really want to talk to an accountant when you [SPEAKER_04]: And yes, you could take your capital cost allowance on the building portion and it's at 4%.

[SPEAKER_04]: So you could decrease your rental income every single year by 4% of your building value to lower your taxes on the rental property.

[SPEAKER_04]: But the problem becomes is that, let's just say, you hold this property for five years, and you've taken capital cost allowance or amortization every single year.

[SPEAKER_04]: And then you decide to sell after the fifth year.

[SPEAKER_04]: Well, what CRA says is like, look, we gave you a benefit for the last five years.

[SPEAKER_04]: But now when you're going to sell, we're going to basically tax you on that entire amount.

[SPEAKER_04]: right like the way I mean generally that's how it works and so then you end up paying all of that as tax on a one time basis versus you're getting a little bit of a benefit every single year but then you're getting hit with a big tax in the year sale so you know you want to talk to your accountant and tell them like okay well [SPEAKER_04]: how much rental income am I going to make from this?

[SPEAKER_04]: Is it worth it to take this amortization every single year?

[SPEAKER_04]: Because, you know what, if they're like, well, you know what, we're holding this for like 50 years, we're gonna pass it on to our kids.

[SPEAKER_04]: So yes, we want the tax benefit every single year.

[SPEAKER_04]: So maybe time value of money is it's good.

[SPEAKER_04]: So just take it every single year if you don't want to sell.

[SPEAKER_04]: But if you're like, no, no, I'm only in this for like four [SPEAKER_04]: Then, you know, you've got to start looking at the numbers and it's a different conversation to say, well, maybe you don't want to take it because you're going to get hit with tax when you decide to sell.

[SPEAKER_01]: And it's again, we're very technical, but pulling back capital gains for people that have rental properties.

[SPEAKER_01]: How does capital gains work?

[SPEAKER_01]: How does it get calculated?

[SPEAKER_02]: Yeah, so I think we touched on that.

[SPEAKER_02]: When you sell something, whatever your proceeds ended up being, assuming you sell it for your market value, your capital gain will be the difference between that and your adjusted cost base.

[SPEAKER_02]: And so for example, if you bought a property for 500,000 and you down the road sell it for a million dollars, your capital gain would be a million less 500,000.

[SPEAKER_02]: It would be 500,000.

[SPEAKER_02]: And I think we touched on it before the inclusion rate for capital gains, meaning how much of that is taxable is that 50%.

[SPEAKER_02]: And so only 250,000 of that amount would even be taxable.

[SPEAKER_04]: And that's because the budget did not go through on the increase of the capital gain inclusion rate.

[SPEAKER_04]: I'm sure we all remember that.

[SPEAKER_04]: And there was a big panic around that.

[SPEAKER_04]: And so eight.

[SPEAKER_04]: So full-made life changes.

[SPEAKER_04]: It's basically like that.

[SPEAKER_01]: Yeah, people.

[SPEAKER_04]: So it went up to 75 and then they then got it took it back and we're still at 50%.

[SPEAKER_00]: And just for people at home, so in that scenario, 250,000 straight to the bank, you don't have to worry about any tax on that.

[SPEAKER_02]: It'll be taxed as well.

[SPEAKER_02]: So again, this will be the distinction what Mo mentioned between corporate and personal.

[SPEAKER_02]: So if it's personal, it's at the graduated tax rate.

[SPEAKER_02]: So it depends on your bracket.

[SPEAKER_02]: But at the highest rate, it will go all the way up to 53.5%.

[SPEAKER_04]: If it's on the pending all he's talking about the other portion so the the 50% that's non-taxable Oh, yeah, yeah, yeah, yeah, that one goes straight.

[SPEAKER_00]: You may have seen your clear 500 grand on the property That's right, 250 you can basically set aside the correct bank account.

[SPEAKER_00]: I don't know if that's right Yes, then it's based on your Income times of 250,000.

[SPEAKER_00]: Yeah, that's correct.

[SPEAKER_04]: Yeah, yeah, okay [SPEAKER_01]: We're almost an hour in, and I feel like I've got three pages left of practice.

[SPEAKER_00]: So, I would like to talk about one more thing about the technicalization, because I feel like that's one of those words that in the world of investment properties is thrown around all the time, and I'm pretty sure.

[SPEAKER_00]: 75% of the people either hearing it or saying it or like I'm still on clear one clear action oh yeah Yeah, so can we just talk about how depreciation and how that works?

[SPEAKER_00]: What exactly does all things depreciation?

[SPEAKER_02]: Yeah, I mean if you're in accounting terms when you think about depreciation you're trying to think about what is the useful life of what I have?

[SPEAKER_02]: How long especially with land doesn't matter land always goes up in value but the building [SPEAKER_02]: how long is this building realistically going to last?

[SPEAKER_02]: And so that's where the depreciation question comes in.

[SPEAKER_02]: Thing momention that was at 4% so that for buildings.

[SPEAKER_02]: Yeah, so if you're thinking about in terms of years, there's a certain amount of years that you think this building will last and let's decrease the value that we've recorded this property at 5 at a mount every year and take a bit of a deduction.

[SPEAKER_02]: to eventually, by the time, has to be replaced, the value of it is technically not a circle.

[SPEAKER_04]: And just to mention, the 4% is what CRA has said.

[SPEAKER_04]: That's right.

[SPEAKER_04]: We're not, you know, that's not what we're recommending or we're saying the life of the building is.

[SPEAKER_04]: That's right.

[SPEAKER_04]: That's just the rates.

[SPEAKER_02]: That's a lot of years.

[SPEAKER_02]: Yeah, basically.

[SPEAKER_02]: It would change and that's building right.

[SPEAKER_02]: If it was something like a computer, they say more 50% because they think after about two, three years, it's obsolete.

[SPEAKER_02]: So building at 4% will have a much longer life.

[SPEAKER_01]: So in anticipation of the world cup, a lot of people are thinking about doing short-term rentals coming up.

[SPEAKER_01]: And obviously a lot of people that are maybe have long-term rentals in place.

[SPEAKER_01]: They'll switch to short-term rentals.

[SPEAKER_01]: We've seen that, particularly with portions of their principal residence.

[SPEAKER_01]: How does tax treatment change if someone switches from a long-term rental to a short-term rental?

[SPEAKER_04]: Yeah, it's there's actually new rules around this so I'm not we're not very familiar with with that piece of it actually because there's actually new legislation that restrict some deduction that you would generally get on on short term rentals and and I know there's like city restrictions as well on where you can actually have a short term rental versus where you can't.

[SPEAKER_04]: So, yeah, there's, yeah, it's almost too complicated.

[SPEAKER_04]: It's a lot of complicated stuff.

[SPEAKER_02]: One of the basic distinction, though, and you move from, from a long-term rental to short-term rental is, a long-term rental is considered to be passive.

[SPEAKER_02]: There's not a lot of involvement that you need to have.

[SPEAKER_02]: A short-term rental in the eyes of this area is a business.

[SPEAKER_02]: And so it does change the classification of what you're operating.

[SPEAKER_02]: And with a business, there comes a lot more onerous responsibilities.

[SPEAKER_02]: You have to factor in things like potentially GST.

[SPEAKER_02]: Like it gets reported on a different form as well.

[SPEAKER_02]: Yeah.

[SPEAKER_02]: There's other requirements that that you need to maintain there.

[SPEAKER_01]: So you, and we've seen this play out on the ground, but people not collecting GST on short-term rentals, and having a massive bill at the end.

[SPEAKER_02]: Exactly.

[SPEAKER_02]: Or even incorrectly reporting it, right?

[SPEAKER_02]: That's not a long term run.

[SPEAKER_02]: It's not anymore.

[SPEAKER_02]: We do see a lot of issues with that.

[SPEAKER_04]: And I don't know this, but I would think, like, Spectax and, you know, empty home stacks.

[SPEAKER_04]: Because some of those exceptions are like, you've got a long-term tenant in there.

[SPEAKER_04]: And maybe if it's, you know, you don't have speculation tax on a rental property that was a long-term rental.

[SPEAKER_04]: But then when it becomes a short-term rental, then I think there might be some nuances about, well, now you might have spec tax because there's shorter terms and not like, because I can't remember exactly which one it is, but maybe it's a speculation where you have to have at least a tenant in there for like 180 days or something like that, whereas, I mean, I don't know how it would work now that you have short-term rental, you might not have somebody there for 180 days.

[SPEAKER_04]: it might be 30 days increments.

[SPEAKER_04]: And so how does that work?

[SPEAKER_04]: Like as long as you have 30 day increments for up to six months, are you okay?

[SPEAKER_04]: Like, you know, I don't know.

[SPEAKER_04]: So they could be a little bit more complication on that.

[SPEAKER_00]: But if somebody out there is deciding to take this on because I feel like everybody's hyping up how much he's going to be made in a [SPEAKER_00]: that's leaving in May and you're like, okay, this is an opportunity for me in June, July, June, July, short-term rental and re-rented back in September, that takes out any sort of issues with the specs, but then, but really what the consideration is is that it's a change of it goes from passive to a business.

[SPEAKER_00]: Yeah, that's what people should be.

[SPEAKER_02]: And I wouldn't consider it to be a change in use like we mentioned before, where it's that personal to business, you know, it's still, it doesn't, I don't think it changes the characteristics in that regard.

[SPEAKER_02]: Right, not the, yeah, I think I'm a spoke there with change, but the filing, the filing for those two months would be different.

[SPEAKER_02]: You would have to include those on a separate form on your tax return.

[SPEAKER_00]: Right, so it's, so anyone thinking about that would have to really understand, [SPEAKER_00]: Yeah.

[SPEAKER_00]: That active business component and what they how that changes.

[SPEAKER_00]: That's what they're all.

[SPEAKER_04]: And also GST, I would write.

[SPEAKER_04]: Yeah, definitely definitely think about GST.

[SPEAKER_04]: We're not GST experts, but I just know it's complicated.

[SPEAKER_04]: And so definitely talk to, you know, we've got, we, you know, at DMCO, we do have some people that we work with that, you know, that know their GST and and PST and other indirect taxes.

[SPEAKER_04]: So, you know, we're more than welcome to sort of, you know, [SPEAKER_01]: Excellent.

[SPEAKER_01]: I'm thinking about family trusts and as people are kind of maybe in retirement age, thinking about estate planning, when does it make sense to maybe structure it as a family trust your, yeah, that's a great question actually.

[SPEAKER_02]: So a discretionary family trust has about a 21 year life.

[SPEAKER_02]: And so that means after 21 years, you have to either distribute out all the property [SPEAKER_02]: to its beneficiaries, or the trust will be deemed to have disposed of its property if our market value.

[SPEAKER_02]: The interesting thing about that is so if you think about an individual to get back to your question, you want to kind of estimate [SPEAKER_02]: where they're kind of, you know, in 21 years, what they want to be giving their wealth to their beneficiaries.

[SPEAKER_02]: And so if you have children that are in their mid 20s or early 30s, you would think 21 years from now, they'll be in their 50s, it'll be a responsible time to pass on that wealth.

[SPEAKER_02]: That kind of where we start to think about is a good time to introduce trust.

[SPEAKER_02]: Problem that you want to avoid, potentially, is that if you introduce a trust too early by the time you reach that 21 years of the life of the trust, you may not trust your kids enough to want to give them the underlying property and then you have to distribute it back out to yourself and then you're back to square one.

[SPEAKER_00]: Right, so the trust is ineffective.

[SPEAKER_02]: It's an effective, in that case, you would want to put it into place where, by the time you reach the 21 years or before, you're comfortable to distribute out that wealth to your children.

[SPEAKER_02]: And we talked a little bit earlier about when you pass and your deemed to have disposed all of your property at Fair Market value.

[SPEAKER_02]: Well, when you have this trust mechanism, it allows you to, to kick that can down the road for your children's time.

[SPEAKER_02]: and you can pass on your wealth to them, without having it be exposed on your death, and they can continue that growth without having that tax hit.

[SPEAKER_02]: So can we just for people like big picture how does a trust work?

[SPEAKER_02]: Sure, generally when you have a trust, you have a settler, and so the settler can't be somebody that is related to you, usually it's somebody that's a family friend or somebody unrelated.

[SPEAKER_04]: and the subtler it really has no substantial involvement other than they contribute the potential capital initial capital to the trust and they can never be a beneficiary of the family trust otherwise is other technical problems that we're not going to get into but it's just make sure that the you pick somebody that you know for sure will never be a beneficiary of the trust [SPEAKER_02]: That's sort of the capital component.

[SPEAKER_02]: It's usually something that's tangible.

[SPEAKER_02]: It's not really, it's like a gold coin or silver coin, something that is physically real, but it's not any substantial amount of money.

[SPEAKER_04]: So they're also getting, the lawyers don't, they're getting away from like silver coins but they're like hard to find now.

[SPEAKER_04]: But, you know, it's over the whole time high.

[SPEAKER_04]: Yeah.

[SPEAKER_04]: So now we've been suggesting like, you know, $10 bill or a $20 bill.

[SPEAKER_04]: You know, like an actual must be physical because they like take a picture of it and like put it in as part of the trust documents.

[SPEAKER_04]: So and I just want to take a step back on the family trusting and it's very important is please talk to your accountant and your and get a lawyer involved at the time you're thinking about it because it's very important to have a good written trust document.

[SPEAKER_04]: for flexibility throughout the 21 years.

[SPEAKER_04]: We've seen, and I know Nav has too, like we've seen so many trust documents that just have not been [SPEAKER_04]: flexible enough to allow us to do tax planning because they're restricted in the nature of how the clauses have been written in.

[SPEAKER_04]: So, you know, let's make sure you sit down with the lawyer and the accountant to, you know, to write this agreement in a way that that could be flexible 10 years from now.

[SPEAKER_04]: Like, you know, your life's going to change in 21 years.

[SPEAKER_04]: You want to make sure it's your family trust allows you to be flexible from a tax planning perspective.

[SPEAKER_04]: Right.

[SPEAKER_00]: And to go back [SPEAKER_00]: Counting lawyer involved, we got the gold coin or the silver coin.

[SPEAKER_00]: Yeah, we've opened the trust, but yeah, how does it work?

[SPEAKER_02]: So you have the settler, that's really their only involvement is to set, we call it settling the trust.

[SPEAKER_02]: When you have the corporation, you incorporate a company.

[SPEAKER_02]: So now that you've settled the trust, you have what's known as your trustees.

[SPEAKER_02]: And your trustees are the people that are usually going to have control.

[SPEAKER_02]: So in our context here, it would be your parents.

[SPEAKER_02]: So it'll be dad, mom, usually there's a clause for replacement trustee if anything's potentially happens to dad or mom, and then you have your beneficiaries.

[SPEAKER_02]: And so this is where Mo was mentioning maybe you want a bit of flexibility.

[SPEAKER_02]: Because you don't know potentially down the road, you want to add more beneficiaries.

[SPEAKER_02]: Your kids will be your beneficiaries, but then maybe they'll have kids.

[SPEAKER_02]: and then do you want to include your grandkids?

[SPEAKER_02]: Do you want to include your daughter-in-law, your son-in-law?

[SPEAKER_02]: Potentially, even a company that you control, do you want one of your companies to be a beneficiary?

[SPEAKER_02]: Do you want your children's companies to be beneficiaries?

[SPEAKER_02]: And so we want to make sure that this trust is flexible enough to add beneficiaries then as we please.

[SPEAKER_02]: So those are the three components, your settler, your trustee, who has ultimate control, and then your beneficiaries.

[SPEAKER_02]: And parents love this, because in a trust structure, [SPEAKER_02]: they control.

[SPEAKER_02]: The trust deed will specify even on their death, what will happen to the trust rate.

[SPEAKER_02]: So they can control beyond the grave.

[SPEAKER_02]: And that's why everybody loves it.

[SPEAKER_00]: People love the trust.

[SPEAKER_02]: Yeah.

[SPEAKER_02]: And to go back to, well, should I incorporate a company and have my properties in there where I can introduce the trust versus holding something personally, a lot of it comes down to control.

[SPEAKER_02]: Right.

[SPEAKER_02]: When you have things in a company and [SPEAKER_02]: and introducing a trust or even a holding voting shares, you have control over your children, and that's ultimately why people love it.

[SPEAKER_00]: And, but for people who are listening that are like, okay, I don't even know, like, what is a trust?

[SPEAKER_00]: Like, why are people, it's exactly that, it's just literally for control.

[SPEAKER_00]: So there's no, there's no task.

[SPEAKER_04]: It's also flexibility of transferring wealth.

[SPEAKER_02]: Right, because discretionary trust.

[SPEAKER_00]: Yeah, it's a discretionary.

[SPEAKER_00]: But there's no kind of tax benefit to a trust.

[SPEAKER_04]: Well, in the real estate context, probably not other than transferring wealth.

[SPEAKER_04]: Because, you know, let's just say you've got 10 rental properties inside a corporation.

[SPEAKER_04]: and you got a family trust on, you know, at the top of that, of that holding company.

[SPEAKER_04]: You could sort of decide how you distribute those shares because you could have say three kids and this is what NAV was talking about is, as you have three kids and you're like, you know what, I don't want to give my shares to one of these kids, like, for whatever reason, then you only want to give them to the two others.

[SPEAKER_04]: So then you get distribute the shares just to the two kids instead of the third kid that you don't want, you know, the real estate to go to.

[SPEAKER_02]: But couldn't that be done just with a regular will?

[SPEAKER_02]: It could, but the, so I understand your question.

[SPEAKER_02]: Yeah.

[SPEAKER_02]: The issue ends up becoming as if you have a will.

[SPEAKER_02]: You will hold it until you die and then it will go through your will into your children.

[SPEAKER_02]: All that property that you own will be disposed of on your death, and you will have to pay tax on it, right?

[SPEAKER_02]: And if you don't have the cash or your children or your executor does not have the cash to pay that tax, there will have to liquidate some of the properties to be able to pay the bill, probably all of it, to be honest.

[SPEAKER_02]: Whereas if it's in a corporation, the one thing that we didn't mention is that the corporation, when you introduce the trust, the trust is going to subscribe for growth shares of the corporation.

[SPEAKER_02]: meaning that all the accumulation of both of the corporation will go to the benefit of the trust.

[SPEAKER_02]: And so when you pass, those shares that the trust owns will not be disposed of on your death.

[SPEAKER_02]: They are held by a family trust that will go through the trust and can be distributed to your children or whoever your beneficiaries are at a later time man.

[SPEAKER_02]: But on a toxic for basis crack, it will not trigger that deemed disposition on death.

[SPEAKER_02]: Yeah.

[SPEAKER_00]: And so there is a major benefit and so what type of wealth would you like when does a trust make sense and I guess everybody's different.

[SPEAKER_00]: Yeah, you'd have to look like you there's no sort of one piece of advice fits all but can you give me one piece of advice fits all when does the trust make sense discretionary family trust I usually see it in the context of of holding shares of corporations I think is really the key thing.

[SPEAKER_02]: Yeah, really.

[SPEAKER_02]: Okay, so even if you have so [SPEAKER_04]: Even if it's like $45 million worth of, even like two, three million worth of properties inside a corporation and you know, and you know, it's going to grow because you want to keep those properties in the family.

[SPEAKER_04]: Then yeah, a family trust makes sense because not only does it make sense from a tax perspective like NAVT, I don't like, like I said, I think it's from a family, you know, transfer perspective.

[SPEAKER_04]: It makes sense as well because you know, you have 21 years to decide.

[SPEAKER_04]: How many of the kids get this wealth or if none of them get it right and in 20 years from now the parents could decide they were like you know what we're actually going to burn through all that cash because we want to go on some crazy Vacation so we want to buy this amazing property or do this then they could just take the shares after 21 years to because [SPEAKER_04]: They're going to be beneficiaries as well, right?

[SPEAKER_04]: So I wouldn't think about it as just a purely tax thing.

[SPEAKER_04]: It's, I think, think about it like, holistically from an overall, like, family planning purposes, or planning purposes as well.

[SPEAKER_04]: And how do you want to transfer your wealth?

[SPEAKER_01]: Exense.

[SPEAKER_01]: DMCL is going to probably bill us if we take much more of your time, so you're worried about that.

[SPEAKER_01]: So just quickly, though, two questions, and we talked about this a little bit before we actually pushed record, but non-residents buying Canadian real estate.

[SPEAKER_01]: I know it's coming up a lot at DMCL.

[SPEAKER_01]: How does tax work for non-residents who buy Canadian real estate?

[SPEAKER_04]: So obviously there's a foreign buyer's tax that you know you've got to be careful of, but just ignoring that, you know, for a non-resident, you know, depending where they're from, you're going to have to file a Canadian tax return and report your, if it is a rental property that you're buying in Canada, then you're going to have to report that income on a Canadian tax return, and you're going to have to pay tax on it.

[SPEAKER_04]: And, you know, there has to be some with holdings and, you know, we could get around all of that, but then what they have to do is they also have to report that income under whatever they're earned in Canada on their.

[SPEAKER_04]: tax return from wherever they're from.

[SPEAKER_04]: So if they're from, say, the U.S., Canada U.S.

has a treaty that avoids double taxation.

[SPEAKER_04]: So what that means is that if a U.S.

resident has a property in Canada and they're paying tax in Canada on the rental property, they can use that tax on their U.S.

tax return as a credit.

[SPEAKER_04]: So then they're not paying double tax.

[SPEAKER_04]: Right.

[SPEAKER_04]: So, and then when you sell, you know, there are some filing obligation as a non-resident when you sell a Canadian property.

[SPEAKER_04]: Because obviously, you know, Canada doesn't want to leave, you know, like if there's a non-resident, they sell the property.

[SPEAKER_04]: They're like, well, we kind of want a piece of the pie, too, right?

[SPEAKER_04]: Like, we don't want you to just report all of this gain in the US and pay tax there.

[SPEAKER_04]: Like, you got to do something here, too, and we want to know how much money you made.

[SPEAKER_04]: So there's filings that you also have to do in Canada when you sell a property as well.

[SPEAKER_04]: And with holding tax.

[SPEAKER_04]: There's withholding tax, but when you file this particular form, you can actually, and it's very important that you file this.

[SPEAKER_04]: So because if you don't file it, you actually have a withholding of 25% of your total gross proceeds.

[SPEAKER_04]: If you don't file this form, but if you file this form, you you actually basically are telling CRA like look look don't with hold 25% of my gross proceeds I only my gain is only x so only what I will give you 25% of my capital gain you're not you're net yeah you're net and then what you can that then what you do is.

[SPEAKER_04]: when you file a Canadian tax return to report the sale, you probably had some other legal fees and real turfies that you had to pay.

[SPEAKER_04]: You can claim those on your tax return and potentially get back a little bit of that with holding as well.

[SPEAKER_04]: So it's actually very important as a non-resident when you're selling the file this.

[SPEAKER_04]: Because if you don't, what the lawyers do is they just withhold 25% of the gross proceeds and they just hold it in their trust account.

[SPEAKER_04]: And I mean, they end up making money on it because I mean, they just leave it in an interest bearing trust account and, you know, you don't want them making any money.

[SPEAKER_00]: Does it matter?

[SPEAKER_00]: So you're a non-resident?

[SPEAKER_00]: Does it matter if you're in Canada or outside of Canada?

[SPEAKER_00]: Like, if you're when you sell, I don't think that matters.

[SPEAKER_00]: No.

[SPEAKER_04]: Now, if you're if you're a if you're a non-resident of Canada, it doesn't really matter.

[SPEAKER_04]: I just heard it's important to have those real-terfies.

[SPEAKER_01]: So, last but not least, maybe Canadians buying in the US, obviously lots of people looking at the Sunbelt and parts of the US excited about potential growth.

[SPEAKER_01]: What should they know about buying in the US?

[SPEAKER_01]: and maybe some things to avoid.

[SPEAKER_02]: Yeah, we're not too much on the US side.

[SPEAKER_04]: But I would just say that DMC also has a US tax team.

[SPEAKER_02]: Yes.

[SPEAKER_04]: And we, you know, we work with them as well.

[SPEAKER_04]: But maybe you could touch on the Canadian side of things of if a Canadian person has a rental property in the US making money what happens to Canadian perspectives.

[SPEAKER_02]: Yeah, so if you're a resident of Canada, your tax on your worldwide income.

[SPEAKER_02]: And so it doesn't really matter from our point of view where you earn that income, you're gonna be taxier no matter what.

[SPEAKER_02]: And similar to what most said, if you are to sell it, even though it's in the US, you still have to pay tax on that gain in Canada.

[SPEAKER_02]: So that's really the main thing I would say.

[SPEAKER_02]: Yeah, yeah, required to report all your rental income.

[SPEAKER_02]: And you may have some exposure to US tax, and that's really where you may want to get involved with a US accountant.

[SPEAKER_02]: The rules are complex in the US because every state is different.

[SPEAKER_02]: And they have different rules.

[SPEAKER_02]: And then, in fact, really, there's different rules.

[SPEAKER_04]: So it's the same thing that goes in reverse, because they'll have to probably do a US tax return.

[SPEAKER_04]: and then the tax that you pay in the U.S.

can then be used on your Canadian tax return so you're not double taxed.

[SPEAKER_02]: I think I can jump in on one of your questions quickly before we end this.

[SPEAKER_02]: I think one of your questions talked about interest to Dr.

Bility.

[SPEAKER_01]: Yes.

[SPEAKER_02]: I thought that was a really good one.

[SPEAKER_02]: Yeah, let's talk about it.

[SPEAKER_02]: So really with interest deductibility, the real key concept is that for interest to be deductible, it has to be in the pursuit of earning income.

[SPEAKER_02]: And so that's why when you have a principal residence, the interest that you pay for your principal residence is not tax deductible.

[SPEAKER_02]: But there are maneuvers there.

[SPEAKER_02]: How do you get that loan to be tax deductible?

[SPEAKER_02]: And so a lot of times people that have accumulated wealth in other areas, or let's say even if you were to do [SPEAKER_02]: a GIC for example.

[SPEAKER_02]: But instead if you have a flexible enough mortgage, why don't you put that thousand dollars against your mortgage?

[SPEAKER_02]: And then if you have also a line of credit from that same mortgage, you could then withdraw that thousand dollars from your mortgage and then invest in a GIC.

[SPEAKER_02]: So what you've effectively done is you've taken your harder and money from your paycheck.

[SPEAKER_02]: You've paid down your non-deductible mortgage.

[SPEAKER_02]: And with drawn funds that are then invested in a GIC, making that portion that you've withdrawn, the interest component on it is now tax deductible.

[SPEAKER_01]: Because it becomes an income earning purpose because it's because the GIC now is earning some something So in other words, in other words, instead of just investing the $1,000 put it towards your mortgage Have like a whole equity line of credit.

[SPEAKER_01]: That's right.

[SPEAKER_01]: That you then take the $1,000 and a lot of flexible products, you see that $1,000 is immediately, right?

[SPEAKER_01]: Yeah.

[SPEAKER_02]: Exactly.

[SPEAKER_02]: So you may have like a, they call them helox, right?

[SPEAKER_02]: The home equity line of credit.

[SPEAKER_02]: every dollar that you paid on your mortgage, you can withdraw that same dollar back in the line of credit.

[SPEAKER_02]: The rates are not always the same usually.

[SPEAKER_02]: It's a bit worse off to withdraw through the whole mechanism of credit.

[SPEAKER_02]: Like prime plus half a percent.

[SPEAKER_02]: Yeah, not a major number, but if you can put that in the market and maybe you're paying 4% on it, but if you can make 20% on it, and also then right off the interest.

[SPEAKER_00]: Yeah, it's a it can be 31 so if you're so and writing off the interest on say prime or prime and a half percent or whatever what is that bring your interest rate to on that borrowed money [SPEAKER_02]: Yeah, that's a good question.

[SPEAKER_02]: I would have to do the math.

[SPEAKER_02]: Yeah.

[SPEAKER_02]: Yeah.

[SPEAKER_02]: But no, it doesn't have been good.

[SPEAKER_02]: And you do see a lot of times.

[SPEAKER_02]: I had a client that they had a 400K on their home equity line of credit.

[SPEAKER_02]: And they also had a GIC of 400,000.

[SPEAKER_02]: And I said to them, why do you have the separate?

[SPEAKER_02]: Use the 400,000 to pay down your line of credit with draw again, and then invest it.

[SPEAKER_00]: Because now, I see that there weren't actually doing it effectively.

[SPEAKER_02]: They were paying the interest on the line of on the GIC, but they weren't getting a deduction on the interest from the rate.

[SPEAKER_02]: Right.

[SPEAKER_02]: And so you can make them deductible and collect the interest.

[SPEAKER_02]: I think you're giving both of you guys ideas probably.

[SPEAKER_01]: Well, this is great.

[SPEAKER_02]: I think the best for myself too.

[SPEAKER_01]: Yeah.

[SPEAKER_01]: No, well, that's fantastic.

[SPEAKER_01]: I mean, tons of takeaways.

[SPEAKER_01]: I feel like I'm going to have to listen back to this maybe a few times to wrap my head around here.

[SPEAKER_02]: Maybe a few edits.

[SPEAKER_01]: You had to, well, you know, I'm thinking before we let you go, though we do have this segment called the Five Wire, Five Lighthearted Questions that we end every show with, can you stick around for that?

[SPEAKER_01]: First, one book that you've read recently that you'd recommend for our listeners.

[SPEAKER_01]: Oh, I've not read a book in forever, so I was going to say the Income Tax Act.

[UNKNOWN]: Thank you.

[SPEAKER_01]: If you want to fall asleep in the last few years, what new belief behavior or habit has most improved your life.

[SPEAKER_04]: How many years, sorry?

[SPEAKER_01]: Last few years.

[SPEAKER_04]: I think doing, I started doing yoga, helped help me.

[SPEAKER_02]: I think just trying, trying this set a good routine, go to bed on time and wake up at a good time.

[SPEAKER_00]: Those are, but, and yoga too.

[SPEAKER_04]: Yeah, yeah, yeah, because I, I mean, I play a lot of basketball, so just getting that stretch in as you get older, it's, it's a game changer.

[SPEAKER_04]: It's a game changer for me.

[SPEAKER_04]: Right on, right on.

[SPEAKER_01]: What have you been binge watching lately or a movie recommendation?

[SPEAKER_01]: Stranger Things?

[SPEAKER_01]: Really?

[SPEAKER_01]: Yep.

[SPEAKER_00]: That's really good.

[SPEAKER_00]: That's right now.

[SPEAKER_00]: That's good.

[SPEAKER_00]: You used to dream.

[SPEAKER_00]: Yeah.

[SPEAKER_00]: Is it a new show or a new season?

[SPEAKER_04]: I've been around season these season.

[SPEAKER_02]: Yeah.

[SPEAKER_02]: Okay.

[SPEAKER_02]: Number one showing Netflix.

[SPEAKER_02]: Yeah.

[SPEAKER_04]: Wow.

[SPEAKER_04]: Where's Landman?

[SPEAKER_04]: Landman's on Paramount.

[SPEAKER_04]: I don't know what that's all I'm trying my life.

[SPEAKER_01]: Yeah.

[SPEAKER_04]: That's Billy Bobby so good in that.

[SPEAKER_04]: Yeah.

[SPEAKER_04]: He's so good in that.

[SPEAKER_01]: Favorite band or music?

[SPEAKER_01]: I'm an R&B guy.

[SPEAKER_01]: Okay.

[SPEAKER_01]: All right.

[SPEAKER_01]: And last but not least, something that you've purchased for under $1,500 that's had a positive impact on your life under 1,500.

[SPEAKER_02]: Well, look at that yoga mask.

[SPEAKER_02]: Yeah, yeah, yeah, yeah, yeah, yeah.

[SPEAKER_02]: Well, I bought the new iPhone, but that's barely 150.

[SPEAKER_02]: Yeah, yeah, yeah, yeah.

[SPEAKER_02]: Is it, yeah, is it actually the worth it?

[SPEAKER_02]: Honestly, the battery life for me has been incredible.

[SPEAKER_02]: I don't think every night when I go to charge it, I don't think I've dropped below 45%.

[SPEAKER_02]: Wow.

[SPEAKER_00]: Yeah, because I feel like before it came out, whatever, at least the business news was like, is there anything here that's actually going to make people battery life carrier to them?

[SPEAKER_00]: But I think the sales are better.

[SPEAKER_01]: Yeah, about how much I think the cameras dramatically better.

[SPEAKER_01]: Well, they think so.

[SPEAKER_04]: They're already so good.

[SPEAKER_02]: Yeah, there's something around internally to create more space so that the battery, the battery inside is significantly larger.

[SPEAKER_01]: Okay, so that's it.

[SPEAKER_01]: Excellent.

[SPEAKER_01]: Well, hey, thanks, Mo and Nav.

[SPEAKER_01]: If people want to learn more about what you're up to or DMCL, how can they?

[SPEAKER_01]: How can they?

[SPEAKER_01]: Yeah.

[SPEAKER_02]: So if you go to DMCL.ca, we have a people section.

[SPEAKER_02]: You can find myself.

[SPEAKER_02]: You can find Mo.

[SPEAKER_02]: You can connect with us directly as well through there.

[SPEAKER_02]: There will be a link that you can contact us.

[SPEAKER_02]: You can also read some of the articles and things that we've posted through there.

[SPEAKER_01]: Excellent.

[SPEAKER_01]: Well, no reason not to have a good tax accountant if you're buying and selling real estate.

[SPEAKER_01]: So yeah, that's a sure.

[SPEAKER_01]: Thanks so much for having me.

[SPEAKER_01]: Oh, thanks for having us.

[SPEAKER_01]: Appreciate it.

[UNKNOWN]: Appreciate it.

[SPEAKER_00]: So there you have it folks, our conversation with Nav Penu and Mo Shaheed from DMCL.

[SPEAKER_00]: The tax department did not disappoint great stuff from those guys and so many things to think about and consider.

[SPEAKER_01]: And in the studio, it was good to have them in the studio.

[SPEAKER_01]: I think they said that was their first podcast.

[SPEAKER_01]: And yeah, we are joking.

[SPEAKER_01]: Sounds like they're going to start a podcast, not related to accounting, though.

[SPEAKER_01]: Oh, right.

[SPEAKER_00]: I can't even recall.

[SPEAKER_00]: I do know that they said they'd come back, which is exciting.

[SPEAKER_00]: Yeah, especially when the tax, uh, there's always something new, always something to talk about there.

[SPEAKER_01]: Well, that's that's actually the thing.

[SPEAKER_01]: And I, I kind of, I feel so, I mean, I don't feel sorry for those guys in this regard.

[SPEAKER_01]: But they have to, they got to stay on top of it and men.

[SPEAKER_01]: What a tricky thing to say on top of, especially because like part of that conversation, which was eye-opening is how the province now with the layers of policy, [SPEAKER_01]: that don't drive with the federal level, so it's like, okay, what do we have to comply to here?

[SPEAKER_01]: And especially when they're contradictory, it's kind of mind-blowing that there's no communication between the different levels of government.

[SPEAKER_00]: Yeah, you know what?

[SPEAKER_00]: We're in interesting times, and I feel like we have been since since we started this show, so the insanity continues.

[SPEAKER_00]: What else do we have for the day out of them?

[SPEAKER_00]: We have, [SPEAKER_00]: Vancouver Real Estate Podcast.com.

[SPEAKER_00]: This is where all things real estate related live.

[SPEAKER_00]: We got buyers resources.

[SPEAKER_00]: We got sellers resources.

[SPEAKER_00]: If you're thinking about real estate in 2026 buying or selling, now is the time to get in touch and we'll get you set up with some of our tools at Vancouver Real Estate Podcast.com.

[SPEAKER_00]: But also, [SPEAKER_00]: if you're finding this tax advice or anything else was not tax advice we should say none of this is investment advice or tax advice but if you're finding this show useful all we ask is either review a comment share with a friend or family member that you think will get value that's how we're growing and we're looking to work we're looking to grow in 2026 we're back absolutely Matt and if anyone wants to get in touch with you how can they do that?

[SPEAKER_00]: You can give me a show.

[SPEAKER_00]: I'll be around all through the holiday season 7-7-8-8-4-7-8-4-7-8-4-7-8-4-7-8-8-8-8-8-6-6-4-5-7-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4-4 [SPEAKER_03]: Thank you guys for saving for radio.

[SPEAKER_03]: Just squad today.

[SPEAKER_05]: Thank you.