I am going to show buyer one listing with asking price in between 1-1.5M today. I am not so sure about if it is the right decision to choose that community in order to keep the value of the house. At least that community would be one of my primary choices. So I look through sold properties info, her you go. Which communities did home owners bought for 1-1.5M in 2017? I chose communities with at least 5 sold properties.
By Urban Upgrade
There are a number of advantages to investing in real estate, especially if you choose your properties wisely. We work with many types of investors and often get asked whether it is best to buy into the single family, townhouse, or apartment markets - the truth is that each comes with its own advantages and disadvantages, so there often is no simple "right" decision that works for everyone.
Below, a good old fashioned pros and cons list to help to outline the main benefits and drawbacks for each type of rental property:
Pros:
No Condo Fees: Owning a single family home, be it a detached home or a semi-detached home, means no condo fees, which means that monthly overhead is reduced, allowing for better cash flow and more money in your pocket.
Tenants Pay Utilities (Usually): In single family rentals, most often utility costs are the tenant’s responsibility, although with some suited homes, and many executive rentals, these are included for convenience. With utility costs covered by the tenant, monthly carrying costs are more predictable, and generally lower anyways - most renters pay closer attention to utility usage when they are footing the bill!
Higher Stability for Resale: This is true in the current market at least, but may not necessarily hold true in the long run. While it can be slightly more difficult to market a previously rented property (especially if you had careless tenants), right now single family homes are simply selling better than condos in Calgary. In fact, in some inner-city communities, single family homes on larger lots (50-ft +) are extremely coveted, and selling very quickly.
Cons
Seasonal Upkeep: Your tenants may not consistently shovel the walk, or mow the lawn. With careless renters, a previously well maintained home can quickly turn into an eyesore, leading to neighbour complaints and fines from the City.
Exterior Maintenance: As the Landlord, this often falls under your jurisdiction. Fixing downspouts, repairing broken gates, painting trim and windows (all of the things you hate doing at your own house…) multiply it by two because this is your responsibility, not your tenant’s.
Repairs: Once again, all repairs are 100% yours to pay for, out of pocket, and completely your responsibility to source, manage and coordinate. If you go this route, make sure to budget money every year for minor repairs and upkeep, and allocate some funds for larger ticket items like furnaces and roofs… It is important to keep the house in good working order, when it comes time to find new tenants OR to sell.
$$$$: Generally, this is the most expensive market to buy into, meaning the purchase cost will be higher initially, and you will need a larger down payment.
Pros
More Attainable Price Point: Typically, townhomes are less expensive to buy than a single family homes, meaning more cash in your jeans, and likely a more attractive rental price to prospective tenants.
Less Exterior Maintenance: Most townhomes include landscaping and snow shovelling, meaning you don’t need to rely on your tenants to be responsible with respect to this.
Lower Condo Fees: Condo fees are usually less than in an apartment condo and typically cover professional management and maintenance which makes your life easier as a Landlord.
Less "Large Ticket" Expenses: Condo fees also typically cover building insurance and reserve contributions, meaning your insurance costs are much less every month, and there should* be money for large repairs when they come due. (*Just because there should be money for large repairs, doesn’t mean there will always be enough - Just as you would for a single family home, expect the unexpected and budget some funds for larger repairs.)
Cons
Condo Fees: Wait, but weren’t the condo fees just listed above as a “pro”? Yes. Although generally lower than apartments, there are still condo fees, and condo fees do have a risk of rising over time.
Risk of Special Assessments: If a large repair is required, and there isn’t enough money in the reserve fund to cover, there is a chance that you will see a cash call from the condo board.
Bylaws: Most townhome dwellers appreciate the private entrances, courtyards, and ease of pet ownership. That said, all renters must follow the bylaws or the owners can get fined, so you need to ensure that these rules are understood. Not all complexes will allow pets without board approval.
Pros
$$$$: Generally the most affordable option, allowing you to get in to the investment market without breaking the bank.
Less Responsibility: Generally, investing in an apartment/condo requires very little maintenance from the owner (you). The building generally takes care of anything outside the unit, and often will take care of a few items inside like smoke alarm tests and filter changes.
Utilities May Be Included in the Condo Fees: Meaning you can advertise your rent as being more “inclusive” of extras. Always make sure to verify exactly what is covered in the condo fees however, as this can vary from building to building - most include gas and water, but not electricity.
Desirable Locations: Apartment buildings are typically located close to amenities, shopping, groceries, transit and other things that tenants love, which in turn makes your property more marketable to prospective renters.
Cons
Higher Condo Fees: Condo fees are inevitable and tend to be highest for this type of property. That said, they often include utilities like heat and water.
Tougher Resale Market: It is no secret that the apartment sector is struggling in Calgary right now. Price reductions are occurring all over the city and with a huge over supply and even more high-rise building under construction (especially in the Downtown area) it doesn’t look like these conditions are going to change any time soon.
Risk of Special Assessments: Similar to townhomes, if a large repair is required, and there isn’t enough money in the reserve fund to cover, there is a chance that you will see a cash call for owners. Once again it is important to remember that these issues would arise with other types of properties too, and would likely be more costly anyway.
Condo Bylaws: All renters must follow the bylaws or the owners can get fined, so you need to ensure that these rules are understood and that you trust your tenants.
Investor Tip: Regardless of the type of rental you choose, be prepared for the time and expense that comes with maintaining a home you don’t live in. When it comes time to sell your property, be forewarned that it isn’t always easy to sell a rental property: tenants are messier and less flexible with showings, and rental properties typically see more wear and tear than non-rentals.
If you’re thinking about investing in Calgary, we would love to help you out. Give us a call anytime so that we can get you on your way to becoming someones favourite Landlord (or Landlady). We help our clients assess the right investment for them after discussing budget, holding period, cash flow requirements, appreciation expectations, and need for liquidity.
From MoneySense
Today, the Office of the Superintendent of Financial Institutions (OSFI) introduced new rules on mortgage lending to take effect next year.
OSFI is setting a new minimum qualifying rate, or “stress test,” for uninsured mortgages (mortgage consumers with down payments 20% or greater than their home price).
The rules now require the minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by the Bank of Canada (presently 4.89%) or 200 basis points above the mortgage holder’s contractual mortgage rate. “The main effect will be felt by first-time buyers,” says James Laird, co-founder of Ratehub.ca. “No matter how much money they put down as a down payment, they will have to pass the stress test.” The effect of the changes will be huge, resulting in a 20% decrease in affordability, meaning a first-time homebuyer will be able to buy 20% less house, explains Laird.
In this case, the family’s mortgage rate, plus 200 basis points, is less than the Bank of Canada five-year benchmark of 4.89%.
According to Ratehub.ca’s mortgage affordability calculator, a family with an annual income of $100,000 with a 20% down payment at a five-year fixed mortgage rate of 2.83% amortized over 25 years can currently afford a home worth $726,939.
Under new rules, they need to qualify at 4.89%
They can now afford $570,970
A difference of $155,969 (less 21.45%)
In this case, the family’s mortgage rate, plus 200 basis points, is greater than the Bank of Canada five-year benchmark of 4.89%.
According to Ratehub.ca's mortgage affordability calculator, a family with an annual income of $100,000 with a 20% down payment at a five-year fixed mortgage rate of 3.09% amortized over 25 years can currently afford a home worth $706,692.
Under new rules, they need to qualify at 5.09%
They can now afford $559,896
A difference of $146,796 (less 20.77%)
If a first-time homebuyer doesn’t pass the new stress test, they have three options, says Laird. “They can either put down more money on their down payment to pass the stress test, they can decide not to purchase the home, or they can add a co-signer onto the loan that has income as well,” says Laird. The stress test will be done at the time of refinancing as well, with one exception. “If on renewal you stay with your existing lender, then you don’t have to pass the stress test again,” says Laird. “However, if you change lenders at mortgage renewal time, you may have to pass the stress test but it’s not crystal clear now if this will be the case for those switching mortgage lenders.”
So if you’re a first-time homebuyer, it may mean renting a little longer and waiting for your income to go up before you’re able to buy your first home. Alternatively, some first-time buyers will buy less—maybe a condo instead of a pricier detached home. Or, the new buyers may opt to get a co-signer to qualify under the new rules.
But whatever you do, if you’re a first-time buyer, make sure you understand what you qualify for using the new regulatory rules, and get a pre-approved mortgage before you start house-hunting. “This shouldn’t be something that shocks you partway through the home-buying process,” says Laird.
And finally, do your own research and run the numbers on your own family’s income numbers. You can use Ratehub.ca’s free online mortgage affordability calculator to calculate the impact of the mortgage stress test on your home affordability.
The top reason foreign buyers from China want to get into the Canadian housing market is education, not investment, according to data from a popular global real estate listings website.
CP, THE CANADIAN PRESS
Figures released Tuesday by the Chinese website Juwai.com in partnership with Sotheby’s International Realty Canada found schooling was the primary motivation for potential Chinese homebuyers who viewed property listings in major Canadian cities in 2016.
It found housing needed for educational purposes was the most cited reason 46 per cent of Chinese users were looking at properties in Montreal, followed by 44 per cent in Vancouver, 41 per cent in Toronto and nine per cent in Calgary.
The second most common motivator was “own use,” which could mean the home would be used as a second or third property. Sixty-two per cent of those looking for homes in Calgary cited this was their main reason, followed by 37 per cent for Toronto, 25 per cent for Vancouver and 34 per cent for Montreal.
Investment was the top reason listed by a quarter of home seekers, with 27 per cent saying it was the main reason for their property searches in Vancouver and Toronto, 23 per cent in Montreal and 21 per cent in Calgary.
Brad Henderson, president at Sotheby’s International Realty Canada, says the figures show that there have been misconceptions about why Chinese homebuyers look to Canadian real estate.
“I really think a lot of perception that people have around foreign buyers and specifically buyers from mainland China are informed by more anecdotal information and not statistics,” he said.
The data also indicated the majority of Chinese property searches were for Canadian homes priced below $655,050.
“While home buyers from mainland China have been identified as a notable segment of foreign purchases within the luxury property markets of Vancouver and Toronto, Juwai.com data dispels the assumption that Chinese interest is limited to the high-end segment,” said the report.
“Instead, it implies that conventional real estate dominates demand.”
The figures also found the implementation of a 15 per cent foreign-buyers tax last August in Vancouver had a swift impact on the interest of those searching for Canadian properties.
Juwai.com says that immediately following the announcement of the tax in July, its listing inquiries for Vancouver plummeted 81 per cent year-over-year and 78 per cent in August year-over-year when the tax came into effect.
It also saw that listing searches increased in other Canadian cities, with property inquiries soaring 1050 per cent and 420 per cent year-over-year in Calgary during August and September.
Even so, Henderson says he anticipates the number of Vancouver searches to pick up again, citing a modest increase in the number of inquiries in the last quarter of 2016 which he attributed to prospective buyers having digested the impact of the foreign-buyers tax.
“So we believe that in 2017, we’ll probably see an increased interest in properties in Vancouver.”
The data also found that Canada ranked third by users as the most popular destination for international homebuying, after the United States and Australia.
Juwai.com says the data was compiled over the course of 2016 from its more than two million monthly Chinese visitors.
请注意了，其实不是在出租房子卖掉以后才有办法，而是如果这套房子曾经是你的主要居住房子，并且居住时间超过7年+1以上的话。具体请看看下面的问答：
Q: I own a house in Quebec, which is rented and I rent a townhouse in B.C. (I’ve been away since Oct. 2013—I’m an imported grandmother). The house is up for sale. Will I have to pay capital gains tax when I sell the house? Is there a way around it? I will make about $25,000 in gains as the market is poor in my neighbourhood in Quebec. I’ve owned the house since 2006. Any advice is appreciated. —Wendy T.
A: Hi, Wendy. Sounds like the draw of family pulled you out west but I’m sure the great west coast weather helped keep you in British Columbia, which is why you’re selling your Quebec house. The good news is you will be required to pay capital gains tax on the sale of this home. Why is this good news? Because it means you made money on the sale and purchase of this asset.
Based on what you’ve told me, you estimate about a $25,000 gain between the purchase price and the sale price. If we ignore all other factors, this means you’ll pay your marginal tax rate on $12,500. If you earn less than $38,000 per year, this translates into an extra $1,255 in income tax during the year you sold the home.
But things aren’t equal. The Canada Revenue Agency offers a tax exemption on the sale proceeds of each family’s primary residence. In simple terms, this is calculated based on the number of years the home was your primary residence, plus one year. In your case, you can exempt eight years of the total 11 years you owned the home (seven years of living in the home, plus one makes eight years that qualifies for the exemption.) That reduces the income tax owed from $1,255 to just under $350.Better still, if the home is mortgage-free you get to pocket the entire proceeds of the sale, minus $350 and any transactional costs. You could use this money as part of your retirement fund, to put a down payment on another home in B.C., or simply as fun money. All in all, not bad situation to be in.Of course, it’s always a good idea to pay a professional to get precise, personalized advice before tackling any tax saving strategy. All the best and have fun on the west coast.
Released: 2017-09-13 Statistics Canada
The median total income of Canadian households rose from $63,457 in 2005 to $70,336 in 2015, a 10.8% increase.
Today, Statistics Canada is releasing data from the 2016 Census on the incomes of Canadians. This release presents incomes of Canadians as measured in 2015, and looks at trends over the 2005-to-2015 period, a decade of significant income growth and economic change.
An important factor in the economic story of Canada over the decade was high resource prices that drew investment and people to Alberta, Saskatchewan and Newfoundland and Labrador, boosted the construction sector, and more generally filtered through the economy as a whole.
This boom in the resource sector coincided with a decline in the manufacturing sector, with fewer jobs in this sector in 2015 than 2005. The bulk of these manufacturing job losses were in Ontario and Quebec.
This census release paints a picture of the income of Canadians in 2015 before the effects of the oil price slowdown in 2015 and 2016 were fully felt.
Led by growth in resource-rich provinces, median income rose 10.8% in Canada from 2005 to 2015, compared with 9.2% growth in the previous decade and a decline of 1.8% the decade before that.
This growth was not distributed evenly across Canada. Resource-based provinces and regions had the highest income growth, led by Nunavut, and Saskatchewan. Median income growth was slowest in Ontario and Quebec, the two provinces with the largest populations and significant manufacturing activity.
The low income rate was relatively stable over the last decade, rising marginally from 14.0% in 2005 to 14.2% in 2015. There were regional variations over the decade. The number of persons in low income declined in Saskatchewan and Newfoundland and Labrador, while the number increased in Ontario. There were also variations across age groups with a smaller proportion of young children living in households with low income and a larger proportion of seniors.
Almost two-thirds of Canadian households contributed to an RRSP, RPP or TFSA in 2015. Of these households, more than half contributed to only one plan, while one-third contributed to two plans and 14% contributed to all three.
In 2015, 96% of Canadian couples had both spouses reporting income, up significantly from about two-thirds in the mid-1970s.
One-third of couples had fairly equal incomes in 2015 compared with about one-fifth of couples 30 years earlier.
According to the Labour Force Survey, two industrial sectors experienced declines in employment from 2005 to 2015: manufacturing (-22%) and agriculture (-14%). Over the same period, employment in the health care sector rose over 30% as did employment in construction and the professional, scientific and technical services sector, sectors associated with economic expansion. These changes in the economy are reflected in changes to median household income.
Nunavut (+36.7%) and Saskatchewan (+36.5%) had the highest growth in median incomes over the past decade. Newfoundland and Labrador, the Northwest Territories, Alberta, and Manitoba also saw median incomes grow by more than 20% over the decade.
The decline in manufacturing jobs in Quebec and Ontario was reflected in the lower growth of median incomes in those two provinces. Quebec (+8.9%) and Ontario (+3.8%) were the provinces with the lowest growth rates.
The metropolitan areas within these regions also tended to follow these provincial/territorial patterns. For example, almost every metropolitan area in Ontario saw income growth below the national average, while almost every metropolitan area on the Prairies had income growth above the national average.
The following sections look at regions across the country and provide further detail on the growth in median household income for provinces and metropolitan areas.
Earlier results from the 2016 Census show that the population is moving west. While economic opportunities in the West underlie this trend, median income growth does not necessarily follow the growth in the number of households and in the West was more related to developments in the resource (oil) and construction sectors.
Over the decade, the Prairie provinces had the highest growth in both the number of households and household median income in Canada. Even within the Prairie provinces, however, there were differences. For example, the growth in the number of households was faster in Alberta (+21.6%) than Saskatchewan (+11.7%), yet the median income growth in Saskatchewan outpaced that of Alberta.
The median household income in Manitoba was $68,147 in 2015, ranking eighth among the provinces and territories. Despite a 20.3% increase in median income since 2005, roughly twice the national growth rate, Manitoba slipped one rank from seventh in 2005 because other regions had even stronger growth.
Winkler (+24.2%) and Brandon (+23.3%) had the highest median income growth among the metropolitan areas in Manitoba. The income growth was slower in Steinbach (+16.6%), despite having the fastest growth in the number of households at 41.8%. In Winnipeg, the largest city in Manitoba, median incomes grew 16.6%, somewhat below the provincial growth rate.
Saskatchewan (+36.5%) had the highest median income growth among the provinces, and was second highest nationally following Nunavut (+36.7%). On the strength of this income growth, Saskatchewan improved its provincial/territorial ranking from eighth to fifth over the decade.
Although Moose Jaw (+26.4%) had the slowest income growth among Saskatchewan metropolitan areas, it was faster than all but 17 of the 152 metropolitan areas in Canada. Saskatchewan was also home to the metropolitan area with the highest growth in median income in Canada (Yorkton), up 40.5% from 2005. The number of households in Moose Jaw and Yorkton grew by about 6.5% over this period—among the slowest growing metropolitan areas in Saskatchewan.
Alberta ($93,835) had the third-highest median income among the provinces and territories in 2015, down from second place in 2005. Alberta was the fifth-fastest growing province/territory in Canada at 24.0%.
Within Alberta, median total income rose the fastest in
Wood Buffalo (35.2%),
Camrose (+29.9%),
Wetaskiwin (+27.3%),
Okotoks (+27.0%),
Edmonton (+26.6%),
Cold Lake (+23.0%)
Calgary (+22.7%).
While Sylvan Lake had the slowest growth in median incomes of any Alberta metropolitan area (+7.8%), it had the second-largest increase in the number of households (+50.5%).
The Atlantic provinces and Quebec had the lowest median incomes in Canada in both 2005 and 2015. However, investments in the resource sector during this time led to higher incomes in Newfoundland and Labrador (+28.9%), resulting in the third-fastest income growth among the provinces and territories. This increase lifted Newfoundland and Labrador from the lowest median income in the Atlantic/Quebec region to the highest over the course of 10 years.
Every metropolitan area in Newfoundland and Labrador posted income growth above 12% over the decade. The growth was highest in Bay Roberts (+33.1%) and St. John's (+27.5%), followed by Corner Brook (+15.7%), Grand Falls-Windsor (+14.5%), and Gander (+12.4%). Among metropolitan areas in the rest of Atlantic Canada, only the median income in Miramichi, New Brunswick (+14.3%), grew at a faster pace than the slowest-growing Newfoundland and Labrador metropolitan area.
New Brunswick ($59,347) had the lowest median income in Canada in 2015, followed by Quebec ($59,822). Median household income grew by 8.9% in Quebec from 2005, the second-slowest provincial/territorial growth rate in Canada over the decade. Montréal, the largest city in the province, had a median total income of $61,790 in 2015, up 8.8% from 2005.
Despite a low median income growth rate in Quebec, several metropolitan areas in resource rich areas had relatively high income growth. Median incomes in Rouyn-Noranda (+20.4%), Val D'or (+18.0%) and Sept-Îles (+13.4%) all grew faster than 10%, as did those in Québec (+11.1%). Conversely, median incomes were 4.1% lower in Baie-Comeau.
In the Eastern Townships, Granby (+19.1%) and Cowansville (+16.0%) had among the highest growth in the number of households within the province. However, median income growth in Granby (+3.8%) and Cowansville (+1.8%) were well below the Quebec average of 8.9%. Both Granby and Cowansville had higher-than-average growth in the number of people over the age of 65 and they also had relatively high levels of manufacturing.
The median household income in British Columbia was $69,995 in 2015, seventh among the provinces and territories, down from sixth in 2005. Median incomes increased 12.2% from 2005, 1.4 percentage points above the Canadian average, making British Columbia the eighth-fastest growing region over the decade. Fewer manufacturing and agricultural jobs coincided with employment increases in utilities, health care and social assistance, and forestry and construction sectors.
Every metropolitan area in British Columbia experienced some growth in their median income. Median income growth ranged from 2% or less in Powell River, Port Alberni and Quesnel to over 20% in Cranbrook (+21.8%), Prince Rupert (+23.2%), Terrace (+24.6%), Fort St. John (+27.5%) and Dawson Creek (+31.6%). Vancouver, with a median income of $72,662 in 2015, experienced an income growth rate of 11.2% since 2005, somewhat below the provincial rate.
by Tyler Difley
Buying a home is a momentous occasion in anyone’s life. Thankfully, Canada Mortgage and Housing Corp. has some suggestions that can help you navigate the ins and outs of the home-buying process.
1. Determining if home ownership is right for you
Recognize the real costs of homeownership
Upfront costs (e.g., down payment, closing costs, taxes)
Ongoing costs (e.g., mortgage payments, property taxes, insurance, utilities, condo fees, routine maintenance)
Major repairs (e.g., roof replacement, foundation repair)
Renting vs. buying
There are benefits and drawbacks to both renting and owning a home – make sure you understand them before you decide which option is right for you
2. Determining if you are financially ready to own a home
Calculate how much you are spending on a monthly basis
Calculate how much you can afford to spend on housing each month without putting your financial health at risk
Your monthly housing costs should be no more than 32 per cent of your average gross monthly income
Your monthly debt load should be no more than 40 per cent of your average gross monthly income
Determine the upfront costs
Have you saved enough money to cover a down payment, home inspection and appraisal, insurance costs, land registration fees, prepaid property taxes or utility bills, legal or notary fees, potential repairs and renovations, moving costs, and GST?
3. Financing your home
Get pre-approved for a mortgage
This lets you know how much you can afford, your interest rate and what your monthly mortgage payments will be
You will need the following to qualify for a mortgage
Contact information for your employer
Proof of address
Government-issued photo ID
Proof of income
Proof of down payment (amount and source)
Proof of savings and investments
Details of current debts
Know your credit score
Lenders and brokers will look at your credit history before deciding whether to approve you
Mortgage loan insurance
Required if your down payment is less than 20 per cent of a home’s purchase price
4. Finding the right home
What do you want or need in a home?
Location
Size
Special features
Lifestyle
Forms of homeownership
Freehold
Condominium (strata)
Leasehold
Co-operatives
Start your search
Via word of mouth, social media, newspaper and real estate magazines, visits to new housing developments, real estate websites, “for sale” signs, and/or a REALTOR®
Homebuying professionals that can help
REALTORS®
Insurance brokers
Home inspectors
Appraisers
Land surveyors
Builders or contractors
Lenders or mortgage brokers
Lawyers or notaries
5. Making an offer and closing the deal
Your offer should include
Your legal name, the seller’s name and the address of the property
Purchase price
Amount of your deposit
Any items you want included in the purchase
Closing date
Request for a current land survey
Date the offer expires
Any other conditions
You will need the following information to finalize the details of your mortgage
Legal description of the property
Building specifications
REALTOR.ca listing
Property tax assessment
Appraisal
Home inspection report
Land survey
Heating and utility costs
Condo fees
Signed offer to purchase
Closing day
Take legal possession of your new home
6. Maintaining your home and protecting your investment
Make your mortgage payments on time
You can make your payments weekly, bi-weekly or monthly
Late or missed payments can lead to penalties, and negatively impact your credit rating
Plan for the costs of operating a home
Maintenance and repair costs, security monitoring, snow removal,
gardening, etc.
Live within your budget
If you regularly spend more than you earn, find ways to cut your spending or increase your earnings
Save for emergencies
Set aside an emergency fund of roughly five per cent of your income every year to deal with unexpected expenses
The catch is any buyer will have to move the building off the lot it’s on.
Homes in the flood zones, bought up by the government to encourage people to move out, are up for auction for just one more day.
There are about 25 houses listed, most located in the town of High River, with bids ranging from $1,500 to $100,000 as of Thursday morning.
Winners have 160 days to move the house at their own expense.
Government auction property information link:
https://surplus.gov.ab.ca/OA/ItemList.aspx?keyword=high%20river
For transactions where the seller is a non-resident, our branch's law firm has recently reminded us that the seller must obtain a Clearance Certificate from the Canada Revenue Agency (CRA). If the seller fails to do so, the buyer may be held responsible for any unpaid taxes and penalties owed by the seller.
This tax is generally 25% of the income portion, though specific cases may vary. The application for this certificate must be submitted within 10 days of the transaction closing.
In summary, non-resident sellers should consult with their accountant before listing their property on the market to ensure compliance and avoid potential tax liabilities.
CALGARY, Alberta — Alberta’s premier warned on Thursday that the Western Canadian province faced a $6 billion shortfall in revenue due to deeply discounted prices for its crude oil but offered no specifics on how to prevent falling deeper into the red.
Alberta’s financial forecasts have been thrown into disarray by fast-growing output from its vast oil sands and limited pipeline capacity to move it to markets in the United States and elsewhere. That has pulled the price of a barrel down to less than half that of international benchmark Brent oil.
The situation has prompted Premier Alison Redford and her government to warn of a tough budget on March 7, and raised questions about her ability to meet a promise of erasing its budget deficit in the upcoming fiscal year.
In an eight-minute televised address, Redford explained the reasons for the sharply reduced take from Alberta’s biggest industry and pledged not to raise taxes to make up the difference, but did not say where she will cut spending.
In fact, she made note of strong desire in the province of 3.8 million people for new roads, schools and healthcare facilities.
“Despite falling oil revenues, I give you my commitment that as we deliver our long-term economic plan for Alberta, we will be thoughtful in our approach and we will deliver on these priorities,” she said.
Alberta is Canada’s largest oil-producing province and the largest foreign energy supplier to the United States, and had become used to boom times until the oil market weakened last year.
Redford has been an enthusiastic promoter of TransCanada Corp’s contentious Keystone XL pipeline, which would carry Alberta’s crude to refineries in Texas.
The project took a series of steps forward this week as the governor of Nebraska approved a new route for the long-delayed project through the state and 53 U.S. senators urged U.S. President Barack Obama to approve it. However, Obama’s decision is not expected for several months.
Alberta is considering a host of other potential routes to new markets that could lead to higher returns, but Redford cautioned that long-term solutions will not be quick.
In the meantime, Alberta, which derives 30% of its overall revenue from the oil industry, will be $6 billion short of its revenue target for the upcoming fiscal year, she said.
Recently, the bitumen crude from the oil sands has sold for more than $40 a barrel below U.S. light crude, leading the Bank of Canada this week to also point out the national economy was feeling the effects as well.
“It will take focus and determination over the next several years to open new markets. And that is job one for my government,” Redford said.
The Progressive Conservative government, in power since 1971 and re-elected last year, is being pilloried by its opponents for forecasts they say that have been far too rosy, for relying too heavily on the fortunes of a highly cyclical industry and for tapping debt markets.
“It doesn’t do any good to talk about how we might have pipelines four or five or six years from now,” said Danielle Smith, leader of the opposition Wildrose Party. “What is the plan over the next three or four or five years to get us accustomed to this new reality of lower energy prices and lower revenues?”
Redford was vague as she cautioned about upcoming spending cuts in programs and services “that are not sustainable over the long term.”
“Quite simply, we have to put Alberta’s finances on a more stable footing. A province as prosperous as Alberta should not be as susceptible as we are to swings in the price of oil and gas.”
Figures from Statistics Canada show a net number of 56,000 people moved to Alberta in the first three quarters of 2012, which suggests that a new record could be set once the remaining numbers come in. The net migration figure is the difference between the number of people who moved to Alberta and those who left.
According to ATB Financial, this figure is even greater than what was seen in 2005 and 2006, the years of the last Alberta boom.
"Alberta is the hottest job market in the country and one of the best places in fact in the industrialized world," said Todd Hirsch, senior economist with ATB Financial.
While the booming job market is good news for Alberta, Hirsch warns the population increase will also increase demands on the province's education and health care systems.
Many newcomers are coming to Alberta from outside of the country — over the past six years, the number of immigrants has doubled.
Ronald Smith, a civil designer, has worked at Edmonton-based Stantec for a year after moving from Florida.
Smith was working in a convenience store to pay the bills while he looked for a job in his field, even responding to postings in Australia and the United Kingdom.
"The land development industry dried up so I had to expand my boundaries to look in other places," he said.
Stantec vice-president Keith Shillington says the continuing economic problems in the United States is forcing people to look farther afield for a job.
"As the recession has prolonged down there, we're finding more Americans willing to make the move up to Alberta," he said..
As for Smith, he is enjoying living in Edmonton so far and is happy with the opportunities offered by his new employer.