New Capital Gains Tax Vs. Real Estate Investors

[00:00:00] Welcome to the Canadian Real Estate Investor, where hosts Daniel Foch and Nick Hill navigate

[00:00:06] the market and provide the tools and insights to build your real estate portfolio.

[00:00:13] Welcome back to the Canadian Real Estate Investor podcast and thank you so much for

[00:00:17] joining us.

[00:00:18] My name is Nick Hill.

[00:00:19] I'm joined every Tuesday and Friday morning by my good friend Daniel Foch and today

[00:00:25] we are talking about taxes.

[00:00:28] Yes, we know everyone's favorite topic, but this tax in particular has made a couple news

[00:00:34] headlines lately and it's the new capital gains tax here in Canada.

[00:00:40] I think it continues to make news headlines like I guess they decided to omit it from

[00:00:46] their most recent budget motion in parliament which I don't know seems like there's

[00:00:52] some political stuff going on which I don't understand but they're saying that you

[00:00:56] they want to introduce it as a separate motion so that they can corner the conservative party

[00:01:01] or I don't know honestly that's when I realized when I read all these articles

[00:01:05] about it I was like I obviously don't understand politics at all.

[00:01:08] So anyways, does anyone these days?

[00:01:11] Yeah, the 2024 federal budget has been released and with it a vigorous debate

[00:01:16] and some controversy about the implications of changes to the capital gains tax in Canada.

[00:01:23] Yeah, exactly.

[00:01:24] So what we're going to do in today's episodes, we're going to look at first of all what

[00:01:27] capital gains is then we're going to look at a bit of a history on capital gains.

[00:01:32] Of course, we'll talk about the recent changes made to the tax, why the government will

[00:01:37] be doing this now and of course how it will affect you our fellow Canadians as

[00:01:44] a whole and more specifically investors and even more specifically real estate investors.

[00:01:51] Yeah, so we do have a lot to cover here and I think before we dive in because it's probably

[00:01:55] going to be a little bit of an unwelcome news and information for a lot of people who

[00:01:59] have a lot of equity in real estate.

[00:02:02] We will start things off on a positive note.

[00:02:03] So here is a great review from one of our lovely listeners who is called iTunes

[00:02:08] Reviewer 2.

[00:02:11] We haven't got anything from iTunes Reviewer 1.

[00:02:14] iTunes Reviewer 2, we appreciate you.

[00:02:16] This says, these guys deserve credit for the service they are providing.

[00:02:19] Five stars.

[00:02:21] I wish I found out about this podcast before I started real estate investing.

[00:02:25] I love the deep dives they do on our economy.

[00:02:27] It's the kind of timely information you can't get from a newspaper article or a book.

[00:02:31] If you live in Canada and want to further understand the fundamentals of real estate

[00:02:36] investing, this podcast is for you.

[00:02:38] Keep up the great work.

[00:02:39] Thank you.

[00:02:40] We will keep it up and comments like this really make it worthwhile.

[00:02:44] Nick and I do put a lot of effort into this.

[00:02:47] It probably doesn't sound like it sometimes because it's only an hour that we get you

[00:02:51] for at a time maybe.

[00:02:54] But there is a lot of research and behind the scenes stuff that goes into this and

[00:02:57] producing it.

[00:03:00] Messages like this really make it worthwhile.

[00:03:01] So keep patting us on the back.

[00:03:05] It makes us feel like a couple of good boys.

[00:03:09] Every dog deserves the pets.

[00:03:11] Yeah, totally.

[00:03:13] Exactly.

[00:03:14] We love it.

[00:03:15] And again, we will keep it up.

[00:03:16] These reviews, they mean the world to us.

[00:03:19] They really do put a smile on our face.

[00:03:21] It's one of the reasons that we keep going.

[00:03:23] It's one of the reasons that we read them on the show as well, hoping to get

[00:03:27] more.

[00:03:28] And it's the reason that you tune in from beautiful Italy, which you are in right

[00:03:32] now.

[00:03:33] Yes.

[00:03:34] This is now forever will be known as not only the Capital Gains episode, but

[00:03:37] the Italian episode.

[00:03:38] There you go.

[00:03:39] I kind of like that movie, The Italian Job.

[00:03:42] Have you been driving a Mini Cooper around?

[00:03:44] Well, well, let's say that we'll do a full debrief because you've been in New

[00:03:48] York since I've been gone.

[00:03:49] And I think we both have some cool stories to share.

[00:03:51] So we've got a lot to get through here.

[00:03:54] So we'll do it.

[00:03:55] Yeah, fair enough.

[00:03:56] Yeah.

[00:03:57] We'll get back to the Capital Gains then.

[00:03:59] So let's start off with what Capital Gains is.

[00:04:01] Since you're so good at explaining things, Nick, can you tell me a little

[00:04:04] bit about what it is?

[00:04:06] Thanks for the flattery.

[00:04:07] Of course, I can.

[00:04:08] Capital gains are essentially the profits realized from a sale of an asset when

[00:04:15] the selling price exceeds the purchase price.

[00:04:18] So for instance, we use a simple stock investing example here.

[00:04:23] So purchasing, let's say 100 shares of a company at 90 dollars each,

[00:04:27] totaling a nine thousand dollar investment and then later selling them at

[00:04:30] one hundred dollars each would result in a one thousand dollar profit that

[00:04:34] would qualify as a capital gain.

[00:04:37] But of course, capital gains apply to more than just the profitable selling of

[00:04:41] stocks or shares in companies.

[00:04:43] Capital gains are the profits from a sale of an asset or this might

[00:04:50] interest some of you, a capital property.

[00:04:53] Yeah, exactly.

[00:04:53] So other than securities such as stocks, bonds or mutual funds, common

[00:04:58] types of capital properties include cottages, land buildings or even

[00:05:02] equipment or like vehicles that you would use to run a business or a rental

[00:05:07] operation. So rental properties and that's according to the Canada Revenue

[00:05:11] Agency's website.

[00:05:12] So in simple terms, you get taxed on the capital, the money that is gained

[00:05:18] from selling an asset.

[00:05:20] And a lot of people in Canada like to invest for capital gains, for

[00:05:24] capital appreciation because our market has gone up in value for a long time.

[00:05:30] There are some situations that do not trigger capital gains, such as selling a

[00:05:33] principal residence for more than you paid or profits made in various tax

[00:05:37] sheltered vehicles such as RRSP's, RRIF's or RESP's and I guess as well

[00:05:42] now the TFSA and the first home savings account.

[00:05:47] I'll tell you what, I got some RESP-ECT for those tax sheltered

[00:05:53] investment vehicles.

[00:05:54] That was good.

[00:05:56] I like that actually.

[00:05:57] OK, nice. Good, good.

[00:05:59] I was hoping you were going to sing again, though.

[00:06:00] Like, yeah, only very occasionally.

[00:06:05] Now, before we go into the recent changes and all the good stuff that

[00:06:09] we're going to talk about, let's go all the way back and look at a history

[00:06:12] of capital gains in Canada.

[00:06:15] The introduction of capital gains was not unique to our beautiful country.

[00:06:22] The United States adopted such a tax way back during the 1860s to support

[00:06:28] the Civil War and the United Kingdom did this similar thing in the 1960s

[00:06:35] in order to fund social security initiatives that they were working on back then.

[00:06:40] So from its inception in 1972 until 1988, Canada taxed 50 percent

[00:06:47] of capital gains at the individual's top marginal rate.

[00:06:52] This inclusion rate increased to 66.67 percent.

[00:06:57] Kind of weird that it's 666.

[00:06:59] I feel like that number has got some negative connotation.

[00:07:01] Two-thirds just inconveniently ends up there always.

[00:07:08] So that inclusion rate increased to 66.67 percent in 1988

[00:07:13] and to 75 percent in 1990.

[00:07:17] This lasted about a decade.

[00:07:19] And in February of 2000, the rate was reduced to down to two-thirds,

[00:07:24] which lasted until October of 2000, where it was dropped back down to the 50 percent

[00:07:29] that we all know and I was going to say no and love, but I'm sure we don't love it.

[00:07:33] That we all know today where it remained up until these recent proposed changes

[00:07:39] that came out in the new federal budget.

[00:07:41] Now, at one point, there was a temporary relief through exemptions.

[00:07:45] The Canadian government also experienced with or experimented

[00:07:48] with capital gains exemptions.

[00:07:49] In 1985, a one-time exemption allowed individuals to exclude up to 100,000

[00:07:54] capital gains from their taxable income throughout their lifetime.

[00:07:56] However, the exemption was discontinued in 94, aligning with broader tax strategy adjustments.

[00:08:02] So this brings us to today's reality and the recent changes laid out

[00:08:06] in the federal budget for 2024, where the government's intention

[00:08:11] to increase the inclusion rate on capital gains realized annually above

[00:08:16] 250,000 by individuals and on all capital gains realized by corporations

[00:08:22] and trusts from one half to two thirds by amending the Income Tax Act

[00:08:27] effective June 25th, 2024.

[00:08:30] OK, that was a bit of a mouthful.

[00:08:32] So what does that mean?

[00:08:34] Well, it means that capital gains realized by corporations

[00:08:38] and trust will now be subject again to that two thirds,

[00:08:41] that 66.67 percent capital gains inclusion rate instead of just that one half,

[00:08:47] that 50 percent that we've experienced for the last two plus decades.

[00:08:51] Individuals with a capital gain of more than 250,000 will also pay tax at a higher rate.

[00:09:01] Now, let's go through this chart that we've got here comparing

[00:09:05] capital gains under the old tax regulations,

[00:09:08] the new tax regulations and the delta between them now.

[00:09:11] Dan, I'm going to get your your Mr.

[00:09:13] chart, so I'm going to get you to go through this.

[00:09:15] And for all of you listening, if you want a visual on this,

[00:09:18] Dan's posted it in a few different places.

[00:09:20] And it's also on a YouTube video that he produced for our course and community

[00:09:24] realist dot CA. So, Dan, over to you, can you walk us through

[00:09:27] maybe some of the highlights here?

[00:09:29] Maybe start at the kind of the beginning and we'll jump into the middle

[00:09:32] and in the end.

[00:09:33] Yeah, I just want to make it clear if it hasn't been clear already

[00:09:37] that the 66.67 percent, the two thirds is the inclusion rate.

[00:09:43] So over two hundred fifty thousand dollars,

[00:09:46] two thirds of the capital gain that you make gets included

[00:09:49] in or like in your income that you have to pay tax on.

[00:09:53] And so you're taxed at your income tax rate at that point.

[00:09:58] And so assuming you're in the top tax bracket

[00:10:00] and you've already paid 52 or you're already paying

[00:10:03] 52 percent tax on your income tax.

[00:10:05] So that would be provincial and federal in the province of Ontario at 52.

[00:10:09] You would be paying

[00:10:12] let's let's we'll start with three hundred thousand,

[00:10:14] which is just over that two hundred fifty thousand dollar hurdle,

[00:10:16] because you'll see that the the delta gets bigger.

[00:10:19] As the two hundred fifty thousand portion becomes a smaller amount

[00:10:23] of the total capital gain.

[00:10:25] So at three hundred thousand before it was seventy eight thousand.

[00:10:29] And now it's just over eighty two thousand for an increase of about five point

[00:10:33] three three percent.

[00:10:35] If you go up to a million dollars

[00:10:38] before it was two hundred and sixty thousand tax obligation,

[00:10:41] now it's a three hundred twenty two thousand dollar tax obligation

[00:10:44] for an increase of about 24 percent.

[00:10:46] Yikes. Yeah.

[00:10:47] If you go up to one point five million,

[00:10:51] it was a three hundred ninety thousand dollar capital gain

[00:10:54] tax obligation before and it would increase twenty six point six seven percent

[00:10:59] to four hundred ninety four thousand.

[00:11:02] So you can see again that the increase

[00:11:05] gets larger the further away from that two hundred fifty thousand dollars

[00:11:09] you get. And that's that's just assuming on an individual basis.

[00:11:12] On a corporate basis, the the the two hundred fifty piece

[00:11:17] would be erased. Right.

[00:11:19] So because you just pay you pay the heightened capital gains on

[00:11:22] on all gains in a corp.

[00:11:26] Not like there's no two hundred fifty thousand dollar hurdle,

[00:11:28] which is interesting because a lot of people,

[00:11:33] a lot of people say, should I invest as an individual or a corporation?

[00:11:37] And it just became less compelling now to invest as a corporation.

[00:11:41] Yeah, exactly. And I mean, this this chart

[00:11:45] as a lot of the charts and graphics that we've been discussing

[00:11:47] on the show for the last few years is kind of scary and it's not great.

[00:11:51] I mean, it starts to change quite a bit.

[00:11:53] So I guess the next question we're going to try to answer is

[00:11:55] why would the government do this?

[00:11:58] Well, simply put, they need money.

[00:12:02] And hey, don't we all?

[00:12:03] And this tax is set to bring in

[00:12:07] just less than 20 billion dollars.

[00:12:10] The government's, I think, projected 19.3 billion

[00:12:14] is the number that they're working with.

[00:12:16] And they say that it'll only impact the wealthiest of Canadians.

[00:12:20] They're projecting between somewhere between I think it was as low

[00:12:24] as 35 and as high as 50,000 Canadians.

[00:12:27] Yeah. So that will all get into it because I analyze this

[00:12:31] pretty, pretty thoroughly in my sub stack.

[00:12:34] But let's start with the government's summary on the tax.

[00:12:37] So this comes from their website, Tax Fairness for Every Generation.

[00:12:41] A new page on the Department of Finance website says to make Canada's system

[00:12:44] more fair, the inclusion rate or the portion of capital gains

[00:12:47] on which tax is paid for capital gains for individuals

[00:12:50] with more than two hundred and fifty thousand dollars in capital gains

[00:12:53] in a year will increase from one half to two thirds.

[00:12:57] Individuals will continue to pay only pay tax on 50 percent

[00:13:00] of any capital gains up to two hundred fifty thousand per year.

[00:13:04] The inclusion rate will also increase to two thirds for all capital gains

[00:13:08] realized by corporations and trusts.

[00:13:10] The new rules will apply to capital gains realized on or after June 25th, 2024.

[00:13:15] And that last line is pretty important.

[00:13:17] And it's been kind of contentious because you're seeing this rush

[00:13:20] to sell for people, a lot of people trying to lock in that capital gain.

[00:13:24] And I've heard like two sides of the story.

[00:13:27] So I've heard some people arguing that they mean

[00:13:31] that its capital gains earned after 20 after the 25th.

[00:13:35] But then I had somebody kind of explain to me that it says the word realize.

[00:13:39] So it's like if you sell after that date, then you realize the gains is not

[00:13:43] not whether or not you earned it.

[00:13:44] So they're like the rush to sell and you're seeing a lot of M&A

[00:13:48] activity rushing to try and get executed by that date

[00:13:52] because there's, you know, at at these higher

[00:13:55] multi-million dollar amounts, the difference is like 20 to 30 percent

[00:13:59] increase in tax. Right.

[00:14:00] So on one of, you know, five hundred thousand dollar tax bill,

[00:14:05] it's an extra 100 K or.

[00:14:07] Yeah. Yeah.

[00:14:08] So those big, big chunk of change. Right.

[00:14:11] And as previously mentioned, this isn't new.

[00:14:14] Right. Back in the 90s, the capital gains tax inclusion rate

[00:14:18] increased from 50 percent to 66 percent and then all the way up

[00:14:22] to 75 percent for quite a while.

[00:14:25] It's among the long list of factors included in discussion

[00:14:28] about the brutal recession that Canada faced in the 1990s

[00:14:32] with several tax increases that were instituted by the federal government

[00:14:36] between 1989, great year, and 1995

[00:14:40] that are thought to have a negative effect on GDP growth and productivity.

[00:14:47] And Dan, you and I have been posting some some great interactive

[00:14:50] charts that really visualize the negative impacts

[00:14:54] and the lack of of GDP per capita in Canada over the last few years

[00:15:00] and few decades.

[00:15:01] Yeah, I think a lot of people anticipated seeing a wealth tax

[00:15:06] in this budget.

[00:15:07] And so the objective of the of a wealth tax would be

[00:15:12] really balancing out the disparate economic gap

[00:15:16] that we're seeing between older generations who baby boomers

[00:15:20] who hold a lot of the real estate assets in this country

[00:15:23] and the struggling millennials in Generation Z.

[00:15:27] And so on brand with that messaging, the tax is positioned as a tax

[00:15:31] on the top zero point one three percent of Canadians,

[00:15:34] which I think is a bit disingenuous way to put it.

[00:15:39] They say, you know, next year, 28.5 million Canadians

[00:15:42] are not expected to have any capital gains incomes

[00:15:44] and three million are expected to earn capital gains

[00:15:47] below the two hundred and fifty thousand dollar annual threshold.

[00:15:50] Only zero point one three percent of Canadians

[00:15:53] with an average income of one point four two million are expected

[00:15:57] to pay more personal tax,

[00:16:00] personal income tax on their capital gains in any given year.

[00:16:02] It's like it's hard to explain this

[00:16:07] in the way that they're trying to use that small fraction of a percent.

[00:16:11] But they're basically saying that, like the number that you mentioned,

[00:16:14] you know, 40 to 50 thousand people per year are realizing a capital gain.

[00:16:19] And so on a per year basis, they're not wrong that it's,

[00:16:24] you know, it's zero point one three percent.

[00:16:26] But the point is, how many people did they just impact

[00:16:29] who have that large of a capital gain pending? Right.

[00:16:34] And my argument would be a lot, which I'm going to

[00:16:37] I'm going to like we'll break it down because we're going to go

[00:16:40] through the substack here.

[00:16:41] But I think the it's just it's just fascinating from my perspective

[00:16:45] to position it that way, especially heading into, you know, baby boomers

[00:16:51] in retirement, many of whom depend on these assets

[00:16:55] who are going to be real.

[00:16:56] I mean, like it's clear that it's politically and economically

[00:17:00] convenient because they know that that generation will likely

[00:17:05] have to sell and then realize a capital gain.

[00:17:10] And they're going to get more tax revenue from it.

[00:17:12] Yeah, exactly.

[00:17:13] I mean, they're implying that that again, that zero point one three percent,

[00:17:18] that 40 to 50 thousand of the population will sell an asset

[00:17:21] and realize that capital gain.

[00:17:22] That it will be substantial enough in size to be impacted

[00:17:26] by this new tax policy.

[00:17:28] So based on this and Dan, you ran some numbers on this.

[00:17:32] They're stating that just over 50,000.

[00:17:35] So 53,000 Canadians will realize a qualifying capital gain

[00:17:40] that would push them over that two hundred and fifty thousand

[00:17:43] dollar annual threshold, assuming that they're basing this

[00:17:46] on an average of capital gains filings of that size over the last few years.

[00:17:51] And again, these are assumptions.

[00:17:52] I guess we maybe should have had another disclaimer in this.

[00:17:55] You know, neither of us are accountants or or tax strategy experts.

[00:17:59] So this is far from financial advice.

[00:18:02] We are just doing our best here to make this as clear and concise.

[00:18:06] It's a complicated topic.

[00:18:07] So go and we're just more accountants.

[00:18:10] We're just the bearers of bad news. That's it.

[00:18:12] I know. I get shot at.

[00:18:14] It's going to be nice when we can talk about some some positive stuff

[00:18:17] on the show. We always try to mix in some positive stuff, but anyway, back to it.

[00:18:22] Yeah, like I don't really have a problem with an actual wealth tax.

[00:18:26] And I know like I've been called that.

[00:18:28] I think somebody called me a commie in our reviews here for saying

[00:18:31] for being empathetic to

[00:18:34] we're not even empathetic to, but I guess just saying that I understood

[00:18:38] why the government banned airbnbs in in B.C..

[00:18:42] But I don't like I don't think a wealth tax is that bad of an idea.

[00:18:49] I think this policy falls short of that a little bit.

[00:18:52] And I think it ignores some negative economic externalities

[00:18:56] that could be created by it.

[00:18:59] So I mentioned pending capital gains, and I think that this

[00:19:02] ignores pending capital gains, which is a key friction factor

[00:19:05] in Canada's housing market.

[00:19:06] So the rich, in quotes, people that they're allegedly

[00:19:09] targeting hold most of the houses and frankly, most of them

[00:19:12] are not actually rich and certainly not in the top

[00:19:16] zero point one three percent, which is kind of the way it's being positioned.

[00:19:19] You know, like they said, oh, it's people who have a one point

[00:19:21] four million dollar average income.

[00:19:23] It's like, yeah, well, that's because 53000 people

[00:19:26] who realize a capital gain in that one year, their income is obviously

[00:19:29] going to be obscenely high in that one year because all the capital

[00:19:32] gains got added to their income.

[00:19:33] So like it there's this book called How to Lie with Statistics, and

[00:19:38] it's very on brand.

[00:19:39] I think we should we should change it to how to lie with changing

[00:19:43] definitions, because that seems to have been a big play

[00:19:46] for our government and our friends south of the border

[00:19:50] over the last few years, where it's just let's just

[00:19:53] let's just alter this the definition of this word.

[00:19:55] Yeah, recession, recession,

[00:19:57] defined rich, right? Exactly.

[00:20:00] Yeah, so I think I think it's kind of funny.

[00:20:02] The the threshold and I guess the size of it,

[00:20:07] like it's almost like they're afraid of like they're not

[00:20:09] they're not proud of their tax. Right.

[00:20:11] It's like if you're going to do it, like say that it impacts

[00:20:14] a lot of people, right?

[00:20:16] If you're actually serious about

[00:20:18] taxing the rich or whatever it is, right, or putting in a wealth tax.

[00:20:21] So anyway, I I think that

[00:20:25] a large portion of people would appear in that tax bracket for one year

[00:20:28] when they sold an asset and realized those capital gains,

[00:20:30] which are taxed at their income tax rate for that year.

[00:20:33] So in that year, you would become one of the fifty three thousand people

[00:20:37] in the zero point one three percent if you sold a real estate asset

[00:20:41] and realized a capital gain more than two hundred fifty thousand dollars,

[00:20:43] which is not uncommon in Canada.

[00:20:46] Recent data provided by Statistics Canada indicates

[00:20:49] that a significant portion of all residential properties in Ontario,

[00:20:51] B.C., Nova Scotia and New Brunswick were owned by individuals

[00:20:55] or entities possessing multiple properties.

[00:20:58] So we know that there's a large amount of people

[00:21:03] who who have a second home, a large amount of individuals

[00:21:07] who have either a cottage or an investment property

[00:21:09] who would be subject to having to pay capital gains because they're not exempt.

[00:21:13] As soon as you own two properties, one of those two properties is not exempt

[00:21:16] because it's not your primary residence.

[00:21:18] The percentage of the housing stock owned by these multiple property

[00:21:21] owners varied from twenty nine to forty one percent

[00:21:26] on a province by province basis.

[00:21:27] So a large portion of housing stock owned by by investors.

[00:21:33] Let's call it. Yeah, exactly.

[00:21:36] And and from our findings, the average home,

[00:21:39] the average ownership length of a property in Canada seems to be around

[00:21:43] the five to seven year mark when including both investment

[00:21:48] and primary residence.

[00:21:50] Now, that data point is likely skewed a little bit down by primary residence,

[00:21:55] obviously where people probably tend to spend longer.

[00:21:58] But even if we assume five years, which would be a short timeline

[00:22:02] for investment property, the average Canadian house price has gone up

[00:22:05] almost 40 percent in that period of time,

[00:22:09] from about four hundred and forty five thousand to seven hundred

[00:22:14] and eighteen thousand with an average capital gain of two hundred

[00:22:17] and seventy three thousand dollars, tragically or conveniently

[00:22:23] above the two hundred fifty thousand dollar annual threshold.

[00:22:26] Now, be mindful that this is an average and much of those gains

[00:22:30] will likely be higher.

[00:22:33] So this means that on average, assuming a very short investment

[00:22:36] horizon, which would be like, I mean, most investors

[00:22:40] probably have the objective of holding longer than that.

[00:22:42] A lot of the property sitting on the market would have gains

[00:22:46] above the two hundred fifty thousand dollar threshold, meaning

[00:22:49] their tax burden is increasing as of the 25th.

[00:22:53] Combining this data in sort of a statistically improper way, I

[00:23:00] thought it would be reasonable to guess that somewhere around

[00:23:02] 10 to 20 percent of Canadian real estate would have a pending capital gain

[00:23:06] that just got significantly more expensive, like at least

[00:23:10] based on that table that we presented earlier.

[00:23:12] At least five percent more expensive to liquidate at, you know,

[00:23:17] and then creeping up to for the some of the bigger properties,

[00:23:20] creeping up to 20 percent more expensive to liquidate.

[00:23:23] Yeah. And I mean, that's again talk about serious chunks of change.

[00:23:26] Right. But this multiple property owner statistic

[00:23:30] just measures the names that appear on one more property

[00:23:35] title and excludes other key factors, i.e. corporations.

[00:23:41] Yeah. So in the original quote above that we read from the

[00:23:44] Government of Canada website, Tax Fairness for All Generations,

[00:23:47] it also mentions that the inclusion rate will increase to two thirds

[00:23:50] for all capital gains realized by corporations and trusts.

[00:23:54] So CMHC's 2016 rental market survey found that after individual investors,

[00:23:59] which is the biggest 49.3 percent of owners,

[00:24:03] rental ownership is very much dominated by private corporations

[00:24:06] owning thirty nine point seven percent of rental apartment units.

[00:24:09] So the multi property owners that we mentioned before is about

[00:24:13] forty nine point three percent.

[00:24:15] And then private corps, so small corporations like you and I

[00:24:18] would start to own a rental property, own 40, just shy of 40

[00:24:22] percent of rental apartment units.

[00:24:25] And they just saw an increase

[00:24:27] of the inclusion rate on 100 percent of their capital gains.

[00:24:31] No two hundred fifty thousand dollar hurdle.

[00:24:33] Statistics Canada found that in Ontario, three quarters or 75 percent

[00:24:37] of non individually owned properties are held by corporations

[00:24:42] compared to sixty eight point nine percent in Nova Scotia and fifty

[00:24:46] seven point three percent in British Columbia.

[00:24:48] The share for non individual owned properties held by governments

[00:24:52] is highest in British Columbia, thirty nine percent,

[00:24:55] followed by Nova Scotia, twenty three percent and Ontario, 20 percent.

[00:24:59] I'm not being selective by choosing those provinces, by the way.

[00:25:03] That's just all the data set included.

[00:25:05] Statistics Canada also states that the share of housing held by corporations

[00:25:08] and institutions for Ontario was seven point six and British Columbia

[00:25:12] 10 percent, and that's for housing.

[00:25:15] So not all not all properties, which is what I mentioned before,

[00:25:18] because any commercial stuff is going to be owned by corps.

[00:25:21] And it didn't say whether or not it's the number of properties

[00:25:25] or the total dollar value of the properties

[00:25:27] that is cut up in those percentages prior.

[00:25:30] So I use the lower statistic in this analysis, which was the seven point six

[00:25:33] and 10 percent in Ontario and B.C.

[00:25:36] And that was just for housing.

[00:25:38] And those are the only provinces for which that data was available.

[00:25:41] Yeah, exactly. We don't play favorites here.

[00:25:43] We just work with what we can find, everybody.

[00:25:45] But let's go back to that seven point six percent figure.

[00:25:48] And let's be generous and take that seven point six percent

[00:25:52] Ontario figure, adding that to the ten percent

[00:25:57] of multi property owners who likely would realize the capital

[00:26:01] gain above the two hundred and fifty thousand dollar threshold.

[00:26:04] It wouldn't be unreasonable to assume that somewhere between five

[00:26:08] and 10 percent of all housing in Canada just saw their tax burden

[00:26:13] of their pending capital gain increase by eight percent.

[00:26:19] Let's say approximately eight percent.

[00:26:21] Again, these aren't hard numbers.

[00:26:23] This is just the dance out here doing God's work,

[00:26:27] putting this stuff together for us.

[00:26:29] Yeah. And so it's worth remembering that it is being positioned as a tax

[00:26:32] for the zero point one three percent.

[00:26:35] And honestly, I think that by, you know, like with the wealth tax piece,

[00:26:41] by increasing the tax burden of selling real estate,

[00:26:45] I think they found a great way to make sure that fewer individuals

[00:26:48] in Canada sell properties and realize a capital gain above two hundred

[00:26:52] and fifty thousand dollars after June 25th, 2024.

[00:26:55] They've all they've been all but disincentivized

[00:26:58] to to sell. And I'll explain why in a second.

[00:27:02] Existing supply is owned for the most part by legacy real estate

[00:27:04] owners like the ones that I mentioned before.

[00:27:06] Many of these investors are older.

[00:27:08] They purchased properties a long time ago and they depend on their assets,

[00:27:11] cash flow and capital gains as part of their retirement plan.

[00:27:15] Yeah, exactly. I mean, look, I mean, Dan, you and I don't have,

[00:27:18] you know, pensions, right?

[00:27:19] I know a lot of pensions are kind of on their way out.

[00:27:21] And I know a lot of people took their,

[00:27:24] quote unquote, pensions into their own hands.

[00:27:26] And this was part of their retirement plan.

[00:27:28] And, you know, these investors are regularly demonized for,

[00:27:33] you know, quote unquote, hoarding assets, houses, right?

[00:27:37] They could otherwise have been purchased.

[00:27:39] But here's the kicker.

[00:27:41] This tax could exacerbate that same,

[00:27:45] quote unquote, house hoarding problem.

[00:27:47] Switching costs were already a leading factor

[00:27:51] in the prohibitive leading prohibitive factor in the resale

[00:27:56] supply reaching the Canadian housing market.

[00:27:59] Right. It's expensive to buy and sell and transact here.

[00:28:02] Those switching costs just got a hell of a lot more expensive for many investors.

[00:28:08] Let's pause here and ask ourselves, why would an investor sell?

[00:28:12] Now, Dan, you've kind of got two different scenarios here.

[00:28:16] Run me through them.

[00:28:17] Sure. So and I'm going to ask you because I polled my audience on Twitter

[00:28:22] and Instagram about this, and the result was pretty clear.

[00:28:25] So let's assume that you I want to know what your answer is.

[00:28:28] So let's assume that you bought a property for a dollar.

[00:28:31] And, you know, I mean, obviously, that's an extreme example.

[00:28:34] But who knows?

[00:28:34] Boomers were buying properties for like 35 grand and a goat back in the day.

[00:28:38] Right. So let's say you bought a property for a dollar

[00:28:41] and now it's worth one million dollars.

[00:28:43] Obviously not in a likely scenario, but an easy one to illustrate for math,

[00:28:46] especially spoken math.

[00:28:47] So you have two options.

[00:28:49] Number one is you sell the asset.

[00:28:50] Number two is you keep the asset.

[00:28:52] So let's look behind door number one door.

[00:28:54] Number one, you sell the asset.

[00:28:56] You pay switching costs of five percent plus HST, give or take for commission,

[00:29:00] legal fees, mortgage discharge penalties, etc.

[00:29:02] And you realize a capital gain of I put in those costs at seven seventy five

[00:29:06] thousand dollars. So you realize a capital gain of nine hundred and twenty five thousand.

[00:29:09] You now pay about two hundred and seventy five thousand to three hundred

[00:29:12] and twenty five thousand in capital gains, assuming you're in the top

[00:29:14] top tax bracket and obviously closer to the three

[00:29:19] hundred and twenty five thousand number if you're a corporation without the

[00:29:22] two hundred and fifty thousand dollar exemption.

[00:29:24] So assuming this step up is about eight percent higher tax amount

[00:29:28] more than what you would have paid before, which is what I've gathered from

[00:29:33] accounting professionals. So in this example, you would net from this sale

[00:29:39] six hundred to seven hundred thousand dollars, let's say behind door

[00:29:41] number two, you can keep the asset provided you have enough equity

[00:29:44] in the property and it can cash flow above a debt service coverage ratio

[00:29:48] of let's say one point two five percent, which is what a lot of lenders are

[00:29:51] expecting rental properties to debt service at today.

[00:29:54] You can conservatively get a mortgage on the property for seventy percent loan

[00:29:58] to value. I didn't even go to 80 percent because I think that that we're

[00:30:01] not in that lending environment today, allowing you to take seven hundred

[00:30:05] thousand dollars, conveniently very similar number to the other number.

[00:30:09] You can take seven hundred thousand dollars in equity out of the property.

[00:30:12] The cash flow from renting this property would cover the mortgage

[00:30:17] in this scenario.

[00:30:18] You would net a similar amount of six hundred thousand to seven hundred

[00:30:22] thousand dollars and you'd get to keep the asset with the three hundred

[00:30:26] thousand dollars in equity against it, which you would have otherwise paid

[00:30:30] in tax. You may also invest the capital that you got from refinancing

[00:30:33] asset and tax deduct the interest cost against the investment returns,

[00:30:37] which is something known as the Smith maneuver.

[00:30:38] And we have an email thread going with the Smith maneuver guy who

[00:30:42] worked by him on the show because probably like I've never been a huge

[00:30:45] fan of it because I think it's a little complex for the average person,

[00:30:48] but it is becoming like through in this example, it is becoming

[00:30:52] probably a more valuable strategy.

[00:30:55] So it is a legal tax strategy that allows your mortgage interest payments

[00:30:58] to become tax deductible against income earned on the capital

[00:31:02] that you got from that.

[00:31:03] So if you're asking me which door I'm walking through

[00:31:07] or which door I'm choosing, I'm like kicking down door

[00:31:11] number two, which is keeping the asset because,

[00:31:13] you know, laid out simply like this.

[00:31:16] And again, these these numbers aren't accurate.

[00:31:19] But for simple spoken mass sake, it makes way more sense

[00:31:24] to keep the asset. Apparently, I'm not the only one because the vast majority

[00:31:27] of investors would rather keep their asset than sell it.

[00:31:29] And we know this from anecdotally and anecdotally asking

[00:31:34] investors that we speak to across the country within our realist

[00:31:38] dot C a course in community, as well as you said, Dan, running a few

[00:31:41] polls on social media.

[00:31:43] And it was an overwhelming keep the asset and do the refi

[00:31:49] basically get the same amount of money out and still be able to hold

[00:31:52] the asset asset with a decent amount of equity in it.

[00:31:57] Yeah, I and I think that is going to provide housing

[00:32:02] in the long term.

[00:32:03] But if their goal was to get a lot of these like

[00:32:08] because I think that there's a certain political faction

[00:32:11] that calls like investors, like house hoarders.

[00:32:13] It's like, OK, well, now they're going to hoard them longer

[00:32:15] because they have an increased incentive to do so.

[00:32:18] And ideally, they would want that to become rental supply

[00:32:21] because like they likely will.

[00:32:23] A lot of the speculators, I think, are in a different position.

[00:32:26] And hopefully it will discourage speculation.

[00:32:28] Like honestly, I do.

[00:32:28] I am hopeful that certain things will be accomplished by this policy.

[00:32:33] But it's not going to be a major supply creator.

[00:32:37] If anything, it's actually going to be a resale supply destroyer

[00:32:41] by incentivizing people to hold the way that we just described.

[00:32:45] So in the meantime,

[00:32:48] unfortunately, there's probably a chance that there might be

[00:32:51] a bit of a race to the exit for sellers who want to get out

[00:32:54] before that capital gain tax rate increases on June 25th.

[00:32:58] And it's funny because, you know, Canada isn't the only country

[00:33:02] to increase capital gains either.

[00:33:04] I mean, I guess we're the only ones who have actually done it.

[00:33:06] But President Biden's seven point three trillion dollar

[00:33:09] twenty twenty five budget released last month proposes several tax changes

[00:33:12] aimed at wealthier taxpayers, including a minimum tax on billionaires

[00:33:16] and nearly doubling of the capital gains tax rate

[00:33:19] and also an increased Medicare tax rate.

[00:33:21] And so for them, so in the US, just for comparison, by the way,

[00:33:24] in the US, your capital gains is already at 100 percent inclusion.

[00:33:28] So we're only talking about the inclusion rate here in Canada.

[00:33:30] And our tax rates obviously higher for capital gain,

[00:33:33] assuming it gets added to your income and then your income,

[00:33:36] you pay income tax on it.

[00:33:37] But it was only 50 percent of your capital gain

[00:33:39] that got added to your income before.

[00:33:41] Now it's two thirds that got gets added to your income.

[00:33:44] And then it just depends on, you know, if it's a big capital gain,

[00:33:46] you assume the highest tax rate and then it gets starts getting expensive.

[00:33:50] But in the US, it was always 100 percent of capital gain was taxable.

[00:33:54] And they're trying to increase that now to 44.

[00:33:57] He's not actually trying, but he's proposed verbally

[00:34:00] that they're going to increase that to 44 percent.

[00:34:01] I don't know if I see it actually happening.

[00:34:03] But you could see some increase.

[00:34:04] I mean, all of these governments now have realized that revenue is necessary.

[00:34:10] Yeah, crazy. What a what a thought.

[00:34:12] I, you know, I mean, again, I just you're right.

[00:34:15] Nothing's happened yet down down in the good old US of A.

[00:34:18] But just even the proposed increase has has ruffled

[00:34:23] a lot of feathers the wrong way.

[00:34:25] And it's almost like taxes are being raised now to pay off

[00:34:28] all the crazy amounts of debt that was accumulated over the last few years

[00:34:32] with cheap interest rates and reckless money printing.

[00:34:35] But hey, what do I know?

[00:34:36] I mean, I remember when we were talking about the the US debt ceiling

[00:34:40] and the government was about to shut down and all this crazy stuff.

[00:34:43] Right. I mean, all I do know is that I don't think this is good for investors.

[00:34:50] I don't think it's great for entrepreneurs

[00:34:54] and maybe the immediate future of our country, because this is a major,

[00:34:58] as we've said, disincentive for people to build wealth here.

[00:35:02] And it's had a backlash in other industries than just real estate.

[00:35:06] Here's something from the tech sector.

[00:35:09] I'm going to read a quick quote here.

[00:35:10] My phone was exploding with text from leaders across the country saying,

[00:35:14] this is a nightmare. You have to fix this.

[00:35:17] They don't know what they're doing.

[00:35:20] And that is from Mr.

[00:35:21] Benjamin Bergen, who is the president of the Council of Canadian

[00:35:25] Innovators Industry Group.

[00:35:27] And at the crux of the complaints, he feels he was feeling that

[00:35:31] the potential change would encourage entrepreneurs to open their businesses

[00:35:35] elsewhere and push workers into the sector in the sector.

[00:35:38] This is the tech sector away from Canada

[00:35:42] as they try to avoid paying more tax when cashing in on their stock options.

[00:35:47] So, again, not a good thing.

[00:35:51] Yeah, it's definitely not.

[00:35:52] It's not growth forward or business forward.

[00:35:54] But I mean, the reality is like Western governments do have a lot of revenue

[00:35:58] to generate to pay for a lot of these past expenses and future expenses.

[00:36:03] I mean, there's this idea.

[00:36:04] It's a theory. It's called modern monetary theory.

[00:36:07] But the idea is that, you know, as a government, you and everyone's like,

[00:36:10] oh, no, no government's actually doing modern monetary theory,

[00:36:13] believes in modern monetary theory.

[00:36:14] And it's like, well, they might not.

[00:36:16] But but it they're behaving in a way that now is coming full circle.

[00:36:21] It seems a lot like that.

[00:36:23] So modern monetary theory is basically the theory that you can spend

[00:36:26] a bunch of money as a government, any government who's in control

[00:36:29] of their own currency.

[00:36:30] So like, you know, there's they have a central bank

[00:36:33] and they can issue their own currency.

[00:36:36] The central bank can issue their own currency.

[00:36:38] A government can spend

[00:36:41] money and all of that money gets circulated in the economy.

[00:36:46] So if I'm, you know, the government, I do a bunch of infrastructure projects

[00:36:49] and then a bunch of infrastructure guys get paid.

[00:36:52] And then they have that money and then they go buy jet skis

[00:36:55] and then, you know, marinas make money and whatever.

[00:36:57] And, you know, it all becomes a circle. Right.

[00:36:58] And and then eventually this becomes this economically productive thing.

[00:37:05] All this government spending becomes economically productive.

[00:37:07] The idea is.

[00:37:09] And then once it's that money's had time to circulate

[00:37:12] in the economy for a little bit and earn a return and grow the economy,

[00:37:16] then you tax it back out.

[00:37:18] That's how modern monetary theory sort of works.

[00:37:22] And we literally did see this happen in Canada, where you saw

[00:37:26] you seen a bunch of money being pumped into infrastructure,

[00:37:29] housing, et cetera, our economy.

[00:37:31] We talk a lot about it.

[00:37:32] Our economy is really exposed to housing and real estate.

[00:37:35] And it and we also saw interest rates being extremely low.

[00:37:40] It created a lot of wealth for

[00:37:44] for Canadians who own real estate.

[00:37:46] And that's that that economic productivity part.

[00:37:51] And now it's time for that wealth to be taxed out.

[00:37:54] How else are you going to get money out of these assets?

[00:37:57] Really, if you're a government like it's not even be like.

[00:38:01] You know, it's not like they're earning a huge income.

[00:38:03] So like the assets are.

[00:38:06] So you can't really tax it out that way.

[00:38:07] So the only way to really do it is this way.

[00:38:09] It's not and I'm not saying this because I am supportive of the policy.

[00:38:12] I'm just saying that's the logic behind it.

[00:38:15] Like there's there's so much money and wealth

[00:38:17] created in the Canadian economy, just sitting there idly, not doing

[00:38:21] what it needs to do for the economy because it's because it's sitting there,

[00:38:24] because it's fixed.

[00:38:25] And the only way to get that out is by putting the tax on that,

[00:38:29] that that wealth that was created directly, which is capital gains.

[00:38:34] So anyway, let's finish it up here with a great piece

[00:38:37] from the intelligent people over at the Fraser Institute and their recent paper

[00:38:41] titled Canada's rising personal tax rates and failing tax competitiveness

[00:38:46] researched by and written by Jake Fuss and Grady Monroe.

[00:38:51] This is taken from the introduction of that study, the federal and provincial

[00:38:53] increases to Canada's marginal income tax rates from 2009 to 2023

[00:38:57] have put the country at a greater competitive disadvantage for attracting

[00:39:01] and retaining skilled labor and less directly investment in entrepreneurs.

[00:39:04] Even before the changes, the country's combined federal

[00:39:07] and provincial top marginal tax rates compared unfavorably

[00:39:11] to those in the United States for other industrialized countries

[00:39:14] out of 61 Canadian and US jurisdictions, including the provinces,

[00:39:18] states and Washington, D.C., Newfoundland and Labrador

[00:39:20] currently has the highest combined top statutory marginal tax rate,

[00:39:24] which is 54.8 percent, followed by Nova Scotia at 54 percent

[00:39:28] and Ontario at 53.53 percent.

[00:39:31] The fact that Canada's top tax rates are often applied

[00:39:35] to lower levels of income than is the case in other countries

[00:39:39] further erodes our tax competitiveness.

[00:39:43] To adjust for the difference in income thresholds, we compare

[00:39:46] the combined statutory marginal tax rates to at various levels of income

[00:39:53] in Canadian dollars for each Canadian and US jurisdiction

[00:39:57] at an income of three hundred thousand dollars, Canadian,

[00:40:00] the highest threshold, with the exception of Alberta and Newfoundland

[00:40:04] and Labrador, in which a Canadian combined top rate is applied.

[00:40:08] Canadians in every province face a higher marginal tax rate

[00:40:13] than Americans in any US state.

[00:40:16] Results are the same at the income of 150,000 Canadian

[00:40:21] and Canada's marginal tax rates are also uncompetitive

[00:40:26] at incomes of 75 and 50 thousand dollars.

[00:40:30] So basically from 50 thousand dollars all the way up to three hundred thousand dollars.

[00:40:33] Doesn't matter how much money you're making.

[00:40:35] We are not doing we are all worse in Canada than in every US state.

[00:40:42] So Canada also competes with other industrialized countries

[00:40:44] for highly skilled workers and investment to measure the competitiveness

[00:40:47] of Canada's top tax rates.

[00:40:49] The study compares the combined top statutory marginal income tax rates

[00:40:52] with rates in 38 industrialized countries in 2022,

[00:40:56] which was the last year with international data.

[00:40:58] Canada had the fifth highest combined top tax rate out of 38 countries.

[00:41:03] The federal change to the top tax rate in 2016

[00:41:05] has markedly worsened Canada's competitive position.

[00:41:08] For instance, Canada had the 13th highest combined tax rate in 2014

[00:41:13] before changes in the federal top rate.

[00:41:17] Now, Canadian governments have put the country in this

[00:41:20] uncompetitive position in part to raise revenue

[00:41:25] as they grapple with persistent deficits and mounting debt.

[00:41:29] However, the tax increases are unlikely to raise as much revenue

[00:41:33] as the government expects since taxpayers,

[00:41:36] particularly upper income earners, business owners, entrepreneurs

[00:41:40] tend to change their behavior in response to higher tax rates

[00:41:44] in ways that reduce the amount of tax they may pay.

[00:41:47] So essentially we are the worse off from a tax perspective

[00:41:53] when compared to the states and the very intelligent people

[00:41:57] at the Fraser Institute are saying that this may not even

[00:42:00] accomplish the goal that the government is trying to accomplish.

[00:42:03] Which is to, again, put that modern monetary theory to work

[00:42:08] and tax out all the money that they just put into the economy

[00:42:11] because people are going to adapt their behavior

[00:42:15] and protect their assets and protect their hard earned money.

[00:42:19] So, you know, this I don't know.

[00:42:22] I really don't know. I don't I don't love this.

[00:42:25] I think this is disincentivizing entrepreneurs and business owners

[00:42:29] and, you know, across all sectors.

[00:42:32] And I also think that it's not going to accomplish the real estate goals

[00:42:36] that they have as well, considering that so much equity and net worth

[00:42:41] and wealth is tied up in real estate assets here in Canada.

[00:42:45] So before we get out of here, Dan, any closing remarks?

[00:42:49] Well, I think that it's it's a difficult thing.

[00:42:53] Like if you want housing to get built.

[00:42:56] And I think that a lot of people are like assuming that,

[00:42:59] you know, housing creators, developers, etc.

[00:43:02] are just like these benevolent people who are going to do it

[00:43:04] if they make no money and whatever.

[00:43:06] And the reality is like I don't think most people are like that

[00:43:08] in regardless of what product type we're talking about.

[00:43:11] And so I'm saying this because, you know, we tax housing

[00:43:15] like cigarettes in this country and capital gains, you know,

[00:43:18] and we tax cigarettes a lot because we want them to we want people

[00:43:21] to stop smoking. So adding tax in a different sort of structure

[00:43:26] to the same thing is not going to help.

[00:43:29] Like developers have to realize a capital gain

[00:43:34] to sell a property to a builder, as an example.

[00:43:37] And now and these are huge valuations now that just got more expensive.

[00:43:42] And so you've impacted one piece of the supply chain.

[00:43:46] Right. Builders have to sell units to end users.

[00:43:49] Like there's so many areas in the supply pipeline of housing

[00:43:53] that are impacted by this.

[00:43:54] And I think that that's why it's important to look at that.

[00:43:57] This Fraser Institute study, when you talk about competitiveness,

[00:44:00] especially with the role that foreign capital plays in this country,

[00:44:03] if you're if you're a foreign investor and you like real estate

[00:44:06] and you don't care what country you own real estate in,

[00:44:09] you just want to maybe your foreign investor in in Asia

[00:44:12] and you want to own real estate in North America.

[00:44:16] You you don't but you're you're agnostic to which country

[00:44:19] you're going to do it in.

[00:44:21] Why would you choose Canada given that those circumstances or that change?

[00:44:25] Right. And so if we want to be protective of competitiveness,

[00:44:29] we want to incentivize people to create housing,

[00:44:32] we can't ignore that the economics of housing are not getting any better.

[00:44:36] Yeah, yeah. Really well said.

[00:44:38] That might be one of my favorite lines.

[00:44:40] We tax housing like cigarettes here in Canada.

[00:44:43] The only final piece I'll add to that is, you know,

[00:44:45] we've we've heard so much of this of this fear of of brain drain

[00:44:49] here in Canada, right, because young, smart people that are likely

[00:44:52] going to end up in, let's say the tech sector is because we quoted it here

[00:44:56] in this episode. This this disincentivizes them even more so.

[00:45:01] And this is only going to exacerbate that already existing problem,

[00:45:05] which is fueled by unaffordability and standard of living, etc.

[00:45:10] You know, entrepreneurs that experience their wealth in the tech sector

[00:45:14] by liquidating their stock options at some point.

[00:45:18] Why would they do that here?

[00:45:19] You know, why not take a quick flight south of the border,

[00:45:22] go set up somewhere where it's way more affordable to begin with

[00:45:25] and and start your business there in a country

[00:45:29] that seems to enjoy and understand business and modern monetary policy

[00:45:34] a bit better than we do.

[00:45:35] So anyways, on that note, we will leave you with all that very complicated subject.

[00:45:41] We hope we were able to simplify it enough for you.

[00:45:44] If you have any questions about this episode or any others,

[00:45:48] please reach out to the show.

[00:45:49] The link is the email for the show is in the show notes as always.

[00:45:54] And if you want to be kind and leave us review and tell us

[00:45:57] we did a good job today, we'll take that too.

[00:45:59] Thanks so much for listening. We'll talk to you soon.

[00:46:02] The Canadian Real Estate Investor podcast is for entertainment

[00:46:06] purposes only, and it is not financial advice.

[00:46:09] Nick Hill is a mortgage agent with Premier Mortgage Centre

[00:46:13] and a partner in the G and H mortgage group.

[00:46:16] License number 10317 agent license M2 1004037.

[00:46:25] Daniel Foch is a real estate broker licensed with Rare Real Estate,

[00:46:29] a member of the Canadian Real Estate.