Its come to light recently that the federal government is getting more and more interested in catching real estate “flippers” in the Toronto and Vancouver markets. Some tax experts and real estate professionals believe that this is just the beginning of a CRA crackdown on real estate investors who may have been tax cheating for many years.
For a variety of reasons, real estate investors take the risk and cheat. And although penalties and fines are mild (even nonexistent), CRA is cracking down on tax cheating with a new approach to enforcement. In fact, during the past two years, CRA has been sending warning signals – they are paying more attention and the monetary penalties are real.
CRA is cracking down on tax cheating with rigid enforcement – especially for home “flippers”
In the past few years, CRA has been uncovering many false claims for taxes related to real estate transactions. As such, the government is reviewing many thousands of real estate transactions every year, and taking their time to identify cheaters (they can take up to 4 years after a filing).
CRA is cracking down on tax cheating because of the growing concern for non-compliance. High-value markets in Toronto and Vancouver are part of the reason, and quickly rising prices are also contributing. It all makes for an environment where investors consider the risk worthwhile.
In the past, condo and home “flippers” were able to own properties and re-sell them without declaring all of the taxes. Today, CRA has many enforcement tools to chase down non-compliant real estate investors – land registry records; under-reported tax filings; and other electronic data.
Improperly claimed GST rebates on real estate purchases
One area that CRA has focused attention is on improperly claimed GST rebates for a newly built home or substantially renovated home. The rebate is only eligible on a primary residence and any effort to falsify can bring to light all types of issues. On the GST rebate, CRA seems to be engaging in serious enforcement efforts, particularly when a real estate purchase is shown not to be a primary place of residence. Needless to say, CRA has little problem evidencing the above.
Although GST rebates might represent “small change” for the federal government, a typical CRA re-assessment could open up all kinds of tax issues with respect to “flipped” properties. Indeed, if CRA determines that a real estate investor is a “habitual flipper”, the property profits could be assessed, along with tax filing penalties, compounded interest amounts, and other associated costs. As CRA is cracking down on tax cheating, property investors are seeking the advice of real estate lawyers, real estate accountants, and tax rebate specialists like the experts at Rebate4U.
The experts at Rebate4U understand real estate tax rebates
Whether you’re a first-time property investor or a more seasoned property owner, Rebate4U can help navigate the rules and regulations set out by Canada Revenue Agency. We have in-house tax rebate experts who understand how different real estate properties are defined and how rebate eligibility is assessed. And because CRA is cracking down on tax cheating, investors would be wise to have professional guidance when purchasing properties and applying for tax rebates.
In every case, real estate tax rebate applications require supporting paperwork and documents. Anything less, any mistakes, or any oversights can delay a tax rebate or even result in complete denial. When you work with Rebate4U, your rebate application is properly submitted, with all of the supporting documents, and well within the deadline. More importantly, Rebate4U makes sure that all CRA rules and regulations are fulfilled, with any outstanding CRA issues attended to.
Rebate4U is here to provide professional services when applying for real estate rebates in the province of Ontario. We can help you to navigate the regulatory framework prescribed by CRA. And our expertise includes condos or homes purchased for renting; newly built condos or homes as a principal residence; even rebates that are disallowed by CRA. While rebate claims are always subject to re-assessment, Rebate4U offers clients a streamlined process and 100% satisfaction.
Find out more by calling 1-800-610-4510 or by visiting our company website at www.rebate4u.ca