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Alberta Real Estate Show – Migration to AB, Calgary Water Main, Canadian Renters & Capital Gains Tax

Check out this episode of the Alberta Real Estate Show on YouTube now!

Welcome to the Alberta Real Estate Show!

Dan: Hey guys Dan McGuire your Canmore Cochrane Calgary realtor here! Trying something different today; this is going to be the first episode of the Alberta real estate show. We’re going to be talking about all things Alberta real estate about what’s happening in Southern Alberta as well as across Canada and exploring more in-depth topics that a lot of my clients are asking me about um so I’ll always be here as your host I’ve got my excellent brother here with me today to be kind of the the voice of the audience. My brother Dave is a real estate investor himself and he’s currently living and working abroad in Mexico City.

Dave: I am living the dream down here but yes, Canadian Canadian property, real estate is very close to our family and and I am a part of it as well and so always interested and always happy to chat about it!

Dan: Nice and no doubt the weather is much nicer in in Mexico City than it is up here right now it’s
kind of a rainy day. We’re in the rainy season it’s like 15 degrees and raining right now but sort of like Monsoon June which is kind of typical. June is the wettest weather month in Alberta for precipitation and February is the driest oddly enough. We’re at a higher altitude kind of like down there in Mexico City so funky weather patterns.

Dan: well for the first section we’ll talk kind of about a few news stories but right now maybe I can chat a bit about what I’ve been seeing in the market with a lot of my clients right now. Sales have still been strong in the first half of this year I’ve had lots of happy buyers and happy sellers in Canmore we’re
still seeing low inventory as well as some multiple offer situations which is always good if you’re a seller not so great if you’re a buyer or first-time home buyer. A lot of my clients in Cochrane and Calgary have been also experiencing some pinches when it comes to inventory and fighting for properties. We’ll talk a little bit about more people coming to Alberta which is putting some stress on the housing Supply. So maybe we’ll start with our first news article?

Alberta In-Migration

Dave: yeah looks like Alberta continues to have very high net immigration so I believe it’s what the 11th straight quarter of growth. I guess in q1 2024 Canada had almost 250,000 new residents new people
coming to Canada.

Dan: this has been a story we’ve seen for you know got to be the last couple years here now I think it was like 400,000 or 500,000 in at the end of 2023 that we saw coming to Canada and a lot of them are choosing a lot of people new migrants as well as immigrants between provinces are choosing to come and live in Alberta. I think a big part of this just has to be Alberta is the economic Center of Canada in a lot of ways. Obviously out east we have some of the older like banking Industries and things like that but certainly with oil and manufacturing Alberta is a really huge destination.

Dave: Life’s good in Alberta. I mean there’s seems like there’s hope compared to some of the other provinces and I spent two separate years out there as well and you know you got the weather and the nature and the good the good months of the weather.

Dan: Our parents actually were also migrants to Alberta Once Upon a Time as well like our parents met working in Banff. Our mom is from Manitoba and our dad was from Ontario so pretty classic Canadian
story. I know so many people, my wife for instance her her parents lived in Alberta and she was born out
here as well so yeah. And our younger brother as well actually so that’s the whole the whole family there. It’s kind of the the economic Powerhouse and I find a lot of young families are here because of that. A lot of young families will reach out to me maybe moving away from the the GTA or from outside of Vancouver where housing options are not as varied like they don’t have as many housing options whereas you can come to Alberta there’s tons of great jobs lots of great recreation opportunities and then also the draw of that more affordable housing. Which is huge. The downside though is kind of that we’re seeing a lot of that go away rents are rising um in Calgary particularly it’s a a big thing in the news right now, as more people come to our Province. So good for investors, good for people who have property here because they’re seeing it lift as well but it’s going to make it more like the places that people are coming from though, over time. So we’ll have to wait and see how it turns out that’s what happens.

Calgary Water Main Break 2024

Dave: That’s what happens. But yeah let’s talk about that water main break yes we have the Calgary
water main break it’s even been on the news down here I’ve been seeing it come up on my feed even in Mexico. I guess because the the Stampede is one of Canada’s biggest events so to have something in the way of that it’s kind of like a worldwide thing.

Dan: I saw down in San Diego some guy who’s like the head of the Water Commission there he used to work with someone up here in Calgary and they reached out and they delivered some gigantic section of pipe that they just had sitting in a yard down there which was exactly what they needed here. I think it broke on June 5th, I was supposed to go swimming, training for my Triathlon, and my swimming was canceled because of the the water man break and I was like okay maybe it’s going to be a couple days…
I think today is the 27th I think they’ve just got it under control. The mayor has said that everything’s going to be ready to go for Stampede so that’s huge and really important for our area. So Ithink a lot of people are really going to be glad to see that. I mean we’re talking hundreds of millions of liters of water
a day. I think they said like if everyone flushed their toilet one less time it’s like 15 million liters of water saved each day so it’s huge. It’s just kind of a symptom of this aging infrastructure across North America I think I was reading there’s like 270,000 water main breaks a year in the United States. So Canada has to be pretty much the same I would imagine in terms of um the amount of this infrastructure
that’s just aging over time.

27% Of Canadian Renters Plan to Buy A Home in the next Two Years Despite Affordability Challenges

Dave: unbelievable what what would go into just keeping that all going and replacing it and yeah hard to imagine. So let’s chat about renters. 27% of renters plan to buy a home in the next two years despite affordability challenges of which there are many.

Dan: Kind of a classic thing that we’re used to hearing across Canada. This was a recent blog post by Royal LePage, by their Chief economists there. 27% of renters are still hopeful and hoping to purchase a home in the next two years despite affordability challenges. And this is something that I’ve definitely seen with my clients too, whether they’re first-time home buyers or people who are looking to move up into their next property. Just because interest rates are high or prices are going up, it doesn’t mean that people are really going to give up on that dream of homeownership.

Dave, we’ve been kind of talking about this because you’re talking about maybe selling your property and you’re wondering, is now the right time? Is it going to be better to wait? And really, people don’t wait; families don’t wait, right? Like if your family’s growing or your life’s changing, you’re not going to let interest rates stand in the way of that for sure. And I mean, it never gets easier; it only goes in one direction. So, I mean, we hope so, yeah.

Well, yeah, I mean, it depends on where you’re at, but yeah, this is the third of the next cycle. And I mean, if the rates are coming down, this is, you know, yeah. I mean, and the renting is difficult as well, so you’re kind of between the two, you gotta, yeah, gotta do what works for you. Life is short, exactly, exactly. So it’s like, hey, I can pay higher rent or I can pay a higher mortgage cost, but I think when you own your property, you’re at least on the property ladder and building equity. And, you know, it goes by fast; like, we’re just renewing our mortgage right now and it’s like, where did that last five years go? And just seeing how much we paid in equity and interest, but yeah, yeah, yeah, it’s crazy.

Capital Gains Tax Changes in Canada

Well, let’s get into kind of like our in-depth topic. This is something that’s obviously also been in the news: the capital gains tax changes here in Canada. The Liberal government brought this forward. I think it just kicked in on June 25th, so a couple of days before we film this. The big change is, you know, typically capital gains would be taxed at 50% of the gain at your income tax rate, and the federal government really wants to change this so above $250,000 of a gain, it’s taxed at 66% of the gain. And then more importantly for corporations in Canada, it’s all taxed at that 66%, so that’s a pretty steep increase.

Like I said, as a professional and someone who’s self-employed, for instance, I don’t have a pension, but I do have a corporation, right? And part of my retirement would be, ideally, realizing a capital gain over time. And this is something that’s huge for business owners, people who own rental properties, people who own second properties just because, you know, not only you’re going to pay a higher amount of capital gains, but if you’re holding it in a holding company, you’re just you’re not going to get to avoid any of that increased tax rate. Yeah, it’s significant when you’re talking big dollar amounts; you know, single percentages can really, really make life hard. So, yeah, it’s huge.

And I mean, Canada has the exemption for capital gains on your principal residence, which is crazy, you know? I mean, why work when you can just hold onto your house and sell it and not pay any income tax when you cash in on that? Thankfully, often it takes a long time to realize those significant gains, and a lot of people roll them forward into the next stage of their lives, maybe their retirement or to afford another house on the property ladder. But, yeah, it’s really crazy.

Recently, I had a buyer, so they were purchasing a property in Canmore, investment property. And this is kind of the start of June; we made an offer on it. We were just right before, probably right at the beginning of June, right? So usually, you want like two or three weeks to close; you have a bit of a condition period there. And when I pulled the title, I noticed that this unit was held by a corporation, so such and such Incorporated. So immediately, I knew, hey, if we can close before June 25th, there’s going to be a significant tax advantage to this seller.

So I went and looked at the title and okay, they paid $40,000 for this unit 12 or 13 years ago, and they want to sell it for X dollars today. If we give them this lower offer but it closes before June 25th, what’s the capital gains tax going to be for them? And I think I calculated it out and it was like $75,000 more of cash that they would just take home simply because this offer closed before June 25th. Yeah, so like I explained that to the seller’s agent, just say, hey, I don’t know if you know this, but I just did a little bit of a calculation on the back of an envelope here and they’re going to save $75,000 by accepting this below-asking offer, let’s say, to accept. Yeah, so my clients were super stoked on that obviously, and it made sense; they were holding it personally.

Unfortunately, down the line, if they were going to sell that as part of their retirement, the first $250,000 of the capital gain would be taxed at 50% of the gain. But beyond that, it would be at the 66% or whatever it is. So yeah, some motivation there for sure to put that deal in place before the date there for sure. I think out east, like agents I know in like kind of Mccoa Cottage Country, they saw a big flood of properties coming to Market just because costs have risen so much and some of them have gains that are huge.

Right? Like our family cottage, our uncle has it now. Like, we don’t really use it ourselves anymore, but the gain on that property, on I think our grandfather built it when like, I think he told me that he paid $1,500 or $2,000 per plot and there were two side by side, you know, before there were roads or anything like that. And I think it was 1960 or 1961 he bought it from the crown when they were released. Wow, wow, so it’s got to just be like 100% of the value of the house is the capital gain. So yeah, you know, now it’s worth $2 million, okay, 66% that is taxed or 50% of that is taxed, right? It’s crazy, so yeah, yeah, wow.

Thanks For Watching – Alberta Real Estate Show

Well, nice. I think that we’ve covered a lot for today. Thank you so much for joining me, of course. I just want to say, you know, to anyone watching, anyone listening, if you have any questions about moving to Alberta, investing in Alberta, markets like Calgary, Cochrane, Canmore, surrounding area, happy to provide insights, more info or answer any questions you have. No questions too small, and I’m always happy to help. Our contact info will just be below in the show notes, yeah.

So any other plans for the day down there in Mexico? I got to get back to work a little bit here still and maybe some tacos for dinner, you never know, it’s, we will see. I don’t know what else to expect, so nice, right? Yeah, awesome, okay, Mexican living, yeah, all right, thanks, Dan.

Okay, thanks, thanks for watching!