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Warn Local Brokers 0f Speculative Profits Tax Act The Speculative Profits Tax Act has now made it; “unprofitable for a specula-‘ tor, either amateur or pro-’ rfessional. to make a quick! profit by buying a house and] turning it over again almost{ immediately", says DouglaSw Meharg, President of the} York Regional Real Estatel‘ Board. ! :9“1Nll\l“lll\llll!“Ill“ll\\\\l\lu“lll1“l\l1“lIll““ullll“llll\lll\lull\\1l1\l\l\\lll\1ll\“lll“mumlllllllll“\lllllllllllmlllllll\llllllIllulllllllullllllll“llllllllllllll!lulllllllllllll\lll\l“llllllllllllmllllll\llllllllll\l1ll1llll11lllllllllllllllllllllllll\lllll\lllllllllllllllll\llull“lllull“l1ll\11lllll“\ll“l111llll1lll“111l\ll1llllllllllllmllllllllllll“mumllll“llll“llllllllmlllllllll\llulll111mm“mumlllulllulllllum-9 When asked his opinion on the recent land specula- tion tax, Real Estate Board President Meharg was quite positive the new legislation (even before final passage last week) had the desired effect of removing the “quick-buck Speculator" from the market. M'eharg saYS there will be an increase in the number of properties coming on the market at this time, thus Market 'York Region Real “““““ Unprofitable For Speculators Sees Much Worse Housing Crisis Ahead CONFISCATORY TAX Herman said a dollar earned could be all, or almost all taken by taxes due to a possible com- bination of federal and provin- cial taxation. and if the transac- tion involved a US. citizen the tax could take more in taxes than the profit earned. ers the new tax is a first priority lien on land and that there is a $50 to $1,000 fine for know- ingly attempting to contravene it. He said the tax applies to all persons disposing of land, being levied on any increase in value of property owned or leased since the April 9 starting date. [He fllgfl rate OI specmauon 1n the past couple of years, but catches some people uninten- tionally," he said, mentioning widows, orphans, etc. HITS SMALL BUSINESS “The act is unfortunately more technical than any of us would like. Unless it is changed ty on the seller he is unable to meet. He may not be able to find out a purchaser is a non-resident. The government may find out later and hit him (the seller) with the tax.” Scary prospects include the fact that owners of commercial and industrial uses on large developing have been very sepa- rate industries but the new tax can penalize. or even prohibit. joint ventures between a deve- loper and builder" he said. In the case of shareholder changes or control changes the act could even bankrupt large corporations, Herman said. fl‘llllllllllllllllllllllllllllll“lllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll“llllllllllllllllllllllllllllllllllllllill“llllIllllllllll“lll“llllllllllllllllllllllllllllllllllllllllllllllllllllllllll\llllllIll lllllllllllllllllll lllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll\lllllllllllllllllllllllllllllllllllllllllllllllllillllllllllllllllllllllllllllllll“lllllllllllllll1llllllllllllllllllllllllllllllllllllllllllllllll '1’ “One of worst pieces of legis- lation that‘s ever been drafted in Ontario...a trap for the unwary . . .who’ve not exercised due caution." That's how two local law partners described the Specula- tive Profits Tax Act effective April 9 and finally passed last week in the provincial Legisla- ture. They were presenting a lecture on the new tax law May 31 to an informal group of Rich- mond Hill-Thornhill area real estate brokers at the Black Hawk Motor Inn. Lawrence Herman of the firm of Herman and Fields. 10217-F Yonge Street said the new tax legislation creates an “unreal, absolutely a terrible situation" that “seriously hampers turn- over in building lots.” H Rice's Flowers For ALL Occasions CENTRE 884-1812 Phone 889-1812 - At All Hours - RICHMOND HEIGHTS Wired Anywhere SUPER SAVE MEAT SPECIALS BLADE 8. SHORT RIB BABY SWIFT WIENERS BUTTER 79¢ LB. 3 FOR 99¢ PEAS 4 FOR 89¢ , We Deliver to Toronto & Surrounding Districts WALKERTON CREAMERY HAMBURG BUNS 4 IN PKG. AYLMER “Probably the same situa- tion exists with most mort- gage companies. And with interest rates at 11% and higher. the public is finding a little opposition when try- ing to refinance their pres- ent home or finance a new one." Meharg said. to the very high demand they were placing $12,000,- 000 monthly, double the goal. Now they have to slow up a little. making more houses avail- able for home owners-hip. N0 PRICE DROP But he doesn’t think pri- ces will go down. He said he couldn‘t ever see house pri- ces going down because de- mand has never been higher than at present, while the supply is low. Now the spe- culators are out of the mar- ket. every purchaser is a prospective resident. But with the shortage of housing and high apartment costs in Metro, the spillover of de- mand into York Region will continue, he said. The local real estate board head said the real cause of high house prices isn’t the speculators. He said high prices and the result of the provincial go- vernment's failure to pro- vide enough services lots for builders to construct homes upon. Meharg said mortgage companies appear to be tak- ing a little time to catch their breath just now. MORTGAGE SLOWDOWN "For instance, one mort- gage company had a goal of $6,000,000 per month for residential mortgages. Due He said the new tax should be of particular concern in the ru- ral urban Richmond Hill-Thorn- hill area becau5e land here is fast changing from rural agri- cultural to urban use due to development. The legislation was drafted in a hurry and there’s going to be amendments and amendments and amend- ments, with litigation certain to follow, he said. Partner Gerald Fields describ- ed the Speculative Profits Tax Act as highly complex legisla- tion drafted according to an am- biguous legislative technique in which the lawmakers let the “noise and the sorting out take place further down the road". He said the act was “purposely done this way". Fields warned the local brok- ers the new tax is a first priority lien on land and that there is a $50 to $1,000 fine for know- ingly attempting to contravene 14 OZ. TIN JUG MILK “It does not seem fair for a developer to be making a million dollars profit on a lOO-acre area of raw land because of a short supply. But you figure it out. When lots are now selling in and around the Toronto area at the rate of $40,000 per serv- iced lot, the provincial go- vernment is creating a short- age Simply because they are not providing the services required. That's the forecast from York Region Real Estate Board President Douglas Meharg. Mr. Meharg prefaced the above marks by pointing out that the “biggest reason for the levelling off of house prices was not the specula- tion tax but the high cost of money. It is believed how- ever, that if the high cost of money prevails, construc- tion will virtually come to a stop in the next few months. “There lies the spectre over the horizon. If we think there is a housing crisis new, just wait for one or two years.” SOLUTION UNRECOGNIZED Mr. Meharg states the problem of high cost hous- ing today could be solved by provincially serviced land being made available to the develop, thus flooding the market with serviced lots provided by free enterprise. If you think there's a housing crisis now wait for me or two Years. RED TAPE "The bureaucracy and red tape the provincial govern- ment has created throughout WIENER ROLLS 3F°R99¢ 3 QUART 2% CAUSE OF ANXIETY He described the discretionary provisions of the act as unnervâ€" ing and a reason for anxiety, because there's no way for lawy- er or broker to be certain what the tax will be at time of sale. It applies to sales. leases, sha- res, options, survivorship in tenancy, gift, change in control or even 50% change in a land owning fraternal organization's membership. he said. And he added that if the de- veloper loses money in a specu- lative venture, the developer gets no consideration. Herman predicted there will be a considerable increase in the number of appraisals required. something which will be one- rous for brokers. “The act was drafted to catch the high rate of speculation in the past couple of years, but catches some people uninten- tionally,” he said, mentioning widows, orphans, etc. HITS SMALL BUSINESS “The act is unfortunately more technical than any of us would like. Unless it is changed 8 IN PKG. “Why don't we rid our- selves of the cobwebs and let our communities get a job done within. Let's get down to the grass roots. Let’s simplify the problems. Let's just do it." INFLATION PSYCHOLOGY In an article for the "CREA Reporter,” a national publication put out by the Canadian Real Estate Asso- ciation, Brian Magee dwells on the “inflation psycholo- gy" that is currently affect- ing Canada. He also said there “is no reason on God’s green earth why any subdivision for housing could not be ready to ’go in six months. Not, however, under our present set-up. “Every urban area and its environs in Canada has been affected by inflation psycho- logy which has seen proper- ty values rise by anywhere from 15 to 40 percent in the last 18 months. “A combination of things have caused this rise in the prices of homes including a backlog of demand built up by purely demographic fac- tors, a compounding of this situation by a disastrous fe- deral government tight mo- ney policy in 1969 and 1970 which brought house build- ing to a standstill. the municipalities in Ontario is the culprit,” said Mr. Meharg. “Other problems involve the lack of municipal funds to finance the in- stallation of basic serv- ices, the fact that housing has never been given prio- 7 1. Saturday and Sunday Only there's going to be a sharp re- duction in the amount of indus- trial and commercial space for rent. It will have dramatic con- sequences for the small busi- nessman. I suggest you get an increase in your liability insur- ance. As lawyers. we have" the local lawyer told the real estate brokers. Herman said the tax will be “a horrendous penalty on the executive traveller . . . (he) will have to live in Canada a year before being exempt from the non-resident tax” although such people as armed forces person- nel. ministers. etc, are exempted. A man not living with his wife or former wife. though main- taining a residence for his child- ren, will be hit by the tax if he sells the house. The act “puts a responsibili- ty on the seller he is unable to meet. He may not be able to find out a purchaser is a non-resident. The government may find out later and hit him (the seller) with the tax.” Scary prospects include the fact that owners of commercial and industrial uses on large BREAD FREEZER ORDERS SIDES BEEF 3 FOR 99¢ 0 Governments must stop studying and start installing; a crash program for the proâ€" vision of services with pro- vincial and federal aid. “Worse than all this was the incredible, almost un- believable lack of foresight by so-called planners in pre- paring for the inevitable shortage.” SOLUTIONS 0 Apartment construction for families must be encour- aged in blighted industrial and commercial areas in co- operation with, and with the blessing of civic politicians. Mr. Magee poses what he terms several positive solu- tions to the housing crisis in both available properties and their rising costs, as follows: rity at any level of politi- cal jurisdiction, plus gov- ernment land banking, which has removed and frozen thousands of acres of prime subdivision land from the market for as long as 20 years. REAL ANSWERS 1 LOAF 40¢ FOR YOUR ITALIAN PRIME POTATOES PRINCE EDWARD ISLAND SAVE UP TO 331/470 HRIHY RENT-A-CAR areas of land may be hit because they don’t qualify for exemption. Their building value must be more than 40% of the total pro- perty value. This would apply to such things as lumberyards, scrapyards. transport yards, fac- tories, shopping centres. QUESTIONS VALIDITY Lawyer Herman said the vali- dity of the act is definitely go- ing to have to be adjudicated by the courts and it may turn out that the whole exercise is super- fluous if the law is\thrown out because the act is beyond pro- vincial jurisdiction. TOWN AUTO BODY The act also means developers will be encouraged to become builders in order to earn exemp- tion. Brokers who have a large business with small builders will be seriously hit and their volume reduced. Until now, building and developing have been very sepa- rate industries but the new tax can penalize, or even prohibit, joint ventures between a deve- loper and builder" he said. (CUT) 10 LBS. 173 Yonge Street N. Richmond Hill 884-2139 24 OZ. LOAF 0 Well-planned commer- cial development should be allowed to proceed in the central cities to generate the much - n e e d e d assessment which, in turn would finance various social programs and capital expenditures such as mass transit. o Henceforth public works, particularly subdivi- sion services, should be in- stalled on a local improve- ment basis and paid for, not in one lump sum by the first purchaser, but through an- nual municipal tax pay- ments. O Municipalities and non- profit institutions should donate or lease land to pri- vate developers for housing at controlled prices and ren- tals. “Taxes would tend to be higher as a percentage of value but with inflation pay- ments would be made with depreciating dollars. Lot prices locally would be cut in half through this method of financing." BREAD 2% EVAPORATED M I L 1§Hcl>vz. 4 FOR 88¢ PENI POWER WHITE FOR ¢ CARNATION THE LIBERAL, Richmond Hill, Ontario, Wednesday, June 12, 1974 3 Sinus 10¢ FRESH IF YOU DRIVE A LATE MODEL CAR think how much you'll save Wlth our WHEEL ALIGNMENT GUARANTEED for 40. 000 M1155! 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