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Salt Spring Island Real Estate

MLS homes for sale by Scott Simmons

Buyer Beware Landmark court Ruling

April 12, 2017 By Scott Simmons Leave a Comment

The headlines were in the media about a month ago and this is something that keeps me up at night.  Especially this CRA to recover from the buyers the capital gains tax.  The other thing to note is this is just part of the trend of the federal government to bring in more taxes.  They are also going to be going after those that seem to claim various principal residences.  Here is the article from the Vancouver Sun Buyer beware_ Landmark court ruling will shake real-estate industry _ Vancouver Sun .   Here is the legal update from the BCREA

LICENSEES LIABLE FOR NOT DETERMINING SELLER’S NON-RESIDENT STATUS?

Oana HyattOn March 25, 2017, several local newspapers ran a story with the alarming headline, “House buyer beware: Landmark court ruling will shake real-estate industry.”1 The story referred to a February 10, 2017 BC Supreme Court judgment2 and left licensees wondering about this decision’s impact on their duties to ascertain the Canada residency status of sellers for the purposes of the Income Tax Act. Despite the heightened tone of the story, the court’s decision does not establish any new duties for licensees in this respect.

There is significant risk to buyers dealing with non-resident sellers due to the Income Tax Act.3 In some circumstances, the Act allows the Canada Revenue Agency (CRA) to recover from the buyers the capital gains tax, which the non-resident sellers in this case should have paid, in the amount of $695,000. Where a buyer makes “reasonable inquiry” and has no reason to believe the seller is non-resident in Canada, the buyer might escape liability under the Act.

The issues in this case were: 1) whether the notary acting for the buyers had made “reasonable inquiry” as to the residence status of the seller, and 2) whether the notary had advised the buyers of their potential tax liability if the seller was not resident in Canada. Note that the case did not address the role or duties of the buyers’ agent in this situation. The evidence was that the buyers’ notary had inquired with the sellers’ law firm as to whether the sellers were Canadian residents at the time of purchase. The law firm had responded that they had no information on this topic, as they were only acting for a creditor of the sellers, who had obtained conduct of the sale of the property pursuant to a court order. The notary then took no further steps to ascertain the residence status of the sellers.

The court found that the notary had failed to make “reasonable inquiry” as to the residence status of the sellers, and had failed to advise the buyers about the potential tax liability. While the buyers are liable to the CRA for some $695,000, plus any applicable penalties and interest, there has been no determination at this stage of the case as to whether the buyers are entitled to recover the entire amount from the notary. It is possible that, at the next stage of the case, the notary might be able to reduce their liability by raising some defenses, or pointing fingers at other persons involved in the transaction. The notary did attempt to add the buyers’ agent as a third party to the action for this purpose, but that application was refused by the court as it was brought forward too late in the litigation. The notary can still commence a separate action against the buyers’ agent, although it’s difficult to see how the buyers’ agent could be at fault in that case. The decision has been appealed by the notary.

As of March 30, 2017, the standard form Contract of Purchase and Sale (CPS) was amended to include the buyers’ declaration as to citizenship (as required, in respect of the BC 15 percent foreign buyer tax), and the sellers’ declaration as to residency status (in respect of the Income Tax Act). Licensees should not give advice to their clients on how to complete this declaration, nor on how to interpret any declaration made by the other party to the transaction. However, as a best practice, licensees should recommend that their clients seek legal or accounting advice with respect to tax issues. A reminder to this effect now also appears on the “Information About This Contract” sheet appended to the CPS.

The Real Estate Council of British Columbia advises that brokerages should also be aware of this matter—particularly where a CPS is assigned to a non-resident buyer and the profit is to be paid to the assignor before completion of the original deal.

Oana Hyatt
B.A., LL.B.

1. Todd, Douglas, “House buyer beware: Landmark B.C. court ruling will shake real-estate industry,” Vancouver Sun (March 25, 2017), online: http://vancouversun.com/news/local-news/house-buyer-beware-landmark-b-c-court-ruling-will-shake-real-estate-industry.
2. Mao v. Liu, 2017 BCSC 226.
3. Income Tax Act, R.S.C., 1985, c. 1, s. 116.

“Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information or the currency of legal information.

Real Estate is becoming like the movie A million ways to die in the west but instead of dying it more like a million ways to get sued with more being added every day.  Buyer beware and buying and selling agent please ask the questions you need to.

Cheers Scott Simmons

Filed Under: Buy house on Salt Spring

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CRITICAL BUYING INFO

Two things buyers should know before they offer:

Price History

Total time on market

Forms for the new BC Real Estate rules
Disclosure-of-Representation-in-Trading-Services
Agreement-Regarding-Conflict-of-Interest-Between-Clients
Disclosure-of-Risks-to-Unrepresented-Parties
PrivacyNoticeandConsent

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Salt Spring Real Estate Market Report

If you are looking for Salt Spring Island Real Estate it would be well worth your time to check out my Salt Spring Market Report pages.

To help you search for a Salt Spring home for sale I have two systems you can use.  One is a map based mobile search system for tablets and/or phones. This system works really well if you are on Salt Spring, as it will automatically show you properties as you drive around the island.

The other system is a data base (Advanced MLS system or PCS) for laptops or desktops.

These two systems display information in real time, which allows you to view new listings within one second of them coming on the market. You will also find the “sold” prices of homes, as well as other useful information.

Radio Real Estate Shows

TV show Realty Reality on Salt Spring

So glad shooting for the new Real Estate TV show “Realty Reality” is over. It was a lot of work. It all looks so easy on TV but in reality it was not easy. I think they were waiting for the “moment” to happen. You know the big fall down the steps or fall of […]

Home inspection on Salt Spring Island

Home inspection on Salt Spring Island happened yesterday at a 42 year old log home. To accomplish the home inspections the buyer brought in a  Home Inspector, Geo-technical Engineer and a local Salt Spring contractor. Jeff the home inspector tells the story about the bag of Gold he found in an attic; gold story How […]

Salt Spring home face lift

My clients bought this dated salt spring home a month ago and are upgrading it.  The home was built in 1996 and is structurally 100% perfect.  It seams as if the original owner skimped on the finishing.   The main up grade Alex Denny (salt spring master carpenter) will be doing for the owners is re-finishing […]

Latest post

Packing Tips for Busy Home Sellers

Packing correctly can simplify the burden of the entire process for a household and potentially their moving company. By packing smart, using proper protocols, and paying attention to the details, things can be ready to go far before the movers arrive and ready to unload upon arrival. Here are some tips for busy home sellers […]

Salt Spring rental homes by the numbers

I get many people asking me about buying a rental home on Salt Spring and usually spend a lot of time answering all their questions.  So in this post, I hope to cover some of the factual information. Here are the typical questions and basic answers; What is the rental market like on Salt Spring?  […]

Salt Spring Housing Crisis explained

Is Salt Spring in the middle of a housing crisis?  It all depends on who you talk to and what one defines as a crisis. If you move to Salt Spring and have limited funds and are looking to rent a home at about $1000 per month your probably out of luck.  There are basically […]

Buying on Salt Spring Island

Salt Spring rental homes by the numbers

July 18, 2018 By Scott Simmons 2 Comments

I get many people asking me about buying a rental home on Salt Spring and usually spend a lot of time answering all their questions.  So in this post, I hope to cover some of the factual information. Here are the typical questions and basic answers; What is the rental market like on Salt Spring?  […]

Ban on Dual Agency BC

June 16, 2018 By Scott Simmons 2 Comments

On June 15th, 2018 the ban on dual agency just came into effect in BC. Here is a post I wrote about how the new rules will change the way I do business on Salt Spring New Rules for BC Real Estate As a continuation of the New Rules post, what happens if we are […]

New Rules for BC Real Estate

June 16, 2018 By Scott Simmons Leave a Comment

On the 15th of June 2018, the new rules governing BC real estate have come into effect. If you come to Salt Spring to look at homes and or land Scott will go over the form below and ask you if you would like agency representation and ask you to sign this Disclosure-of-Representation-in-Trading-Services as a represented part […]

Salt Spring Island Trust Land Use Zoning bylaw 355

February 17, 2018 By Scott Simmons Leave a Comment

On Salt Spring Island the Island Trust is responsible for our local zoning.  You can find our zoning info here at the Salt Spring Island Trust LUB 355. The bylaw has maps that cover every part of the island.  Believe it or not every few months or so I get an email from someone saying […]

Is an offer an sale?

January 26, 2018 By Scott Simmons Leave a Comment

This last month I had an accepted offer on a home and had a backup offer come in.  The backup offer was a very weak offer because the condition precedent (subject to clause) was so subjective.  It was subject to the buyer viewing and liking the lot.  Normally no one would take an offer like […]

More Posts from this Category

 

SALT SPRING NEWS

Salt Spring Housing Crisis explained

July 12, 2018 By Scott Simmons Leave a Comment

Is Salt Spring in the middle of a housing crisis?  It all depends on who you talk to and what one defines as a crisis. If you move to Salt Spring and have limited funds and are looking to rent a home at about $1000 per month your probably out of luck.  There are basically […]

Candidate for Regional Director CREA

March 7, 2017 By Scott Simmons Leave a Comment

I’m running for the position of board member Regional Director for BC for the Canadian Real Estate Association (CREA).  Below is my official platform after edits suggested by CREA lawyers. My name is Scott Simmons. I’m a REALTOR® on Salt Spring Island BC. If you go to the REALTOR.ca site and put in Salt Spring […]

CRD sewer and solid waste

January 23, 2017 By Scott Simmons Leave a Comment

The nuts and bolts of local goverment are really the non glamours basics of water, sewer and garbage (solid waste).   The CRD is the local service provider for Salt Spring.  On the night of 24 Nov 2016 Russ Smith Senior Manager, Environmental Resource Management for the CRD put on a waste presentation.  Here is a […]

Incorporation – A Third Option: Self-governance with contracted services

May 11, 2016 By Scott Simmons Leave a Comment

This was just posted on the Salt Spring exchange in 4 parts.  I have permission from John Gauld the author to publish this document on my Salt Spring web site;   SSI is known as a community that questions conventional practices and is creative and innovative in its response to community challenges. Perhaps the up-coming […]

Salt Spring’s new SSIWPA PAC

November 4, 2014 By Scott Simmons 2 Comments

If you live on Salt Spring you have to get used to all the acronyms.  If you have not heard of SSIWPA it’s because it’s new.   SSIWPA stands for Salt Spring Island WaterShed Protection Authority.  Today  was the first meeting of the SSIWPA PAC (Public Advisory Committee). The ideal behind SSIWPA is that it […]

 

Critical Salt Spring Buying Info

Ban on Dual Agency BC

June 16, 2018 By Scott Simmons 2 Comments

On June 15th, 2018 the ban on dual agency just came into effect in BC. Here is a post I wrote about how the new rules will change the way I do business on Salt Spring New Rules for BC Real Estate As a continuation of the New Rules post, what happens if we are […]

New Rules for BC Real Estate

June 16, 2018 By Scott Simmons Leave a Comment

On the 15th of June 2018, the new rules governing BC real estate have come into effect. If you come to Salt Spring to look at homes and or land Scott will go over the form below and ask you if you would like agency representation and ask you to sign this Disclosure-of-Representation-in-Trading-Services as a represented part […]

Sun Path Chart

Does the home get sunlight?

February 28, 2013 By Scott Simmons 1 Comment

If you’re planning to live on Salt Spring year-round, one of the most important things to consider when buying a property is SUNLIGHT. Do the neighbor’s trees or a mountain block the sun during the winter months?  According to Salt Spring real estate mythology, “If they buy in August, they will list in November and […]

Aggregate Days on the Market

January 2, 2012 By Scott Simmons Leave a Comment

What are “aggregate days on the market”? On the Victoria Real Estate board an agent can “Re-List” a property for a mere $25 fee.  An example would be if a home has been listed on the board for 180 days the listing can be taken off the market and then “Re-Listed” and appear to be […]

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