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Foreign Ownership of Property

More and more foreign nationals are seeking to purchase a second home in Canada either for temporary visits or for the long¬term permanent residency hopes.

Usually, there is no problem with a foreign national purchasing property, especially if the individual has no intention of living in Canada for more than 6 months. The only tax consideration that may arise is the amount of capital gains that the individual will have to pay upon disposition or the holdback on rental income.

The challenge comes when individuals, once here, wish to remain in Canada for more than 6 months. The complexity arises because the concept of residency in immigration differs from the concept of residency for income taxation purposes.

Generally speaking, individuals can come into Canada for up to 6 months as visitors or, as immigration calls them - temporary residents. They can even extend such stays up to 12 months and in the odd occasion, up to 18 months provided that the intention remains bona fide and temporary. However, immigration does not appreciate individuals simply renewing status in order to live in Canada on an indefinite basis under the guise of being visitors.

Once a person has remained in Canada for more than 183 days, CRA can technically ask the individual to pay income tax on world-wide income.

Canada Revenue Agency (CRA) has a different view of residency. Once a person has remained in Canada for more than 183 days (6 months), CRA can technically ask the individual to pay income tax on world-wide income. An individual may thus be deemed to be resident Canada by virtue of "sojourning" in Canada throughout a taxation year for a period aggregating 183 days or more.

Although Canada does have certain tax treaties, such as with the United States, which invoke a number of "tie breaker" rules to determine where residency is for tax purposes, the 183 day mark is one of the benchmarks which CRA will use to determine whether the visitor is required to pay Canadian tax.

There are a number of factors (for CRA) which may be relevant in the determination of an individual's residence. For example, some of the questions to be asked are:

How long and how frequent have been visits to Canada?
Where are the spouse and dependents?
Where is the personal property, furniture and clothing located?
What were the purposes of the visits to Canada?
Is the ownership of residence in Canada on a long term basis?
What memberships does the individual have in Canadian social clubs, organizations,community groups?
Is there a telephone listing in Canada?
How many hank accounts are there in Canada?
Are there credit cards issued by Canadian financial institutions?
Are there local newspaper subscriptions with a Canadian address?
Was there a will prepared in Canada?
Was a Canadian income tax return filed?
Have there been a substantial severing of all ties with the former country of residence?

Thus, ownership of a home in Canada by a foreign national may be the least of the concerns when one considers the complexities of immigration combined with income taxation.

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Home Sweet Floathome

It's been a long voyage through municipal council and federal government regulations, and tough sailing around rezoning hearings, design and construction, but a new kind of subdivision will soon rule the waves of Esquimalt.

What's billed as southern Vancouver Island's only legal mixed-use floating village will be christened in July at Westbay Marina.

The first floathome is in place, a three-level angular, modern design with gas fireplace and barbecue, radiant heat in the main slate-covered floor, two bathrooms and two bedrooms.

It's for sale at $260,000 and also will be a display home for the floating village, which has 33 "lots" now and ultimately will total 40 homes.

Less expensive versions of life on the water are available, starting at about $190,000, said developer Mark Lindholm, who owns the adjacent marina and 61-site recreational vehicle park.

Finishing carpenters still have four weeks of indoor work remaining on the first floathome before the July 19 kick off date for the marine village. The angular lines of the tall floathome are already a contemporary contrast with the sailboats moored in Westbay.

Lindholm said he started on the floathome village in 1996 and it has taken this long to get all the approvals, permits and services for the unconventional development. The effort it took "tells me it's not something that's going to be duplicated in Victoria."

It's not like regular real estate. At Westbay, owners lease their floathome sites from Lindholm over 20 years, which is the term of his master lease from Ottawa. And it isn't a strata title project. The buyer's lease can't be registered at the Victoria Land Title Office, but it can be sold or otherwise assigned.

Despite the legal differences, Lindholm has had many inquiries, from the 21-year-old who wants something unconventional to well-off 50-plus couples. "This is the ultimate lifestyle choice," he said.

Floathome owners can lease by the month at 60 cents a square foot or pay the whole two decades' worth upfront -- lump-sum amounts ranging from $90,500 to $174,500, depending on the size of the marine lot. Owners will have to pay the usual municipal property taxes, too.

Lindholm is providing all the usual municipal services to floating residences and will install concrete floats to connect the homes. Each will be anchored with its own pair of 40-centimetre-diameter steel pilings. Floathomes will be arranged in an irregular pattern, different from a marina's pigeonhole style.

He runs his own utility at the site, providing all the telephone, natural gas, electricity, cable TV and Internet, water and sewer hookups to the floathomes, even an automated wastewater pumping system that sucks sewage out of floathome holding tanks and flushes it into municipal sewers.

B.C. Hydro, Telus and the other utilities "wanted nothing to do" with people who might just unplug and float away somewhere else.

The improvements and new forms of tenure have cost money -- some $2 million to date -- and the higher costs of the new-style village wasn't popular with long-term liveaboards who faced bigger bills to continue living at Westbay. Many have moved to Fisherman's Wharf on the Victoria side of the harbour.

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