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When the nest egg is your nest

TAVIA GRANT

Globe and Mail Update

Latest comment posted at 9:43 AM EDT 19/12/06

A growing number of Canadians expect their home will be a source of retirement income ...Read the full article

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  1. b mac from Canada writes: Having a home paid for in order to live rent free is a big part of being able to afford retirement. The down side to this of course is that your income stops growing while federal, provincial and municipal governments continue to raise your taxes at alarming rate. These tax increases will eventually force you out of your home and into an apartment in a community you are probably unfamiliar with. Governments today cause people a lot of problems with excessive taxing. Mr Harper is the first bit of fresh air Seniors have seen from governments in a long time.
  2. alexi putin from Canada writes: Work and own a home in the G.T.A. then sell retire to a small town in southwestern Ontario. Great climate and a average price house 170,000. Kingsville and Leamington are actually promoting this. This area has one of the highest heat units in the country. Snowfall a few times a year. My wife and I just returned from there and were impressed.
  3. snow lander from Edmonton, Canada writes: the climate in southwestern Ontario is hardly what one would call 'great'. In the summer it hot, humid and the air is brown with pollution from Ohio. Unless people intend to hide in their air conditioned homes and drive around with the windows of their air conditioned cars rolled up I would think it is best to avoid this place.
  4. corry Stuart from Ontario, Canada writes: Mr B mac from Canada wrote 'Mr Harper is a bit of fresh air for Seniors? Well I beg to differ..... The feds took a very large amount for my income tax of me when I received backpay ..... there was no if ands or buts about it. My income as a pensioner is minimal precisely under poverty line, but that made no difference. Thank God I had a house to fall back on because the rest went to income tax. a discruntled person? You bet I am!!!! They have got my RRSP little as it was!!!!!!
  5. Thomas Steeves from Ottawa, Canada writes: Cashing in on rising home values is not as straight forward as many people believe. As one poster indicated, if you are not planning to sell, it can simply mean a higher property tax bill every year. As another poster indicated, if you are planning to sell your home in an expensive real estate market and move out of town it can work quite well. However, I think that people who are planning to use their home as a primary source of retirement income need to think this through. In order to access funds from your home, you have to borrow the money. Sorry, there's no ATM in the basement. Your typical secured line of credit is at Prime 1% (currently 7%). Sure, your typical GIC portfolio will get you 4% if you're lucky, but compared to borrowing the money, that's an 11% swing! A well diversified investment portfolio would only widen the gap. The interest on a CHIP mortgage compounds since there are no payments, and can leave your heirs with next to nothing. As Mr. Richardson says, and I have spoken to him on a few occassions, rising real estate values should be simply a part of a diversified portfolio, and banking on your home for your retirement income should be carefully considered.
  6. G Mack from Toronto, Canada writes: I just bought a two storey 'salt box' home for my parents in a little fishing village 45 min outside of St. John's, NFLD for $50,000...spent $20K on upgrades and the place is palace! They have all their money from the house they sold in Toronto and some RRSP's, but live like a King and Queen. They are loving the beauty of that province and the people are active and there seem to be a larger number of retirees as well! Just a thought...
  7. Phil S from Toronto, Canada writes: #1: I hardly think the conservatives did retirees a favour - remember that they're in the process of wiping out income trusts. Retirees took the same 20% hit on the net worth of these investments like the rest of us. So now what? They have to somehow now survive on the 3% interest that they earn from GICs? If they buy a dividend paying stock, then the gross up will claw back their old age security. Give me a break. The conservatives are sending seniors back into the stone age.
    At least people like me are young enough to recover from the income trust debacle. For seniors, they will have to go work at McDonalds to make ends meet.
    #2: Right idea, wrong location. Try a low cost area like the maritimes, or some third world country.
  8. Jasper the Black Lab from Vancouver, Canada writes: After retirement, why in the world would I NOT sell my paid-for (by then) home and move? Isn't retirement all about getting out of the rat race? At current prices, I could trade for a 100-acre hobby farm, resort-style waterfront home, or choose a more modest home plus $250k - $400k in tax-free cash.
  9. Yeah, that's right I'm from from Toronto, Canada writes: What if your there is a recession or worse yet a depression when you plan to retire and use your home as part of your strategy? A sobering thought.
  10. can I vote again from around-Kingston, Canada writes: The marketing machine that is the banks looks like it paid off, convincing 'the younger generation' to get in on the RRSP bandwagon is like ...ohhh 'money in the bank'. However, when these younger workers go off to purchase their very first home, they'll most likely cash in their RRSP's in order to qualify for a down payment.

    What is interesting is the amount of equity tied up in the real estate market these days, and in my humble opinion it's dubious to say that people will get their money's-worth from the sale of their homes in 20-30 years when they will need to draw on it, because that will require a vibrant healthy workforce of even younger people making skads more money than those selling their homes...wait a minute...can you hear that? it sounds like air being released from a balloon!
  11. Vickky Angstrom from Calgary, Canada writes: That's OK. A significant number of Canadians include winning the lottery as part of their retirement strategy too. However, if I owned one of those monster houses in a suburban housing development, I'd be selling it now, not later - there will be no market in a few years as downsizing continues and Hydro increases. B MAC: It may comfort you to know that most Provinces have hardship exemptions on property taxes for homeowners who have lived in one place for a long time while property values increased astronomically. It may also comfort you to know that municipalities are providing more services that used to be covered by Federal and Provincial governments, so your tax dollars will stay in your community. Sad for those in poor communities though. A blow to universality which really needs higher levels of government to sustain it.
  12. P R from Montreal, Canada writes: To #3 -- While I was born and grew up in southwestern Ontario and really have no desire to ever go back, it's due mainly to the culture (or lack thereof) not the weather. The climate is actually one of the few things that I miss about the area. The summers are hot and humid -- much preferable to unbearably cold winter conditions that we experience in most of the rest of Canada! And the region around Kingsville and Leamington has a climate in which cactus grows and which produces peaches, plums, and some of the best grapes anywhere in Canada! Pelee Island (where some wonderful Reisling, Gewurztraminer and Vidal wines are produced) has 30 more frost-free days than the mainland! Here's a link describing the area -- you'll pleasantly surprised how Canada's most southerly point fares: www.peleeisland.com
  13. Cliff Campbell from No place at all in, Canada writes: I am 33 and I have RRSP's, with the way the government is with our money I do not expect to see much in 32 years when I retire so I better start looking after myself now. The eariler you start the better off you will be later, $1million sounds like a lot now but in 30 years with inflation it will not be. I would be much happier if the government gave me back what I have given them for retirement and let me invest it on my own, I would be so much better off.
  14. Rolly Beethoven from Canada writes: Another option is to retain ownership in ones home and rent it out, while living in Florida for six months, then rent in Canada for the remaining six months. The rent will suppliment the meager pensions the Feds dole out. While the equity in your home continues to grow (hopefully).
  15. Dave C from Toronto, Canada writes: As someone in that 18-34 demographic, all I can say is: With today's increase in self-employment, part-time and temporary work, the death of 'company loyalty', the elimination of pensions from most of the private sector, the aging of the population, the falling ratio of workers to retirees, and a general distrust that there will be anything left of the CPP after the next couple of generations are done with it, is it any wonder than today's young people are planning for a self-funded retirement at the very start of our careers? The general consensus among my friends is - if we don't save for ourselves, ain't no one else gonna.
  16. Allan Franklin from Toronto, Canada writes: It's no great revelation that more people are plannig for their retirement since the government pensions are pathetic and the majority of companies don't offer any kind of pension.
  17. jason green from writes: So all the boomer seniors sell their houses at the same time ? And who's going to buy them? Supply and demand equals low house prices for these seniors. Also b mac, have you talked to many seniors about the Conservative flip flop on trusts? Harper is a breath of fresh air? They are choking on the stink of Harper's betrayal.
  18. gordon mcpherson from Ottawa, Canada writes: Upon retiring you have a house with equity (possibly a cottage)..., but you still must pay your municipal property taxes, telephone/cell, hydro, internet, water&sewer, heating oil or gas, groceries, beer, booze, gifts, maintain the property, i.e. roof, furnace, paint, furniture, an automobile (gas, insurance, maintenance etc). Hopefully, you have access to a private or superannuation government pension, Canada Pension Plan/Old Age Security, RRSPs, stocks, bonds, possibly a reverse mortgage on you home's equity, inheritance etc. The only changes are that, hopefully, you don't have a mortgage any longer and you don't commute to work (less mileage on your car, less gas/oil consumption etc), no bus passes, lunches are at home, you wear your pyjamas or jeans all day, you drink your coffee at home, your kids have moved out, drink more beer/booze, watch more dvds. Its all good, get your crap together and GIT'R DONE!
  19. D. Phoenix from Victoria, Canada writes: Sell your Toronto home and come to Victoria. Although the real estate values in Greater Victoria aren’t much better than in Toronto, there are plenty of cheap (relatively) homes in outlying communities such as Duncan and Nanaimo. There are lots of reasons why: the climate is above freezing all year round; we don't get excessive amounts of rain like the folks on the lower mainland do; direct flights to Toronto; and there are already plenty of seniors here already. Although I wouldn't be moving unless equity gained from the old home is enough to pay for the new home, the cost of the move AND provides enough cash to supplement my retirement income for a few years.
  20. Jimmy K from Toronto, Canada writes: Well maybe one day we will elect a non-small-l liberal government that actually believes in helping people build a nest egg. For example, by making mortgage interest tax deductible, like in the USA. Or perhaps by shifting the tax system from taxing income to taxing consumption. Unfortunately, if we try proposal #1, the NDP will be up in arms, because we all know helping the middle class afford a home and not live with the tyranny of renting is evil, or at least Jack Layton will tell us so. As for proposal #2, we are moving in the opposite direction with the GST cut, and no party will dare increase the GST anymore. Besides, the NDP will be up in arms over that one too (this time, understandibly so) beacause of the somewhat regressive nature of consumption taxes. Oddly enough, they were also up in arms when Harper wanted to CUT the GST. Ohhh those socialists, they're so wacky.
  21. Ted Smith from Canada writes: Interesting conversation, here's my two cents. To all knowledgeable investors, the key is diversification to minimize risk. You may not be hitting home runs all the time, but those singles and doubles sure add up!
    We have tried to diversify by having residential real estate in three provinces (AB, BC, ON), commercial real estate in Alberta, stocks, bonds, trusts, etc. I will not have a private pension but I will rely on my own investments and some rental income to make do. My wife will have a public service pension, which is indexed. Any government pensions will be gravy as far as I see it.
    We expect to be retired by 55 (we are now 51, and I work part time). Our two kids are grown up and moved out, one is still in university for 3 more years. Our oldest daughter recently purchased one of our homes in Calgary (at a heavily discounted price of course!).
    At retirement, we plan to sell one of the Calgary houses and split our time between a condo in Calgary and a house we purchased a year ago in SW Ontario (Windsor) for 120K. I agree with the comments about SW Ontario (good and bad) but the key to us is it's affordable housing and a different climate than Alberta.
    My point in all of this is that we are average type people, but have managed to do the above, raise two beautiful kids, and have a life. How did we do it? Started the family early, always saved at least 10% of income, and didn't do anything really stupid like invest heavily in Nortel, etc. And lived within our means, especially early on.
  22. Thomas Bendoraitis from Elizabethville, writes: I so agree with #1.These people work their entire lives raising children, upgrading their homes, and then a faceless entity called government, forces them to sell because they cannot pay the taxes, hydro, heat, insurances etc. This, when they should enjoy the fruits of their life’s labour without tax worries, albeit dealing with declining health and age issues. It is outrageous that seniors don’t get a severe tax reduction or a complete elimination of taxes after retirement. When is someone going to wake up and say, “Hey, this thing called government is not for the people by the people” it is more congruous with a vulture fed by the undertaker of the poverty stricken retirees. Government is scandalous in almost every Department when investigated, billions of dollars grafted, stolen, kicked back etc. whilst they force Bob and Martha Canadian into an old age home. Their income stream no longer satisfies of our callous, revenue insatiable, 3 levels of government. I have friends who are seniors and they cut corners everywhere such as lighting, heat, you name it and they were the hardest working Canadians I knew. I see some of their OAS increases, they are an insult to their integrity. The Gov’t keeps generating expenses, change your oil tanks, line your chimney, pay separately for garbage pick, hydro increases (talk about scandal) home and car insurance increases etc. Give your head a shake! Those saving for retirement now in RRSP’s, don’t count on it being there when you retire. The feds can pass a law clawing back your nest egg whenever they want and we’ll sit here and do absolutely nothing like good whipping boys and girls while the scandal-eers sail the sunny Caribbean. A resource rich country like Canada should and can provide for its retirees comfort, not just empower and fill the corporate elite and their troughs with the infamous kickback play.
  23. john newsom from Toronto, Canada writes: I've read studies by the Conference Board, Fraser Insitute, the Center for Strategic Studies in Washington and Economist magazine last year, which conclude that by 2040 many countries in the West including Canada ( Japan), these countries will have more houses THAN PEOPLE (or more specifically 'families'), such are the realities of population aging and shifting demographics.

    With the laws of supply and demand, can there be any inference drawn to potential housing values in an age where there are more houses than there are people to buy them? And what might that imply about the soundness of this kind of 'investment strategy' for those in their 30's?
  24. central Canada from Canada writes: Not wanting to echo post #1, but I must agree that when “real net incomes” regress year over year and property values increase at close to double digit rates in most urban areas, something has to give. The younger generation can either contribute to an RRSP or pay off the mortgage, but rarely both.
    As for municipal taxes, when Harris, Flaherty and their “common sense” revolutionaries introduced “fair value assessment” which was supposedly to be transparent, with mill rates reducing as property values increased, they failed to account for the service dump that forced cities to pay for it in the only way they could. The result is that retirees, in their seventies and over, are forced to sell their homes to meet the municipal tax burden. The homestead may have increased tenfold, but the tax bill also, resulting in the inability of a fixed income earner to keep up. Flaherty, now our federal finance minister, has compounded the problem with an about face on the Investment Trusts.
  25. R. Carriere from Canada writes: Sell your home and come East! CLEAN air, peace and quiet, great seafood right off the dock, ocean or lake water sports, less complex problems, NO TRAFFIC, and a house on any lake or the ocean for 200k-400 ( more or less if you wish), people actually say 'Hi' on the streets, cars stop at the intersection to allow people to cross the street...should I go on? Bored from sailing from days on the ocean or uncrowed incredible golf courses at rates that would blow your mind away, or. or or...? Jump on a plane and it's 1 hour to NY-Boston-Mtl and 2 to TO. Cold winter day? minus 5. Hot summer day? 28. It really doesn't get any better than that!
  26. Randy Canuckistan from Canada writes: If all three levels of government seriously gave a damn about retirees they would SUBSTANTIALLY reduce all forms of remuneration to government workers thus alleviating the need to continue with tax increases at such alarming rates. Nobody gets the pay and perks government workers do and it is high time the hosts were treated at least equally to the parasites living on their backs. The income trust fiasco as perpetrated by the Feds is another example of the complete lack of concern for seniors. They could have done a number of the changes without damaging as many people as they have. I guess when you get the indexed pensions government works do you just don't think of those you are economically raping.
  27. N Kevin from Ottawa, Canada writes: I think economists refer to relying on the rising price of an asset for savings as 'passive savings', as opposed to actively saving and investing cash. The only problem is that it only works when the asset, in this case real estate, is in a growth cycle. We've been seeing this for the last 5 years or so. However, as soon as the asset goes into a negative price cycle, as inevitably happens, those who haven't saved any cash can find themselves in serious trouble. They end up with 'negative' equity, or a situation where they owe more then the asset is worth. This is happening right now on a large scale in the US where people have used their homes as piggy banks and have withdrawn huge amounts of 'equity' to fuel consumer spending. With interest rates on the rise, these people who were just scrapping by to begin with can't make their mortgage and home 'equity' loan payments...and they're trying to extricate themselves by dumping their houses. The result being that there is a massive over supply of homes on the market and prices are starting to collapse.

    In any event, I often wondered how you use your home as 'income' if you're living in it and can't or don't want to sell? If you borrow against 'equity', you'll still need to service the home equity debt and that takes income. How does one who's retired afford to do this?
  28. john spafford from peterborough, Canada writes: Sell your home in Toronto and move to Peterborough.
    You can purchase a nicer home here for 250,000. We
    haven't been hit by Toronto fall out yet. However, this won't
    last to much longer as we are only
  29. Whispering Pines from Canada writes: Eleven years ago my wife and I were in our early 50's and were both having considerable frustrations at our jobs. We had a large house in the GTA, one child had left and the other was getting ready to leave. We talked about buying/starting a small business instead but our only assets were in the house. It did not make sense to sell the house to access the equity and then pay rent, so we started looking for a business where one also lived.
    We initially looked at B & B's but found, unless you live in Niagara on the Lake, for the most part, they could only be hobbies. Also, we did not fancy getting up at 5.00AM to bake muffins..
    We next looked at trailer parks but unless you have a couple of million dollars that lifestyle did not appeal. We then looked at small cottage resorts/fishing camps and in 1997 we purchased a 12 cottage business about 90 minutes from Toronto.
    The change has provide us with many benefits: The guests are paying the mortgage and many other living expenses; as an incorporated business we will have $500K capital gains exemption each when we sell (our nest egg); as a May-October business we have a lot of free time to travel, we have a house on a lake (one of the great wishes of older people), our children (and now grandchildren) like to visit so they can fish, swim and stay 'for free' and I have never been healthier due to the physical requirements of an outdoors business.
    Our original plan was to sell when I am 65 years old but we now intend to continue for several more years as this has proven to be a great mid-life change. Many other people might consider something similar; no previous experience is required, just common sense and desire to meet and greet other people.
  30. Ted Smith from Canada writes: #25, you forgot to mention the tons of snow that you get to shovel each year in the Maritimes. Friends moved to Halifax some years ago and are ready to come back because of the lousy weather and too laid back attitude of the East Coast.
  31. Michele K from Ottawa, Canada writes: #14, I wouldn't want to be a landlord in my retirement, let alone an absentee one for half the year. Might be fine for the very handy person who stays in town year-round, but as you get older, you'll want to be rid of those kinds of obligations.

    And #19, maybe you're wanting to be able to unload your own place there, but you surely haven't been around Victoria over the last several weeks. No freezing, year-round? I don't think so - welcome to global warming, phase I. Later phases have 3/4 of Victoria underwater, so at the very least, if you're looking for retirement on Vancouver Island waterfront, buy way back and wait a while.

    And yes, though expensive Victoria is something (only) a Toronto homeowner or recent Calgary-departee could afford, something you BCers have to put up with (being resource-based, and all) that many other places don't (like Ottawa, for example) is a very volatile real estate market - prices are already off a bit in your area, and likely to fall right back to earth as resources go up and down, as they always do.
  32. Rick Czarnota from Calgary, writes: #13 Cliff Campbell I am with you 100%. I am 31 and don't even include Canada pension plan income into my retirement plan. I expect to see nothing from CPP or at best a monthly cheque that will cover a bag of chips and a 6 pack of pop. The only reform to the CPP I support is the option for me to opt out. I can invest my money for my retirement far better than the Federal government. Even RRSP's are only moderately useful as you are penalized (ie. taxed) for successful investing forcing extremely low rate of withdrawl of capital. #9 Inflation or hyper-inflation is far more disconcerting to a senior/retiree than a recession.
  33. Philosopher King from True North, Canada writes: A lot of baby boomers have bought huge palace like homes that are becoming more and more expensive to heat and maintain. I think they're going to be in for a bit of a shock when they go to sell if they're living in the burbs. I won't buy a house like that, and I doubt many in my age bracket (18 - 34 ) will want to take on such a liability unless it comes cheap. So far as I've seen we're all going for freehold townhomes. Cheap to heat and easy to maintain but you still have a basement, garage, yard...etc.

    Worse than this however is the land taxes. I don't mind paying consumption taxes, but income taxes and land taxes are regressive and stupid. If you want people to be able to take care of themselves without running overly expensive social programs, then you need to leave people to decide where to spend their money. Consumption taxes take revenue from those who consume, not those trying to eek out a living. We have a friend of the family who had to sell the house she owned for 40 years because her house was 'reassesed' and the land taxes came in too high. She now lives in an apartment and is miserable about having left the home her late husband has spent so much time fixing up for them.

    I'm am definitely a social liberal, but the fiscal conservatives aren't entirely wrong either. The government should stay out of people's homes and pay cheques. This is why I was so opposed to the GST cut. The Conservatives broke every precedent of Conservatism by cutting the GST and raising income taxes.

    I say no more income taxes that take food from our mouths or land taxes that evict us from our homes. Tax the consumption of resources and products. Then at least people can choose to conserve. What we have now is nonsense that is neither fiscally conservative nor social liberal.
  34. Mr Fijne from Calgary, Canada writes: When this country will understand that taxing people on everything will make its population poorer, homeless and stiffle investment and business, there won't be a need to design wallet picking policies, pitching canadians against each others by exciting the lowest senses of envy of the rich and all this demagogic garbage that is so well used by all parties to get in power and tax us all to death. Citing Finland and other northern europeans countries as the example without delivering half of what these do is misleading. How many immigrate over there if this is so cool to live there? Not many. The best social programs are wealth building possibilities for all. But our governments -and Harper has proven with his lie on income trusts that he belongs to the centralized tax hungry retrograds- do not have the courage to do what Ireland and other rare places have done: cut the red tape and make a welcoming place of Canada not for only the refugies but for the rich. Everyone would benefit. When retirees have only hope to sell their homes to survive you know you live in a country that do not respect its citizens. Homes, people, lives are commodities and no patrimony is left to build a country and after that these politicians are surprised attachment to the land is weak...
  35. True Grit from Calgary, Canada writes: I personally think that a lot of younger people are counting on their inheritance from their 'baby boomer' parents to fund their own retirement.
  36. BC Refuge in AB from Canada writes: As with many here in the post-boomer generation I do not expect to see anything from OAS or CPP, and in doing my financial planning I look at my house (even though it has gone up $200k in the last 2 years) as nothing more than a monthly cost to put a roof over my head. If I make money off it when I sell great, if not I'll be prepared. I focus on my investiments inside and outside my RRSP, and suspect that witin the next decade I will be looking at moving a large chunk of it off-shore to keep it out of the hands of the gov't when all the boomers retire and they realize that since they were too self-involved to have enough kids there is now a shortage of workers to support all the retired folks.
  37. Larry Robinson from white Rock, writes: The only truism about retirement today is that there is no retirement. You and your money must keep working to maximize life expectancy for a whole bunch of reasons from personal to financial health. Bravo to all the younger people planning their 'retirement' now, to Whispering Pines who saw the need for investment and enterprise, and to all who still subscribe to total retirement - get a plan B, and maybe a C. Government can help with tax breaks for seniors to keep their homes but ultimately we cannot expect to do nothing for 20 to 30 years and live comfortably.
  38. R. Carriere from Canada writes: # 30- We had a bad year that year-the Hurricane Juan and what we called White Juan- a 100cm plus dump-besides that anomoly, life has been pretty good both before and after. 'Laid back attitude?' Lousy weather? Compared to what? Oh, do you mean stressed out because of everything 24/7 or did you mean plus 35-incredible humidity-orange smelly skies-and staying indoors for three months just to survive the heat. I stay by my call and wish you all the best!
  39. P Bell from Vancouver, Canada writes: I understand the financial dilemma facing those who are retired, no longer have a significant income and must pay property taxes but I at the same time, if you are using city services, you should pay taxes. When you stop using water, sewer, parks, recreation centres, streets, street lights, etc., then maybe you can stop paying taxes. And don't even start on me about paying the school portion, if you went to school for free then you should continue to support future generations in your community.

    Good points about using a house for retirement though. We bought in Greater Vancouver 3 years ago and when you pay that much you get pretty emotionally invested in the idea it will be worth that least that much and hopefully a lot more when you retire. We hope to sell and move to a smaller community but we were thinking the Okanagan and prices are going up faster there than here. But we are not too far out of the center so have some hopes the value will hold despite a possible decrease in demand for housing as the boomers retire....
  40. keith stringer from Cincinnati, United States writes: Post 3 from Edmonton writes that 'the (air) in southwestern Ontario' is 'brown with pollution from Ohio' (end quote). Actually, if you go to the Canadian government website of Environment Canada, you will read that 'air pollutants from the U.S. account for up to 50 per cent of smog in southwestern Ontario' (end quote). In other words, according to the Canadian government, Canada is at least equally to blame for Southwestern Ontario's air pollution. Obviously both countries should be doing better in this area.
  41. Howard Beale from Canada writes: Ted, #21: I hope you report that taxable capital gain on the 'deeply discounted price' of the home sale to your daughter. CRA monitors all these business related posts. It's taxes like these that prevent a lot of people from getting ahead.
  42. Jim Smith from Western Canada, Canada writes: Hi. Since we are on the discussion of pensions, I am curious to know if, in the long run, public sector jobs are better than private sector jobs, in terms of pensions, benefits, etc. I am in my early 30's. Private sector does pay more than public sector, so people should be able to sock away some money for retirement. What gives?
  43. X Canadian from United States writes: This is a generation that has been extorted of it's pound of flesh by a shameless government of a dozen years. It's no wonder that their only real retirement investments are things they can actually see. The system has been stripped to NOT help those elderly who have not been fortunate enough to support themselves. There's a huge retirement burden coming, who's going to pay for it?
  44. alex loss from Canada writes: Small problem: Either house prices will come down, or retirees will be cashing out to lend their kids the money to buy. Let's get real, very few people have earned the money to buy a 400k house. They bought it for 150, or traded up a few times as prices rose. Better cash out and downsize sooner than later.
  45. Ted Smith from Canada writes: #41, because we sold at a 'deep discount', there is no capital gain, don't you get it?
  46. Howard Beale from Canada writes: #45, perhaps it is you who doesn't 'get it'. A non arm's lenght transaction at less than fair market value is deemed to take place at fair market value. Try looking at s 69(1) (b) of the Income Tax Act.
  47. Howard Beale from Canada writes: #45, perhaps it is you who doesn't 'get it'. A non arm's lenght transaction at less than fair market value is deemed to take place at fair market value. Try looking at s 69(1) (b) of the Income Tax Act.
  48. Veritas Veritas from Canada writes: Ted Smith, you should talk to your accountant. Selling a non-prime residence at BELOW Fair Market Value does NOT legally avoid taxes. You capital gains on the sale of that house MUST legally be based, basically, on the difference between what YOU paid for it and the FMV of that house, at the time of the sale to your daughter. In other words, what she actually paid for it is TOTALLY unrelated to the calculation of the capital gain for tax purposes.
  49. Tim Geoffrey from Canada writes: Ted Smith - you better have a discussion with your accountant because if CRA reviews the capital gain they will deem the proceeds on your deeply discounted house to be the actual fair market value and assess you the tax on the capital gain accordingly regardless of the sale price.
  50. Michele K from Ottawa, Canada writes: Phil King, #34, I agree with all you've written about taxing consumption as the right way to go, but you draw the line at letting house-rich seniors off the hook to pay their fair share of property taxes, and I can't agree.

    Like poster #39, I would say that there is no inherent right to stay put, unless you're willing to pay the property taxes owing. If you can't afford property taxes that have grown over time with your property assessment (and I say, 'over time', because annual assessments based on the whim of local real estate markets as we experience in Ontario are hardly fair), then count your blessings and sell your property, take your handsome, tax-free capital gain and buy yourself something smaller in the same area, or blow it all on a new level of luxury in a smaller centre - only don't complain that you're hard done by (and you farmers who intend to pass down your valuable farms to children tax-free, you can stop griping about how tough you've got it too).

    And I say this, by the way, as someone who owns and pays taxes on a house worth about twice the average here in my fair, high-property-tax-jurisdiction city (Ottawa). Property taxes are going up by leaps and bounds here (in my obsessive, on-going comparison of property tax rates with everyone I know, Ottawa appears to be the second-highest property-jurisdiction, second only to Winnipeg [Torontonians have a lower millrate, but higher property values, so again, they're not taxed as toughly as they think]), and of course I pay twice the norm, but that's what I expect, though I have no children in the school system - I have the wealth necessary to own this house, and I expect to be taxed according to that wealth. I don't expect to be able to afford this house in retirement (we'll move then), and who knows - I may decide at some point before retirement that I've had about enough of Ottawa city tax spendthrifts but until then, I'll pay my taxes, as it should be.
  51. can I vote again from around-Kingston, Canada writes: post 44, Alex the game is known as the shell game and entry into the market and moving about keeps you in the game, even those who think they can leave the game have to live somewhere...hence the game continues. So let's assume the $$$ of the real estate market is X, then 2 years forward the market $$$ will still be X (all things being relative) but if your house isn't as attractive (i.e. location) than someone else's place is going to take up the slack and be priced higher. As for those individuals counting on a change in their financial bottom line by selling out in the higher priced markets, and moving out to the sticks in order to maintain their edge...don't count on it.
  52. Jason Sweeney from Calgary, Canada writes: Ted - Not only can be deemed to have received proceeds equal to fair market value (and required to pay taxes on value that you never received)...but your daughter's cost base for the property will be deemed to be equal to the consideration that she actually paid. When she goes to sell that property, the shortfall between the fair market value and the actual consideration can be taxed again.

    Be very careful.
  53. Clive Gingell from Ottawa, Canada writes: I wonder what'll happen to the housing market when someone in government decides that taxing cap-gains on principal residences is a GREAT idea?
  54. Ted Smith from Canada writes: Oops, I should have mentioned that the property was our principle residence, and now its hers. Sorry about that.
  55. Philosopher King from True North, Canada writes: #50 I think this is about property rights Michele. I agree that part of my argument was sentimental and thus isn't very convincing, but there's more to it.

    Land taxes are inherently unfair because they subvert your ownership of the property. That I can own my home and land lock, stock and barrel, and yet have to dole out hundreds of dollars a month in land taxes is insane. They might as well be charging me rent because if I don't pay it I get 'evicted'. Nobody should be forced from their homes because they can't pay the communist rent. Either we own the property or we don't. No caveats. There are better, more progressive ways to raise tax revenue without hurting people's basic ability to support themselves. Since that is the underlying goal of both social liberals and fiscal conservatives, I can't understand why this antiquated tax system is still around.
  56. Philosopher King from True North, Canada writes: #42 Hi Jim. As a federal public servant I can attest that yes we do get paid a lot less on average than someone in the private sector, but the truth is you can't beat the benefits. My wife, also a public servant, is currently on maternity leave, and with the extra benefits she hasn't lost a cent in pay. In the private sector she'd have 55% of her salary. Moreover, while the job security isn't what it used to be, it's still better than the private sector. However, if you intend on being VP or something, stay in the private sector. Ultimately, if money is your end goal, the public service is not the place for you.
  57. Mr Fijne from Calgary, Canada writes: Post #53 if they do this, they'll better be prepared for WAR and armed revolt.
  58. Philosopher King from True North, Canada writes: #39 I have no problem paying my fair share. I do have a problem with the way the tax system works. Land taxes undermine the right to own property. This model of taxation is centuries old and has no place in the 21st century. Yes our services need to be paid for, but they don't need to collect this way. The reason it has not changed is that the Feds won't give up any tax powers to the Municipalities, despite their obvious starvation for infrastructure.

    As a Canadian, I object to the notion that different levels of government which all represent me, are arguing over how to divide up my life and liberty. Tax those things in which we share, like say non-essential consumption, but not those things which I require to live like my pay cheque or home.

    I object to the government charging me rent on my own home.
  59. Michele K from Ottawa, Canada writes: Cannot disagree with you there, Philosopher King.
  60. Normand LaBine from Winnipeg, Canada writes: We shouldn't get too excited about these higher values. The materials going into them are made with planned obsolescence. My old house (pre-1911) is built like a brick-outhouse. The only place where I take on the new materials is insulation and electrical. No structured trusses, none of that aspenite chipboard sheathing, real toe-nailed walls, not those thin galvanized clips.

    It took the industry a long time to figure out how to make home structures self-deprecating, but they've done a bang-up job.

    Take Argon gas-filled windows. The gas leaks after 10 years. How long is the warranty? Or plastic plumbing? Same stuff as the food wrap that contaminates your body? Or the Heat Pumps in Geothermal heating? They cost $5,000 now, the warranty dies after 10 years of inflation.

    My little house on the Prairie is just fine. I've renovated it with wheelchair railing widths in the stairs, future ramps, fire-escapes at every window (roll-out ladders to the ground). My rain-harvesting will save me garden and lawn watering costs. My solar water heaters will save me electricity, and my passive solar air-heating system will reduce my winter bills. And since its an inner-city neighbourhood, the taxes will climb VERY SLOWLY.

    No furnace here, no air conditioning with R-33 walls and R-52 roof insulation (done for the herb garden on top with a pilot-mooning patio).

    I just hope my wife buries me face-down, when its my turn. The banks and government can kiss my climate-change concerned white cheek. And she can sell a house that pays the new owner half or more of his mortgage payments. When a house starts paying its own freight then you can say it has value.
  61. P Bell from Vancouver, Canada writes: I guess we could go to user fees on all city services - but that would include toll roads folks (and paying for water and every time you flushed the toilet, paying to get into parks etc), and I've never heard anyone saying YAY! when that subject comes up. All I ever hear is complainin'.

    Bottom line with Canadians is that we want all the services (and more please) but don't want to pay for them.
  62. P Bell from Vancouver, Canada writes: For the record, municipal employees only get 55% of salary for maternity leave, with a 6 week top up to 95%.

    How we envy the federal employees.....!
  63. L.B. MURRAY from Sherbrooke, Canada writes: Most people who comment about taxes are absolutely right. After the so-called ''real estate bubble'', property taxes are skyrocketing!! and lo and behold, with the exception of Alberta and parts of B.C., the real estate bubble is bursting...

    BUT, the municipal governments were so quick to ''adjust'' and raise taxes; mine just went up about 53%. Perhaps Mr Carriere from Eastern Canada is right. Let's sell our properties and all of us from T.O. to Ottawa to Montreal move to the Maritimes. Is Mr Carriere talking about Nova Scotia or New Brunswick or P.E.I. ?? We're coming!
  64. salty sam from Victoria, Canada writes: Well having equity in a home is fine and dandy. I've got plenty of that. The problem is that moving into a retirement condo presents little or no savings around here, so the equity all goes back into real estate. My house may be worth $800K but a decent 1200 sf condo downtown costs at least that much. Oh well, back to plan A: drudgery and saving pennies one at a time.
  65. Matt P from Toronto, Canada writes: Please! for all you baby boomers that have gone apapletic over the income trust roll back get some perspective. Did Harper change his policy on income Trusts? Yes. Did the realty of the situtation change between the time of the promise and the time of the change of the policy? Yes again (the flood gates were opening up and BILLIONS of corporate tax dollars were about to go out the window). If the corporations were not going to pay those taxes for the services Canadians use where do you think that money was going to come from? (the answer is of course, you, ie maybe higher personal income taxes or consumption taxes). But the baby boomers, who hold most of the wealth in this country (and most of the income trusts specifically), don't think they should pay their fair share for some reason.

    Sorry baby boomers but as a younger Canadian you get zero sympathy from me. You are the richest generation in the history of this country (built partly on heavy enviromental degradation), You enjoyed the main portion of all the benefits of half a Trillion dollars in deficit spending in the 1960s - 1980s (remember that heavily subsidized post secondary education) most of which you will never repay in your lifetime. And you are about to enter your prime healthcare consumption years. Tell me again how that is unfair.

    Yes you had to work hard for your money, just like your parents and just like your kids will have to. That doesn't entitle you to enjoy the benefits of government services for the last quater of you life and not have to pay for it. On the plus side for you since my generation is so apathetic towards politics you can probably get away with just about anything you want politically.
  66. Bob Rollheiser from Canada writes: Hope is not an action plan. For years various levels of government have looked at the middle class as a source of finance to be harvested at will. It is time that our MP's worried about what the voter thinks, not some absurd technicality of parliamentary procedure. It doesn't matter who forms the government as long as they are accountable to those who elected them.
  67. Glenn Hawley from Calgary, Canada writes: Philosopher King from True North, Canada writes: "I say no more income taxes that take food from our mouths or land taxes that evict us from our homes. Tax the consumption of resources and products."

    PK has a good point here. To expand upon it, tax policy that depends too much on any one area of the economy is going to be inefficient because economic activity will flee from whatever is being taxed. Income taxes thus directly suppress employment, for example.

    We actually should tax everything; property, income, excise (tobacco, alcohol, etc), and consumption (GST/PST). The wider the tax the less likely it is that anyone can manage to avoid tax entirely. Thus we should reduce our dependence on income and property taxes, but not eliminate them, while increasing GST and PST.

    It is especially important to simplify the consumption taxes by eliminating all exemptions to those taxes. That way the tax rate can be lower than otherwise while still garnering the same revenue, while getting rid of exemptions makes the whole system more efficient by lowering collection and adjuducation costs.
  68. Matt P. from Springfield, MO., United States writes: #6 G. Mack- I admire what you did for your parents.
    #27 N. Kevin, you're absolutely right. Millions, even those who formally actually owned their homes outright or had them nearly paid off, fell for the equity cash scams and took out second mortgages with ARM loans and extracted equity up to appraised value expecting the values to rise, but they're falling - leaving them underwater in their mortgages and in many cases defaulting, and millions are trying to sell their homes before they foreclose. Big mess...big preventable mess.
    Property taxes are a huge issue for New Jersey folks with even a house appraised at $250,000 U.S. costing the homeowners upwards of $6000 a year. Any retirees who own their houses free and clear..well, depending on how the state deals with them, they may eventually find themselves having to sell as their limited income may not cover cost of living along with the property tax increases. Florida is double-whammied by ever increasing property taxes which burden new buyers the most and the insurance companies raising rates exhorbitantly because of hurricanes. The taxes and insurance are so high that many people can't find buyers as fewer people are willing to pay the new insurance rates (and if they can't get coverage through private companies, the state offers a plan which is even more expensive) and higher property taxes.
    I sold my house in Las Vegas in June of 05 for $410,000 and bought a custom brick home on 4.3 acres in Missouri for $227,000 and paid cash. I have zero credit card or auto debt, and no loans owed. I'm completely debt free and live for very little actually, but I just turned 44 and I will need to work for the rest of my life to cover medical insurance and keep my savings growing.
  69. fan demonian from Victoria, Canada writes: I'm not a policy maker, but from what I understand, governments realized some time ago that income was mobile, fakeable and hideable. Property, on the other hand, is immobile, concrete and staring tax collectors in the face. So taxes on property go up. Problem is, taxes on income haven't exactly been coming down. So while we bicker over the Blue Party or the Red Party mickeymousing our federal tax brackets, our municipal politicians have snuck in the back door and stolen our wallets. This hasn't caused much outrage because house prices have been steadily increasing, which people for some reason equate with getting rich. Now that prices are flattening and soon will be falling, those municipal taxes are going to start getting noticed.
  70. John McCaffery from Warragul, Australia writes: I like the comment form G Mac #6. However, I would add that in my mind the all round best buy for properties in Canada is Annapolis Royal in Nova Scotia. Here is a town that was once a bustling community in the early 1600s (older than Quebec City), but due to the struggles of the super powers at the time (Britain and France), this jewel of a town had history pass it by. Hundreds of years ago it was a community of 7,000, it is now about 700 but still remnants of the past exist. You can pick-up a two hundred year-old home there for a song! I don’t always give the French too much credit, but I do think they had it right when they chose the beautiful Annapolis area for the main centre as opposed to the British choice of Halifax. However, Halifax had the harbour to support the military strategy, which eventually paid off and helped set the course for Canada - but for a place to live, compare the surrounding areas of Annapolis with Halifax - I dare those Blusnosers!
  71. jay from canada from maberly, Canada writes: listen to the boomers complain here!

    you elect 2 decades of government racking up debt, and now you complain about property taxes!

    at least your generation is predictable.......
  72. Philosopher King from True North, Canada writes: #62 It's probably our union. What I've noticed about people and unions is that if you have one, you probably love them, if you don't you probably hate them. On rare occassions some stray from this, but to be frank it's hard not to like someone who'll wrestle managment to the ground to get you a better deal.

    Some point to our lower wage in comparison to the private sector, but I really think the pension and benefits make up for it. Our pay levels were officially frozen for over ten years, so management had to give the union something during labour talks.

    It's kind of a funny thing in the government. A clerk makes more here than in the private sector, but an officer makes less. Basically as you go up the pay scale the less a government official gets paid. This means the average government worker is paid less than the average, but the lower levels get paid more. Because of the benefits though it doesn't really bother me. It is not however a place to get rich.
  73. Philosopher King from True North, Canada writes: #61 Just thinking out loud here P Bell, but with smart metres on houses, there's no reason why people shouldn't pay for the water they use. Right now it's basically averaged, which let's wasters off scott free. Let them pay for their waste and let us pay the actual cost for it. Other infrastructure like roads is harder though. Tolls cause congestion, and frankly are annoying. I'd say since the Fed and Prov governments collect a lot in taxes from us, they should help maintain at least some of the municipal infrastructure. There's only one tax payer afterall, and personally I'm sick to death of being hit from every angle, or having convoluted nonsense perpetrated for an extra couple million.

    Canada's tax system is ineffecient. Having taxes collected from multiple groups in multiple ways through multiple governments is extremely wasteful. We essentially pay for a municipal, regional, provincial and federal agent at each level per action required to collect. Bureaucracy times four!

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