Not worth being a landlord

My wife and I retired to B.C. from Alberta about six years ago and we never really paid much attention to the housing “crisis” until we moved to West Kelowna.

Our first experience was when we purchased our house and had to shell out a hefty sum for the Property Transfer Tax and also the Provincial Sales Taxe on everything we purchased for the house. (There is no provincial sales tax in Alberta).

It was clear we weren’t in (Alberta) anymore.

My neighbour laughed and said didn’t we know B.C. didn’t stand for British Columbia, it stood for “bring cash.”

After six years of relentless housing “crisis” headlines, I sat down and looked at the costs of potentially owning an investment property in Kelowna, and once I looked closer I couldn’t seem to make the math work.

The bottom line is the cost of ownership is driven out of line by taxes. Further analysis shows me three layers of government piling on taxes simply makes the whole investment unfeasible. Taxes are levied on the purchase, the ongoing management and on the exit of the investment. They’ll get you coming, staying and going.

The list is extensive and relentless. At the federal level, it’s the Goods and Services Tax on anything purchased for the house as well as income tax on any rental income and potentially capital gains tax if you are fortunate enough to have the property increase in value.

At the provincial level, it’s the upfront purchase tax, Income tax on the rental income and Provincial Sales Tax on anything purchased for the house. Also provincially, if the house sits empty (maybe during renovations), you will incur the B.C. Speculation Tax.

At the municipal level it’s property tax. If you decide to sell the house, you’ll have PST and GST on the real estate commission and if you were lucky and the property appreciated, you will pay Capital Gains Tax on the way out the door.

So let’s add this up, you’ll have eight taxes—three federal, four provincial taxes and one municipal, five of those recurring and three being transactional.

The icing on the cake is the B.C. Provincial Landlord and Tenant Act, which gives far more rights to the renter than the person putting up the funds to buy the place.

One month’s rent as a damage deposit and a 2% rental increase cap when your property tax is going up by 4% per annum. No thanks.

The annual cash flow just doesn’t work as there is nothing left to the landlord/investor after the taxes are paid. Essentially you are just working for the government.

So every time I hear someone from government say something needs to be done about the housing “crisis,” I just shake my head.

These people don’t get it. If you take all the returns away in taxes, why would any reasonable person want to make this kind of investment?

If government wants to take all the money, then let them fix the problem. If they reduced the taxes then private investors would step in, but not until they do and they never will, hence the problem remains.

Cam Renaud, West Kelowna