Scott Bergeson wrote:
> Quoting Roy Langston on Wed, 30 Apr 2008 12:41:00 -0400
>http://groups. yahoo.com/ group/LandCafe/ message/4712
>[The rate of] interest on the outstanding
>amount due ... could be set based on the bond
>rate the community must pay for borrowed funds.
>>No, the rate must exceed the prevailing mortgage
>interest rate, or deferment will just be used to
>finance land speculation. In Vancouver, the average
>dwelling now costs over $500K (average SFD is closing
>on $1M), the rental vacancy rate is 0.5%, and power
>company records indicate that 18,000 condominiums are
>That's what a concessionary interest rate of 3%
>on deferred taxes does.
>I've missed a few things here:
>1) Vancouver charges 3% p.a. interest on deferred taxes?
>2) Vancouver pays 3% p.a. interest on bonded debt?
No, it pays market rates for high-quality municipal debt.
3) Speculators are eligible for this concessionary rate?
Yes. All you have to do to be "eligible" is not pay your
>I would expect that Canada has "income" tax, and that
>both mortgage interest and property taxes are
>deductible from "gross income" before calculation of
>tax due. If presumption in error, please advise.
Canada and the province of BC both have income taxes, but
neither mortgage interest nor property taxes is deductible
anywhere in Canada, AFAIK. I don't know if US-domiciled
owners can deduct mortgage interest or property taxes paid
on property they own in Canada.
>While I concur
>about the inadvisability of extensive bureaucratic
>investigation into personal finances, nevertheless,
>most people who "need" (appraisal of that can become
>quite subjective, I know) the deferral usually owe
>no income tax or are ineligible for refund, so you'd
>be charging them a much higher real interest rate on
>the deferral than speculators (includes owner-
>occupied residential; especially, since they tend to
>be eligible for favorable mortgage terms) pay on their
>mortgages. Did you actually intend for this punitive
As explained above, that effect does not apply in Canada.
>(Note: this also makes mortgage finance unaffordable
>and inappropriate for purchasers lacking substantial
>taxable income from which to deduct finance costs.
>A corollary would be that so long as "income" tax
>persists, LVT, Location Levy, or whatever you call
>it ought not be deductible, nor should mortgage
>interest on the land portion of the loan.)
Of course. It should be obvious that the US mortgage
interest and property tax deductions are just additional
ways to shovel money into landowners' pockets for doing
>Final note: Speculation on empty condominia seems
Of course it is. And your point would be...?
-- Roy Langston
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