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Laneway homes in the news

Two stories in the Vancouver Sun today about laneway homes:

West Vancouver is considering allowing laneway homes.  Or, as they say in the carriage trade, “coach houses”.

As a community planner put it all into perspective,

“We have a community that is aging, that needs different housing options. We have younger families who are having difficulty establishing themselves or remaining in West Vancouver because of the cost of housing,” Mikicich said. “At the same time, it’s a community that highly values the established character of its neighbourhoods.”

It’s a way to increase density in this charming suburb of Vancouver without incurring the “monster house” syndrome. As Jake Fry of Smallworks remarked,

“You may have more roofs per acre, but they’re going to be smaller roofs. They’ll probably even have less square footage per city lot, but there’s going to be more families and you’ll see the … communities become much more dynamic”

In this story, homeowners who have build laneway homes and applied for HST (now GST) rebates were instead charged bills by the CRA.  The Canada Revenue Agency rules are not just confusing, they can be contradictory.

It LOOKS straightforward, you build a house and apply for a tax rebate.

But where the rules may get sticky — especially in high-priced Vancouver — is when it comes to determining the value of a laneway home built as a rental.

“The GST/HST new residential rental property rebate is limited to rental units that are less than $450,000 at the time of substantial completion of construction,” CRA said.”

Most laneways can be built for less than $450K, but if you take the value of the property into account the value would be much greater.

To me, this is ridiculous.  You cannot find a property in Vancouver that is worth less than $450K.  As the writer, Don Cayo, says, determining the added cost of the property is difficult and moot:

But simple division may, in fact, overestimate the land value — it hasn’t been subdivided and it can’t ever be, so there’s no market reference to determine its value. Land assessments are usually based on “highest and best use,” but there’s no other use — or only unlikely or very limited use — for pieces of property that small. So their “worth” is highly hypothetical.

I’m taking more than a casual interest in how this plays out, so stay tuned for updates.

About ladywholivesdownthelane

Starting the adventure of building a laneway house in the real-estate jungle of Vancouver, BC

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