Canadian Lawyer

20 A U G U S T 2 0 1 7 w w w . C A N A D I A N L a w y e r m a g . c o m in the real estate market and can be shielded by the corporate structure. That, along with insurance, protects the individual investors from liability related to the property. Individuals purchasing property on their own acquire more risk because they are personally on title as owner and landlord. But even the smaller investor has become more astute and looks for ways to avoid risk. "What I have seen in recent years is even the small guy creates a numbered corporation and buys his duplex that way to shield himself from personal liability," says Adams. "You see people more conscious about the risks and liabilities arising out of ownership of property. They're more inclined to look for protections." Upon exit, there's always been that hefty capital gains tax. While the principal prop- erty exemption has been a way of getting around the tax that applies to the appre- ciated value of the property, new rules introduced in October suggest there will be stricter enforcement and that the exemp- tion may not be applied as loosely as it has been used in the past. Starting with the 2016 tax year, indi- viduals are required to report all real estate sales on their personal income tax state- ments, even if it's considered their principal residence and subject to the principal resi- dence exemption. "That is really the area where there has been a change," says John Sliskovic, an accountant and tax partner in Ernst & Young's private client services practice. "What it really does is it gives the Canada Revenue Agency more information. In the prior system, if the gain was completely sheltered from tax in the principal resi- dence exemption, the administrative policy was you didn't have to report anything. So now, it gives the Canada Revenue Agency more information to assess whether the claiming of the principal residence exemp- tion is appropriate or not." Ron Choudhury, a partner in the tax group at Miller Thomson LLP in Toron- to, where he leads the sales tax specialty group and advises primarily on the tax implications of real estate investments, says he has seen two primary motiva- YOU SEE PEOPLE MORE CONSCIOUS ABOUT THE RISKS AND LIABILITIES ARISING OUT OF OWNERSHIP OF PROPERTY. THEY'RE MORE INCLINED TO LOOK FOR PROTECTIONS. RICK ADAMS, Thompson Dorfman Sweatman LLP We're redesigning our website for improved navigation and easy access to the latest in legal news, features, digital editions, video and more. COMING SOON A FRESH LOOK FOR YOUR MOST TRUSTED LEGAL CONTENT Visit www.canadianlawyermag.com soon to see the transformation for yourself. Untitled-3 1 2017-07-17 2:53 PM

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