March 14, 2018
                          No. 211

Dream Killers“Signs, signs, everywhere signs …”

Remember that old tune by the Five Man Electrical Band? Well, it’s been in my head lately.

It’s how I feel about all the rules and regulations these days. You get a great idea, pass it around to a few people and, voila! It’s destined to be a big winner.

That’s the way it is with entrepreneurs. They get ideas that others haven’t tried, find a way to turn the idea into reality, and the world is better off for it.

Or, at least, that’s the plan! And then they run into the rules. Everything seems so highly regulated these days, and navigating the rules kills a lot of creativity. It’s why so many new ideas operate in grey areas. They’re too novel for the powers that be to have caught up to them with new regulations, yet.

Everyone said my idea was brilliant! I thought it was in a “greyish” region of public policy, the kind an entrepreneur delights in.

I polished up the idea a bit and took it to a lawyer for opinion (just to be safe)…and then to the bureaucrats… and then, to a second lawyer.

Lawyers don’t like grey areas. They don’t think there’s space between the “standard” categories. They think the closest fitting category would merely be stretched to include your amazing idea. And if it doesn’t neatly fit one category, then there might be several that could be stretched far enough to cover it, and so you have to meet the rules for all of them. It cost you a lot of dollars just for them to check it all out, and even then, they might have to kill the idea. It might violate one of those (stretched) categories.

My friend had a brilliant idea to get that dream vacation property. She went to see an accountant about implementing it. 

The verdict: “Accountant liked my idea . . . then squashed it. CRA says nope. . . . they stole my dream.”

“Temporarily,” I responded, and she agreed.

I know rules and regulations are there for good reasons: to protect the public, to prevent fraud, to secure governmental authority, to save the tax base, to keep lawyers, accountants, bureaucrats, and judges employed…

They sure can smother a lot of creative dreams, though. 

But then, every creative school boy has figured that out by about age 8, hasn’t he?

Maybe I’ll run off to the see the Dragon’s instead. They’re apparently holding auditions Friday in my town. Maybe they’ll be more receptive to the launch of new idea.

After all, my idea is also just on temporary hold.

Real Estate Profit Centre #6

So far, we’ve covered five profit centres of real estate, five ways that owning property can make you money. The five profit centres are: appreciation, mortgage write-down, monthly cash-flow, equity, and leverage of your money. There are two more to go.

The sixth profit centre of real estate is tax benefits. While I am by no stretch of the imagination a tax consultant, and this should not be taken as tax advice, I know that there are several ways in which you can benefit tax-wise with the investment of a residence that is intended for profit.

One is that the interest on any funds borrowed for the investment is tax deductible. 

This, of course, does not apply to your personal residence, but it might apply to any revenue producing element of that property, such as a suite.

Another is that improvements on that portion of the property (or the whole property, if it is not your personal residence), are also tax deductible. You are using “before-tax” dollars to pay for those repairs, essentially discounting their cost by your marginal tax rate.

A third is that revenue producing property can be depreciated according to a certain capital cost allowance, even while the property may actually be increasing in value. This may come back to bite you when you later sell the property but, even if it does, it has the effect of deferring taxes on that capital appreciation. It might make sense to use the tax saving in the meantime. You will have to do the math.

And above all, check with an accountant before acting on these ideas.

Award-winning* Fraser Valley Rent 2 Own is a founding member of the Canadian Association of Rent to Own Professionals (
* winner of all-star awards, 2012, 2014, 2015 at the Rent 2 Own Summit.