by Roy Berg of Moodys LLP

By now it is difficult to find a Canadian who has not heard of the buying opportunity in US vacation homes. The weakness of the US real estate market and the strength of the Loonie combine to make US vacation properties seem like a bargain to many Canadians. However, before you jump into the investment you should be aware of the tax consequences, because an unanticipated tax bite can quickly turn a sweet deal sour.

Before delving further into this topic, however, it is important to know that the following discussion makes several important assumptions:

• You are purchasing vacation property and not rental property;
• You are not a US citizen;
• You are not, and never have been, a US green card holder;
• You are not domiciled in the US;
• You do not spend more than 121 days per year in the US on average; and
• You do not spend more than 182 days per year in the US.

If any of the foregoing describes your situation, you may already

By Daniel L. Kiselbach and Cheryl Teron of Miller Thompson LLP

British Columbia is the first Canadian province to allow individual real estate licencees to form personal real estate corporations (PREC). Under the Real Estate Services Act and the Real Estate Services Regulation, Realtors can take advantage of the benefits of incorporation in a manner similar to dentists, accountants and lawyers.

By Jason J. Annibale and Allison Worone (summer student) of McMillan LLP

[Ed. note: I believe this also serves as a cautionary tale for anyone who oversees payments in any industry, not just those subject to construction trusts.]

Developers and others with payment obligations in the construction pyramid (payors) can better manage their risk and exposure by ensuring that their payment and accounting practices are well-managed and clear – particularly given the Ontario Court of Appeal’s recent decision in Colautti Construction Ltd v Ashcroft Development Inc . ¹ As Colautti confirms, payors must clearly allocate their payments to particular invoices or debts. Failing to do so may in certain circumstances allow those entitled to payment (payees) to apply received payments to other outstanding accounts – even where such accounts are due on other contracts or where the accounts have been outstanding past the two-year limitation period in which a claim for payment could be made. Colautti also cautions that payors who comingle project monies received with other funds, may be found to have breached their trust obligations owed to their payees under the Construction Lien Act . ²