Tax Shelters

[LeighF]

Good Day All

I`m sure that we are all in the same boat lately with our RRSP`s heading into the tank. Does anyone know of any other tax exempt alternatives out there that we could invest in besides RRSP`s?

I really don`t like the fact that I have no control over the markets, thus no control over my RRSP`s.

Thanks

 

[Nir]

LeighF, Do you believe you can make more investing in real estate using your RRSP money? good, you just answered your question.
Good luck, Neil

 

[GaryMcGowan]

You could use your RRSP to invest into Real Estate as second mortgages or REITs. There are a number of REIN members that use RRSP second mortgages and use RRSP funds within a limited partnership. We are just now positioning ourselves to use RRSP`s to finance some of our deals. Here are just a few of the members that are using this strategy to help grow people’s retirement funds.

Mark Loeffler www.homeownersoon.com
Thomas Beyer www.prestprop.com
Monte Dobson www.c2ventures.ca

In the words of Greg Habstritt " it`s time to take charge of your RRSP fund". www.greghabstitt.com
If you haven’t listened to Greg`s conference call on Mutual Funds I highly recommend it. http://www.rrspsecrets.com/training/RRSPCC1.html
I`m now using it as a resource to give to potential investors who are fed up with how their Mutual Funds are performing. This is what prompted us to look really hard at how we can use RRSPs to our advantage with JV partners.


gary

 

[Thomas Beyer]

QUOTE (LeighF @ Jan 14 2009, 05:43 AM)
Good Day All



I'm sure that we are all in the same boat lately with our RRSP's heading into the tank. Does anyone know of any other tax exempt alternatives out there that we could invest in besides RRSP's?



I really don't like the fact that I have no control over the markets, thus no control over my RRSP's.



Thanks


An RRSP is a basket where various financial instruments may be placed into, such as: mortgages, bonds, cash, GICs, stocks, REITs, mutual funds, ETFs, Callas and Covered Calls. Some instruments are more appropriate for certain markets like the flat to slightly declining stock market in volatile times, such as 2009.



If you like real estate based investments: Our firm, like many others offers a bond structure that pays 4.5% with any equity over and above via private, non-RRSP eligible shares to co-own / participate in apartment buildings. Other firms offer syndicated mortgages with fixed returns. Some folks offer much more risky, but potentially more profitable land development, commercial real estate or condo development projects that are RRSP eligible.



For non real estate investments that are appropriate today, read this post here on Covered Calls for example, quite appropriate right now for RRSP: http://myreinspace.com/public_forums/General_Discussion/61-8913-What_else_do_you_buy__besides_Apartment_Buildings.html

 

[gwasser]

Yes there is the new Tax Free Savings Account that started as of January 1, 2009.

This is similar to an RRSP in that you can put in all the same investments as you may put in a RRSP and all proceeds are tax free. The big difference is that the funds you put into the accounts are after tax money (i.e. you contribution is not tax deductible as with an RRSP). On the other hand, withdrawal of your investments from the account are also tax free as opposed to RRSPs. There is no age limit other than that you have to be 18 years+.

Gordon Pape has just a new book out on the topic (he was on BNN). Maximum contribution is $5000 per year but if you don`t use it or all of it, you can add it to the contributions of future years. Also, when you make a withdrawal the withdrawn amount will be added to your max. contribution.

This new tax shelter is the best thing that came along in years. Banks and brokerages offer these accounts in numerous variaties to the public. So before you jump do your research to ensure you have the account right for you.

I am not a financial professional so, ensure you check everything before acting. Hope this helps.

 

[LeighF]

I was always told that I could only use my RRSP money for first time home owners only. Is that not true? I would love to invest the majority of my RRSP`s in real estate. The Government Tax free account is a good solution, but what if you need a tax shelter for a certain year, because of your income?

Thanks everyone for your response

 

[GarthChapman]

QUOTE (LeighF @ Jan 14 2009, 06:27 PM) I was always told that I could only use my RRSP money for first time home owners only. Is that not true? I would love to invest the majority of my RRSP`s in real estate. The Government Tax free account is a good solution, but what if you need a tax shelter for a certain year, because of your income?

Thanks everyone for your response

You can invest in real estate with your RRSP`s via mortgages - on pretty much any real property in Canada - RRSP`s can not hold/own real estate.

 

[gwasser]

QUOTE (LeighF @ Jan 14 2009, 06:27 PM) I was always told that I could only use my RRSP money for first time home owners only. Is that not true? I would love to invest the majority of my RRSP`s in real estate. The Government Tax free account is a good solution, but what if you need a tax shelter for a certain year, because of your income?

Thanks everyone for your response


I looked into that and hit a road block. The story seems you can only invest in at non-arms-length real estate. i.e. you can not finance mortgages on your own properties. It also has to be administered by an independent administrator. I don`t know about financing your own (first) house.

I contacted my bank on this and they were completely flabbergasted about the topic. It took several phone calls before anybody even understood what I was talking about (this was TD). I also tried CIBC with the same result. Finally I found (I think after a hint from this forum) internet links to some B.C. based institutions that were involved in non-arms length RRSP mortgages. It was too contorted for me and I just took out a heloc instead.

 

[CargrenInvestments]

QUOTE (LeighF @ Jan 14 2009, 05:27 PM) I was always told that I could only use my RRSP money for first time home owners only. Is that not true? I would love to invest the majority of my RRSP`s in real estate. The Government Tax free account is a good solution, but what if you need a tax shelter for a certain year, because of your income?

Thanks everyone for your response

You are allowed to withdraw your RRSP funds without any penalty to use for a downpayment for your own primary residence (only if you are a 1st time home buyer). You must, however, repay your RRSP account over a period of years; I believe 15 yrs. You may withdraw up to $20,000 per individual (so $40,000 for a couple). My brother used this avenue when he bought his place.

here a link to some info:

https://www.nscu.com/Investments/RRSPs/RRSPHomeBuyersPlan/

 

[MarkTorgerson]

QUOTE (CargrenInvestments @ Jan 15 2009, 11:00 AM) You are allowed to withdraw your RRSP funds without any penalty to use for a downpayment for your own primary residence (only if you are a 1st time home buyer). You must, however, repay your RRSP account over a period of years; I believe 15 yrs. You may withdraw up to $20,000 per individual (so $40,000 for a couple). My brother used this avenue when he bought his place.

here a link to some info:

https://www.nscu.com/Investments/RRSPs/RRSPHomeBuyersPlan/

I was also in the same boat in regards to my own RRSP`s. I have been fortunate enough to become in contact with Integrity Wealth Group whose founders include a long time REIN diamond and gold member as well as a long list of supporting firms.

They have a few different investments being offered which are RRSP eligible. They include an apartment hotel conversion that will create a 4 start 11 story boutique hotel in downtown Calgary. This will be the first new hotel since the Hyatt in 1999. They also have an investment into a land development project in Carstairs. This also poses to be a great investment as it is very close the new ring road expansion as well as the massive NE industrial park expansion which is to create $30,000 new jobs.

The investments are bond share offerings in which the bond will pay a 6% to 10% FIXED annual return. The investment is completely secured against the land and/or property. The overall investment is PROJECTED to pay 15% to 19% annually when you include the share portion of the investment.

I currently own 50 doors of my own and like to think that I have good experience in finding the best investments. I have invested $100,000 of my own registered money into their projects and have since partnered up with them as a sales consultant as I believe in what they are doing.

]If you want some details, please e-mail me at [email protected]

 

[MikeMcCrae]

you can have control over your RRSP`s. Talk to a mortgage broker that understands investing and they can help you place self directed RRSP funds and explain how it works.

 

[Thomas Beyer]

QUOTE (MarkTorgerson @ Jan 15 2009, 11:51 AM) I was also in the same boat in regards to my own RRSP`s. I have been fortunate enough to become in contact with Integrity Wealth Group whose founders include a long time REIN diamond and gold member as well as a long list of supporting firms.

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They have a few different investments being offered which are RRSP eligible. They include an apartment hotel conversion that will create a 4 start 11 story boutique hotel in downtown Calgary. This will be the first new hotel since the Hyatt in 1999. They also have an investment into a land development project in Carstairs. This also poses to be a great investment as it is very close the new ring road expansion as well as the massive NE industrial park expansion which is to create $30,000 new jobs.

[/size]

The investments are bond share offerings in which the bond will pay a 6% to 10% annual return. The investment is completely secured against the land and/or property. The overall investment is set to pay 15% to 19% annually when you include the share portion of the investment.



I currently own 50 doors of my own and like to think that I have good experience in finding the best investments. I have invested $100,000 of my own registered money into their projects and have since partnered up with them as a sales consultant as I believe in what they are doing...
ANY development project (in vacation properties like Bear Mountain) or hotel development projects (especially hotel conversion into strata) are EXTREMELY HIGH RISK as it is very tough to finance right now .. thus very low cash-on-cash ROI ! What is the exit strategy of a hotel project ? Sell ? sell as strata units ? re-finance and operate ? Hotel financing is extremely tough to impossible to get these days, maybe at 33% loan-to-value at a interest rates in the high single digit / low double digit rate .. thus why not flog it to gullible investors at "19% interest " which is paid out of invested cash usually !

"set to pay" are very misleading words !! Estimated to pay is a better word .. or "a wild estimate as no one knows what hotel demand 2-3 years down the road will look like .."

In any investment look at the risk and likelihood of
a) return OF your money, then
b) return ON your money !!

Many development projects are stalled right now, many more in foreclosure .. and many benefit primarily the sales consultant as he takes a 10% commission on investments .. with a very high chance of failure due to the very tough lending and totally unknown demand environment !

PROCEED WITH EXTREME CAUTION if you invest in raw land, recreational properties and any commercial development right now .. especially vacation or hotel focused !!

The (lending and demand) world has changed and will not turn around anytime soon !!!

 

[MarkTorgerson]

QUOTE (thomasbeyer2000 @ Jan 15 2009, 03:21 PM) ANY development project (in vacation properties like Bear Mountain) or hotel development projects (especially hotel conversion into strata) are EXTREMELY HIGH RISK as it is very tough to finance right now .. thus very low cash-on-cash ROI ! What is the exit strategy of a hotel project ? Sell ? sell as strata units ? re-finance and operate ? Hotel financing is extremely tough to impossible to get these days, maybe at 33% loan-to-value at a interest rates in the high single digit / low double digit rate .. thus why not flog it to gullible investors at "19% interest " which is paid out of invested cash usually !

"set to pay" are very misleading words !! Estimated to pay is a better word .. or "a wild estimate as no one knows what hotel demand 2-3 years down the road will look like .."

In any investment look at the risk and likelihood of
a) return OF your money, then
b) return ON your money !!

Many development projects are stalled right now, many more in foreclosure .. and many benefit primarily the sales consultant as he takes a 10% commission on investments .. with a very high chance of failure due to the very tough lending and totally unknown demand environment !

PROCEED WITH EXTREME CAUTION if you invest in raw land, recreational properties and any commercial development right now .. especially vacation or hotel focused !!

The (lending and demand) world has changed and will not turn around anytime soon !!!

FYI - I promote Bear Mountain as a leisure destination, NOT just an investment property. Bear Mountain DOES NOT fit the REIN style of investing. I would look at purchasing here AFTER you have made your money and are looking for a retirement spot. Please DO NOT confuse any Integrity Wealth Group land development investments with Bear Mountain. They are in NO Way linked together. As I mentioned above, Integrity`s land development project is in Carstairs which (in my opinion) has a strong upside due to its location. Please see Integrity`s website for a detailed description of what they invest in so there is no confusion. www.integritywealth.ca

 

[GaryMcGowan]

Here is another post that goes over RRSP investing in Real Estate.



http://myreinspace.com/rein_members_only/General/83-8290-RRSP_investing_101_-_Help.html



Gary

 

[gwasser]

QUOTE (MarkTorgerson @ Jan 15 2009, 03:52 PM) FYI - I promote Bear Mountain as a leisure destination, NOT just an investment property. Bear Mountain DOES NOT fit the REIN style of investing. I would look at purchasing here AFTER you have made your money and are looking for a retirement spot. Please DO NOT confuse any Integrity Wealth Group land development investments with Bear Mountain. They are in NO Way linked together. As I mentioned above, Integrity`s land development project is in Carstairs which (in my opinion) has a strong upside due to its location. Please see Integrity`s website for a detailed description of what they invest in so there is no confusion. www.integritywealth.ca

I spend a couple of vacation nights at Bear Mountain on Vancouver Island it is a nice property all right but definitely not a REIN property. I quickly checked some numbers and walked away with the feeling that this was a development designed to satisfy the thirst of baby boomers to own a recreational property (at a pretty juicy price).

This is nothing more than a recreational investment and investing in hotels is very economy AND operator sensitive. As Thomas mentioned buyer be VERY aware. From my point of view what you can expect is that when lucky you recover the property tax and condofees but not your mortgage payments. The only upside is appreciation if your fellow babyboomers remain gullable. These properties should only be bought for enjoyment not investments.

 

[MarkTorgerson]

QUOTE (gwasser @ Jan 16 2009, 11:06 AM) I spend a couple of vacation nights at Bear Mountain on Vancouver Island it is a nice property all right but definitely not a REIN property. I quickly checked some numbers and walked away with the feeling that this was a development designed to satisfy the thirst of baby boomers to own a recreational property (at a pretty juicy price).

This is nothing more than a recreational investment and investing in hotels is very economy AND operator sensitive. As Thomas mentioned buyer be VERY aware. From my point of view what you can expect is that when lucky you recover the property tax and condofees but not your mortgage payments. The only upside is appreciation if your fellow babyboomers remain gullable. These properties should only be bought for enjoyment not investments.


I honestly don`t know how Bear Mountain EVER became part of this thread???? Completely off topic. Pay attention boys... At no point did I ever mention it in my response regarding RRSP investments.

 

[gwasser]

QUOTE (MarkTorgerson @ Jan 16 2009, 01:47 PM) I honestly don`t know how Bear Mountain EVER became part of this thread???? Completely off topic. Pay attention boys... At no point did I ever mention it in my response regarding RRSP investments.
From one of your posts in stream: "They include an apartment hotel conversion that will create a 4 start 11 story boutique hotel in downtown Calgary. This will be the first new hotel since the Hyatt in 1999. "

Which lead to Thomas bringing up Bear Mountain and the risks of investing in Hotel development. I supported Thomas` story with my personal observation regarding that place and other hotel investments. It was not meant as a critique on your involvement with Bear Mountain - I did not even know you where involved until a later post. So we do pay attention but tend to drift sometimes off topic. No harm intended.

Overall I think we`ve gone completely off topic since we started out with using funds in a RRSP for mortgages towards properties owned by the RRSP holder. We`ve ended up with using RRSPs to fund all kinds of arms-length real estate ventures including hotel Developments. Other than as mentioned in one of the earliest posts, using RRSPs for the down payment on a first residence, it seems that you can not use it to mortgage other properties you own.

 

[Thomas Beyer]

QUOTE (MarkTorgerson @ Jan 16 2009, 01:47 PM) I honestly don`t know how Bear Mountain EVER became part of this thread???? Completely off topic. Pay attention boys... At no point did I ever mention it in my response regarding RRSP investments.
check your footer ...

 

[MarkTorgerson]

QUOTE (thomasbeyer2000 @ Jan 16 2009, 07:44 PM) check your footer ...


Bear Mountain also doesn`t sell itself as a hotel development project. So as the waters are now good and muddied, I am compelled to at least try and clear them up regardless that they have no bearing on the original topic.


What Bear Mountain isn`t: It is not RRSP eligible. It is not a hotel development project. It is not a cash flow bearing investment. It DOES NOT fit the REIN method of investing.


What Bear Mountain is: It is a condo development and lot sale project. There is a hotel owned and operated by The Westin. It is ranked by Money Sense Magazine as one of the top places in Canada to live. It is a Nicklaus designed golf resort that was also ranked by West World magazine as the #1 golf course in Canada. It is a 5 star recreation destination and yes it is expensive.


I offered up Integrity Wealth Group as an option for investing registered money for favorable terms. The comment was made "why not flog it off to gullible investors". In Integrity`s brochure, Don Campbell himself offers a letter of encouragement to investors. Hardly someone who falls into the category of "gullible investor".

As a sales consultant, yes I do indeed make a commission on investments, hence the term "sales consultant". No different than any real estate agent, mortgage broker, etc. It was also assumed that there was a commission paid of 10%. I can rest assure that the commission is not that much and the entire model of anyone being paid within this group is based off of investors success.

So again, this group was offered up as an option to our original topic. Bear Mountain was not. I do have an involvement with both companies and sorry if my footer confused anyone.

 

[LeighF]

Yes, let`s get back to discussing the original topic!