Competence Means Accepting That You Don’t Know Everything

It’s April and a collective groan can be heard ringing through the province. No, it’s not the unseasonal weather causing this displeasure (though that’s not helping!) – it’s tax season. Authorized real estate professionals are experts on the state of the real estate industry, but the tax implications of real estate purchases and sales may go beyond the realm of their expertise. And as house-flipping and investment properties continue to be popular with some consumers, real estate professionals need to remember to leave tax advice for their clients to the tax experts.

One of the tax situations arising more regularly these days is related to consumers claiming a property as their primary residence, but soon changing their minds and immediately selling it, sometimes at a significant profit. The Canada Revenue Agency (CRA) has announced it will be cracking down on those suspected of taking advantage of this capital gains loophole and they are looking to collect more than $500 million extra from those suspected of “flipping,” their property and not paying the tax this year.

During the buying or selling process, a consumer may assume their real estate industry professional is also an expert on home or property tax matters. And while many industry professionals do know a great deal about real estate tax from their extensive real estate industry experience, industry professionals must keep in mind they are not qualified to be counselling clients on tax matters. If a client has a tax query, the best course of action for an industry professional is to direct that client to a financial or tax advisor who is better suited to deal with their tax information needs.

The same is true for legal issues relating to a property purchase or sale. Assisting a client by directing them to a lawyer may be the best way for a real estate professional to demonstrate competency and truly serve their client’s needs.

Authorized real estate professionals want to ensure their clients get the professional information and advice they need, while not putting themselves in a position where they could provide misleading or incorrect information or advice.

To read more, be sure to check out RECA’s Info Bulletin on Competent Service.

Has a client ever asked you for your input on tax matters? If so, how did you respond?