It is no secret that the greatest wealth-builder in history has always been investment in real estate.  Real estate is more than just a fallback investment during a bare market.  And unlike the "paper" investments of the stock and bond markets, carefully selected income properties have real long-term value secured by physical assets.  Additionally, they are not subject to the wide fluctuations common to stock markets and, when properly managed, they can continue to provide a steady return on investment in excess of 10% per annum even when the markets are flat. With mortgage rates near historic lows and vacancy rates in prime areas hovering at 1.5%, investing in high income properties has never made more sense. 

Come in today and we will show you how you can own property.

Post from: Neil Friesen & Associates

Property

Flow-Through Shares Explained

Flow-Through Shares are a tax-advantaged investment in the Canadian natural resource sector. Taxpayers in the highest marginal tax rate can reduce their taxable income and receive refundable or non-refundable tax-credits depending on their province of residency.

Essentially, exploration or mining companies who issue flow-through shares renounce the deductions that would normally be available to the company and provide the deduction to the investor. In order for the investor to benefit from the flow-through shares the company must spend the flow-through dollars on exploration in Canada. This includes most non-development stages of mining including ground sampling, geophysics, drilling, etc.

Flow-through shares are available through some funds or directly in a specific company through an investment advisor. Although the majority of flow-through shares are available towards the end of each year, we attempt to complete flow-through financings throughout the year. This often gives us access to what we consider to be the better flow-through offerings in the companies most likely to provide substantial upside potential. There is also a rush towards the end of each year for flow-through shares resulting in what some may consider less quality issues. Just because an issue is flow-through does not mean it is a suitable investment as the fundamentals of the company should be considered first.

Tax Deductions & Tax Credits 

Income tax benefits to individual investors will vary, depending on the taxpayer’s jurisdiction of residence for income tax purposes and marginal tax rate. At present, Quebec offers the largest potential tax savings for flow-through share investments followed by British Columbia, Manitoba, Saskatchewan and Ontario.

In October 2000, the Canadian federal government introduced a 15% non-refundable tax credit. The credit is in addition to the existing 100% deduction of eligible exploration expenditures and is deductible from the federal portion of one’s taxes. To distinguish it from the fully deductible regular flow-through, investors are calling this new credit-enhanced version "super" flow-through.

For taxpayers at the highest marginal tax rate the federal 15% non-refundable tax credit, when added to the regular 100% deduction, is equivalent to a 137% exploration expense deduction for federal tax purposes.

Several provincial flow-through initiatives have been announced that apply to the provincial portion of income tax relating to eligible expenses in relevant jurisdictions. Ontario (5%), Saskatchewan (10%), Manitoba (10%) and British Columbia (20%) offer harmonizing tax credits. The Ontario tax credit is refundable; the other tax credits are non-refundable.

Under tax legislation governing flow-through shares, eligible exploration expenditures have been 100% deductible for at least two decades. These deductions effectively reduce or shelter before-tax income. Tax credits apply directly to reduce taxes payable.

- A non-refundable tax credit reduces taxes to the extent of taxes payable.
- A refundable tax credit reduces taxes payable and then, if there is an excess, results in a cash refund.

The federal tax credit is non-refundable (the taxpayer has to pay taxes in order to use the claim). However, it can be carried back and applied against taxes paid in the previous three years. Unused tax credits may also be carried forward for a period of ten years.

Post from: Neil Friesen & Associates

Flow Through Shares

What are Life Settlements?

A Life Settlement is a financial transaction whereby a policy owner holding a life insurance policy sells this policy to a third party for a higher cash settlement value than if returned to the issuing life insurance company.

The purchaser of the policy becomes the owner and beneficiary of the policy at maturity and is responsible for all remaining premiums.

Policy owners looking to sell their policy are seeking out Life Settlement brokers to gain access to this market and in turn receive a fair market value for their policy.

Why do people sell their life insurance policies?

There are many reasons why people want to sell their life insurance policies:

- The policy is no longer needed or wanted;

- The owners of these policies want to receive much needed cash and live out their remaining years in dignity;

- Allow them to seek the medical treatment they require;

- Forced liquidation – divorce, hardship, etc.;

- Changing estate planning needs.

Post from: Neil Friesen & Associates

Life Settlements

When you invest within a private real estate syndication, you are pooling your capital with that of other qualified investors for the purpose of investing in larger and more lucrative real estate projects.  This affords the lone investor an opportunity to participate with an organized group of like-minded investors in the ownership of a piece of revenue property that is too much to handle singly or in a joint venture with just one or two others.

Real estate syndicates own income-generating residential or commercial real estate and are secured by tangible assets as collateral.  This characteristic is untrue of many other investments and provides added security for your investment.  Additionally, investing in private real estate syndications provides the individual investor the ability to achieve higher profits with lower risk than the average equity investment.

Although a syndication’s legal structure can take many forms. it is generally accepted that a "Private" Real Estate Investment Trust (or, REIT for short) is one of the best forms of group ownership of real estate investments.

A REIT’s reliable income is derived from rents paid for the use of leased properties.  REIT’s own and manage pools of income-producing properties on behalf of investors who subscribe for REIT "units".  The net income is distributed to each investor in proportion to his or her share of the investment.  The incomes are kept stable through the practice of signing stable, long-term tenants to strong leases, and staggering the lease renewal dates to prevent vacancies from occurring all at once.

Compared with the average equity investments, REIT’s provide higher yields and lower risk, as the tax advantages result in higher yields.  The synergy produced by these traits make REIT’s a uniquely stable, reliable, and secure investment that can produce both income and growth.

A REIT is designed to create diversity, which secures the investor’s capital and keeps the income steady.  By combining a number of diverse properties in a single pool, the cash flow of each property is stabilized by the combined incomes of the other properties. 

REIT’s, over time, have demonstrated a consistent track record of providing the benefits of regular income, tax-efficient earnings, and the potential for long-term appreciation as the vale of the properties increase.  They are equities that derive their value from tangible assets and they have proven to bring balance, diversification, and greater risk/reward efficiency to a broad range of investment portfolios.

Post from: Neil Friesen & Associates

Real Estate Investment Trusts