Another Phase 2 Headache – Tax

BAW4.2Whether you are a local investor or live abroad and simply want to own a piece of real estate in Whistler, you have to pay tax. Owning property, as is usual, requires that you adhere to the local regulations pay strata fees, maintenance fees, Tourism Whistler fees and, of course, income tax. At best, this requires some organization and administration but is still the normal course of business if you own property in Whistler or most other places for that matter.

However, if you are a Whistler Phase 2 property owner, you have a City covenant attached to your property that stipulates that you use can use your property up to 28 days in the summer and 28 days in the winter. For the rest of the year, your property is supposedly rented out by a designated rental manager according to your rental pool management agreement (RPMA). This same rental manager runs the front desk, books the rooms and collects funds on behalf of all owners. It would also be normal course of business for this manager to send all owners monthly financial reports and annual audited financials.http://www.dreamstime.com/royalty-free-stock-photos-confused-businessman-having-problems-closeup-asian-stressed-chalkboard-image39727708

In our case, this didn’t happen. We invested in a project called Nita Lake Lodge where an aggressive investor bought units in our project, then unilaterally decided to take over the management of the hotel. In doing so, he claimed he had terminated long term rental pool management agreements and locked us out of our rooms. His justification for doing all of this was that the Whistler covenant allows him to do so. We disagree.

However, and to the point of this blog, how do you file tax in Canada when you own property in a Whistler Phase 2 development but you are locked out of your property by the manager?  He is supposed to be renting your units, managing the financial records and submitting your information to the tax authorities.

What do you do? Well it’s a real problem and sort of a “no mans land.”

You don’t know how much tax to pay, the tax authorities don’t know how much tax to charge. Did you stay in your rooms a total of 7 days and 7 nights to qualify for a lower tax rate? No, how could you if you were locked out of your rooms as we were? …..and still are.

Who can help fix this?…..unfortunately it all goes back to the City of Whistler (RMOW). Do they want to? Well we can’t seem to get any action and we’ve been asking for assistance for over 2 years.  Funny how a whole resort can be built largely on investment from people elsewhere who want to participate in the community, but when something comes along that requires the City to show some leadership, the owners are on their own.

Until the City of Whistler starts to take an active interest in preventing others from abusing of their Phase 2 covenant…..the headaches will continue. Other investors, please beware.

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