B.C. Government’s Decision on the New Housing Tax is Scary

B.C. Government’s Decision on the New Housing Tax is Scary

B.C. government has decided to target foreign real estate buyers with a new tax. The Globe and Mail writes that "foreigners who buy residential property in the Vancouver area will now have to pay an extra 15-per-cent-tax":

The change to the province’s property transfer tax announced on Monday means an extra $300,000 in taxes for people from abroad buying a home for $2-million.

Anyone who isn't a Canadian resident or a permanent resident, or is a corporation that is either not registered in Canada or is controlled by foreigners will have to pay this new tax, if they decide to buy a residential property within 22 communities in Metro Vancouver. These foreign buyers have to state their citizenship in the paperwork when transferring the title. 

Even though we can consider this decision to be a reaction to angry Vancouverites complaining that the government isn't doing enough control the rapidly escalating housing prices not everyone in Vancouver is happy about the tax.

Vancouver Mayor Gregor Robertson said that the new housing tax would be "discrimination". According to another article from the Globe and Mail, Robertson "said he doesn’t support a property tax that’s applied based on nationality when the real problem involves how housing is being used."

Our focus needs to be on regulating the capital and on people holding properties that are empty for business purposes.

What worries me the most is when the government gets involved in a market place. This seems politically motivated but is also a cash grab for the Government of B.C.. In speaking to Tracy An, our colleague at the Torontoism Team, her reaction was that the 15% tax would not affect the high-end market. Buyers with high net worth would have already started the process to be new immigrants. She felt it would be felt most in the pre-sale Condominium market at the lower end. What will happen to all the units that were sold by developers, when the new buyers find out that they will be charged a further 15% tax... 

Canadians forget that we buy investment and vacation properties and we leave them uninhabited in sunny climes during the summer. We are not innocent, and creating taxes like this will only drive parts of the market underground.

How will this move affect the Vancouver Market?  How will this affect the building industry in B.C., Lumber, Appliances, Travel...we have yet to see.

I look to some very serious repercussions and this seems like a knee-jerk reaction that may have huge effect on the B.C. economy. Let's hope that the Government of ONTARIO will not be following suit!

SK00ML

19 Responses

  1. Ryan J Serviatus

    Thanks for letting us know Richard, let’s hope cities like San Fran and Seattle, or Portland don’t look into this for their markets.

    1. Jerry England

      Unlikely as this is not a federal but state/ provincial initiative. Oregon, Washington State & California tend to be off-shore investment friendly. Over here it is aimed at the $ 2 million + residential market.

  2. Jerry England

    Ontario government will be monitoring this very closely with respect to the GTA.

  3. Chip Barkel

    Charles Sousa has already said he likes what BC did and is looking at their plan.

  4. Jerry England

    This BC initiative reflects what is in place in several countries including Hong Kong.

    Problem in BC the mechanics of its implementation was not thought through and some existing transactions pending closing will be unexpectedly effected and subsequently penalized.

  5. Daniel Bennett

    Unfortunately it would appear our Premier is too busy with photo opportunities to do any in depth research. We do Expo 86 and the Olympics to attract foreign investment then whack them when the come! The “foreign” buyers we are working with in the Fraser Valley are buying homes and commercial properties, getting their kids into school and becoming part of our communities. The provincial property transfer tax revenues are expected to double this year even prior to this tax. The removal of industry self regulation and this tax are totally political grandstanding issues, something we’re sure won’t happen in Ontario:)

    1. Jerry England

      Surely the legislation is aimed at non-residents who do not contribute to the local economy or community and purchase properties over $2 million. Is that not the case ?

      1. Jerry England

        I certainly agree that your BC government has misread the self regulation issue. It’s like beating someone up who you hog tied according to my BC friends.

        1. Daniel Bennett

          Hi Jerry, always feel it a good idea to interrupt controversial Facebook topics with a good bike ride around Fort Langley. The problem is the “solutions” are aimed at the wrong targets. The provincial liberal pundits seem to feel dumping on REALTORS and “foreigners will play well with the part of the electorate that is woefully uninformed. The City of Vancouver, supported by the province, is jumping on board with a vacant property tax. All these political manoeuvres simply mask the much more complex issues that the politicians are failing miserably- homelessness, lack of rental units and lack of incentives to build more, 70000+ new residential units caught up in the Vancouver City Hall bureaucracy, the Downtown Eastside of Vancouver that is essentially a garbage dump full of wasted human potential sucking up resources, the failure of Clark’s LNG initiative, the property transfer tax going from its usually $1 billion to double that by year end and yet school districts are underfunded. Do you know that the idyllic “bedroom” community of Langley has almost 200 homeless kids – not adults – but kids. So REALTORS and “foreigners ” (who are a small percentage of the market)are pretty easy targets to deflect the superficial media talking heads and the uniformed from the real issues.

          The fact is the law of supply and demand prevails and it’s pretty easy when you have a microphone in hand and a camera pointed at you to blame someone else for the demand, despite your having the ability, but apparently not the will, to increase supply.ps the tax is 15% over and above the existing PTT on any residential purchase, in essentially the metro Vancouver area, by an individual or company defined as”foreign”. It kicks in Aug 2 even on deals firmed up but not completed by August 2. So a foreign buyer will get hit with an additional 15% that did not exist when the contract was negotiated. BCREA is hoping to compile statistics on the deals that collapse because of this essentially retroactive tax. What does this say to immigrants and investors we want and need to invest in BC to support and improve our quality of life?

          1. Jerry England

            Valid points. Traditionally politicians create more problems than they solve!

  6. Jamie Da Silva

    Hopefully Ontario doesn’t decide to follow this trend.

  7. Chip Barkel

    They were all together last week along with the federal minister. They obviously put their heads together.

  8. Wilf Mandel

    I am what Bill Clinton described – a firm believer that government has an innate talent to screw up even a two car parade. Government interference in a marketplace is to render it FUBAR.
    Ask Barry about Ontario in 1974 (I was in Montreal, destined to emigrate down the 401 2 years later)…

  9. Robert Ede

    especially since I have just devoted 10 months and 10s of thousands of in promo to non-resident buyers — this will screw up my plans….

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