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!