Free Money: BC taxes foreign purchases of real estate

The BC government has decided to tax foreign purchases of real estate:

Foreigners who buy residential property in the Vancouver area will have to pay an extra 15-per-cent tax as part of a B.C. government plan to slow the foreign speculation that many blame for making the region’s homes the most unaffordable in Canada.

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. Detached houses in the area typically run around that or higher. The surprise move comes after the government tracked all residential real estate transactions across British Columbia over four weeks in June and July and found foreign citizens who were not permanent residents bought just more than a billion dollars worth of property.

Read the full article at the Globe and Mail.

Odd that this tax applies to Vancouver only and not the whole province. Why that particular limitation? Will this push buyers into other areas of the province or simply “keep home ownership within the grasp of the middle class in British Columbia” as ms. Clark puts it?

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MarKoz
Member

Foreign speculators could avoid paying the tax by getting friends or family who are permanent residents to buy on their behalf. Or the tax may lead to inflated housing prices in cities such as Victoria, Kelowna or Toronto, he added.

A group of more than 40 local economists led by Prof. Davidoff is proposing the government not “drag nationality” into the housing debate, but rather focus on whether people owning homes in this market also earn their money in the region. Prof. Davidoff’s colleague Joshua Gottlieb said such a tax would be more accurate and efficient than the government’s new tax.

AngryLemming
Guest
AngryLemming

I’ll do it. You pay me to put my name on title. 2 years later, I will sell and dissapear to Kelowna. Benefits to you? Avoiding the 15% taxes. Benefits to me? My commission, and the full value of your property. Any takers?

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

Isn’t that the kind of arrangement that results in violence in case one of the parties does not carry out his part?

Oracle
Guest
Oracle

Canada land fro Canadian Citizens only.

Try the politicians who sold out metro Vancouver for treason.

Rolls
Guest
Rolls

Pauls calculator jambed with sooo many new listings

ttul
Member

Can’t wait to see Paul’s stats in the next few days… Should be a real shit show.

yvr2zrh
Member
I will say that we should all truly appreciation that Paul comes here to provide us the simplest of data points. They are important and can show trends. When he comes back (from answering 300 phone calls) it would be interesting to hear his perspective on this, especially since the transition of the tax will kill a lot of contracts (for which ultimately, it is a foreigner who is backing out and it will be tough to sue to force the purchase to close). If we are on a run-rate of around 200-300/week – and it takes 2 weeks to close, we could have 500 transactions that don’t close – which will result in 500 people, not selling their home at the price they thought (or at all perhaps) – meanwhile – they have committed on another purchase – so… Read more »
southseacompany
Member
southseacompany

“This Is When the Fed Will Probably Raise Interest Rates”, Fortune
http://fortune.com/2016/07/25/fed-janet-yellen-interest-rates/

“I don’t expect any movements on interest rates until December”

“The data doesn’t support raising rates this week. The next two Fed meetings—late September and early November—are simply too close to the presidential election for any moves to take place. The Fed doesn’t want to be accused of playing politics, and a move in September or November could be interpreted as just that.”

Rolls
Guest
Rolls

FYI im the car business and sale of Rolls and Bentleys have stopped in the past 2 months.. coincidence? remember greed ran this bubble up fairly fast but fear will pop It faster than a teenager with pimple on prom night

ostritch
Member
ostritch

That’s because the Chinese president stopped the outflow of money in March. These new taxes will be the sight and sound of white people chasing their own debt around with a big stick.

MikeS
Member
MikeS

Wow! Westside Realtor got a new job?

franko
Member
franko

The province taxing foreign buyers.
The city taxing vacant properties.
The CRA going after tax evaders.
It all would have been unthinkable a year ago, but the biggest hit by far will come from China clamping down on money fleeing the country.
HAM is soo over….and it will lead the stampede to the exit.

cvdr
Guest
cvdr

Hong Kong put implemented a similar tax a while back and it was supported by a majority of HK residents.

http://vancouversun.com/news/staff-blogs/hong-kong-puts-15-per-cent-tax-on-foreign-buyers-will-b-c-follow-suit

patriotz
Member

I would call it similar if it applied to HK island only. Christy wants to eat her cake and have it too, i.e. be seen to be “doing something” in Vancouver while keeping the floodgates open and directing the money to Abbotsford and points east – which is where her greatest electoral support is. And get extra revenue from foreign buyers who just have to buy in the taxable area.

victoria
Member
victoria

Again Patriotz you hit the nail on the head.

Slava
Guest
Slava

What Christy and others possibly fail to understand is that if her tax does not solve the “problem” there is no hope in hell for re-election.
It is only about the “problem” being solved. End.

Tcg
Guest
Tcg
So even without this tax, I’m seeing the rush to the exits. As I’ve written, our landlords have listed our place in Fairview for sale and I believe they are selling their other properties as well. My parents who are renters in Coquitlam were just notified that their landlord is listing their place tomorrow and another acquaintance just advised he is listing his Coquitlam townhouse on Monday. Maybe it’s coincidence but it seems all of a sudden mm surrounded by people selling. Our next door neighbours just unloaded their place and are renting in North Van now, another friend recently sold his place in White Rock and is a renting in Van and told me his brother-in-law who builds high end houses in West Van has been struggling and has decided his current build will be his last… I’ve been… Read more »
Newcomer
Member
Newcomer

By now, everyone knows a few people who have sold and switched to renting or are trying to do so. This has to be putting pressure on rents.

patriotz
Member

“This has to be putting pressure on rents.”

What happens to a the house they sold?

Newcomer
Member
Newcomer

In the short term, it sits empty. That is why rental supply is low, despite low population growth and steady housing-stock growth: there is an increasingly large pool of unused housing out there. I would expect the stock to become supply at some point (probably when paper appreciation is not so high as to make collecting rents seem like more trouble than it is worth).

patriotz
Member

I very much doubt that even 10% of houses sold sit empty. Also some sellers leave the metro, as other posters have pointed out.

Newcomer
Member
Newcomer

10% is massive with a sub 1% vacancy rate — In any case, I’d be interested in hearing your thoughts on the sudden surge in rents. I have been monitoring rents for years and looking hard since March, and there has been a jump of 25 to 30% this year. I can’t explain that without turning to supply and demand. But if you have a theory, I’d love to hear it.

Tcg
Guest
Tcg

I am seeing a lot of furnished, luxury stuff managed by real estate/ property management companies. I am wondering to what extent the rental market is being manipulated by them. Only when rents are so high does it make sense to buy at current ridiculous prices.

patriotz
Member

I think AirBNB is responsible for a lot of housing being taken off the rental market. Also I think a lot of people are staying in houses that are bigger than they need, e.g. after kids move out. I think these factors are bigger than houses being being sold and left empty outright by the buyer.

Newcomer
Member
Newcomer

AirBNB is definitely a big part of it but I wouldn’t discount empty units.

vangrl
Member
vangrl

AirBnB and Empty homes. I’d say that far more than 10% of sales on the West Side sit empty, or are in the process of being demolished. And all those older homes had basement suites

vangrl
Member
vangrl

and yes the “furnished rentals” are out of control. Everyone is trying to get the most $$$ possible and filling suites with a grand worth of IKEA.

Time to go
Guest
Time to go
This is exactly the same position we are in. Our landlord wants to cash in, so she put it up or sale. She’s asking an insane amount, but I don’t blame her if some greater fool will give it to her. We just found a new rental, same price, but one less bedroom. It’s crazy the rents people are asking for now and some of the new apartments we’ve looked at are what I deem as too small to be liveable for a couple. No closet space, double bed fills bedroom, kitchen bleeds into living room etc… Plus, what’s with the amount of fully furnished rentals out there? I don’t ever remember there being so much of that stock. Anyway, there has been a very noticeable change in the people living in my building over the last 6 months. We’re… Read more »
HAMster
Guest
HAMster

A couple we know sold their house in Langley earlier this year and moved to Vernon.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

I feel very similarly.

The scene was described so very well here: http://www.vancourier.com/opinion/chinese-investors-shutter-vancouver-neighbourhood-while-apologists-cry-racism-1.388750

So much damage in the intervening four years.

Already
Guest
Already

Prices and rent will revert to the mean…..patience

Boombust
Guest
Boombust

You’ll do just fine. It’ll be a little short term pain for a LOT of long term gain. Many people will be wiped out in this implosion; you’ll be still standing because you NEVER BOUGHT INTO THE HYPE.

Already
Guest
Already

Over asking is over, soon we’ll all be saying man ….people were paying how much over asking with no inspections? wackos

Hyper-mega-Bull
Member
Hyper-mega-Bull

the return of home inspections. that’s pretty much the only thing bears can hope for at this point.

bullwhip29
Guest
bullwhip29

in a perverse way this new tax will make market for tear downs (requiring no insp) and vacant land for that matter even more attractive as the transfer tax will only apply to the purchase of the site (not what you ultimately build on it)

ostritch
Member
ostritch

Oh no. Do you mean if you want to sell your house to HAM, you can still do it, but you have to knock it down first? is that the loophole. Oh my God that’s going to fuck up the west side even worse. it’ll look like Athens.

BigDaddy
Guest
BigDaddy

Funny how the governments is unconcerned if the money is dirty or otherwise.

Boombust
Guest
Boombust

Wow. A steal. I’m goo goo ga ga.

Boombust
Guest
Boombust

That dumb house pimp will lose it all…

Already
Guest
Already
Loon
Guest

Time for Vancouver Price Drop to fire back !

Sellnoworbepricedin4evah
Guest
Sellnoworbepricedin4evah

That ad freaks me out. On first read I thought it was a lark. On 2nd and 3rd read I think it’s real.
Mostly though what freaks me out is $24k a year (taxable) income (less taxes, upkeep etc) for a $1.5 mill house.
How long does that take to pay off?….your lifetime.
God help you if property value goes down.

Rolls
Guest
Rolls

realtor selling before prices go higher he tell me as he feels guilty doctor and lawyer cant afford crack shack even with suite income

squeak
Member
squeak

Well, that should be easy to fix: Stop being stupid being a lawyer or a medical Dr. Go and study hard to become a realtor.

Insane
Guest
Insane

Uh-uh, that’s what happens when MONEY and HIGH FINANCE has become STUPID! Don’t listen to the crony capitalist Gov’t, we are living in hyper-inflationary times. We’ll be paying soon astronomial pricesfor fresh produce unless you eat out 3x day for McD and the cronies will tell you inflation is in check!

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

squeak has perfect response ^^^

Sellnoworbepricedin4evah
Guest
Sellnoworbepricedin4evah

Oops. My bad. He thinks the basement alone will garnish $24k a year. Or $2k a ,month.

YVR
Guest
YVR

LOL the rush to the exits has started. Listings will double in August.