Category Archives: opinion

BC Speculation Tax Impact

People who own more than one home are worried about the new speculation tax:

From a Vancouver Island resident with a condo in Vancouver: “If the proposed speculation tax proceeds as you describe, the two-per-cent tax will far exceed the B.C. income tax that we normally pay. We will have no choice but to sell our Vancouver condo. We’re not speculators. We simply wanted to enjoy a few days a month in the city we used to live in, in the comfort of our own condo.”

On the problem for seniors with recreational properties that have been in the family for years: “If they pay zero income tax because their annual income is low enough to warrant no tax — i.e. married couple making around $25,000 or so — they’d never recover the amount.”

From someone with a place on Saturna: “They call it a speculation tax, but it seems more like an empty home tax. The government claims that taxing homes which remain empty most of the year will help deal with the housing shortage. If that is the case, why isn’t Whistler included? The prices are skyrocketing and there is a real housing shortage for workers. On the other hand, they include a Gulf Island like Saturna, where there isn’t a housing shortage and housing prices haven’t risen in more than eight years.”

On the perverse incentives of a tax vis-a-vis longtime residents versus actual speculators: “If you speculate and sell the property quickly, you pay the tax once, while those keeping property for years pay years of tax. The short-term speculators win!”

Read the full article here.

Affordable Rent

The word ‘Affordable’ is subjective, what seems like a good deal to some is outrageous to others.

So to clear up the debate the city has put some numbers to the word ‘affordable’ in their guidelines for rentals built under a city incentive program:

$1750 for a 1 bedroom apartment

$2505 for a 2 bedroom apartment

Does that match up with your expectations for the term affordable?

Negatives for real estate

Yvr2zrh shared this comment:

Wow. Quite a lot of negatives for real estate values.

1.) If you live outside Vancouver and keep an apartment empty there, you now have a very punitive tax. Total will be 3% by 2019 (only 0.5% provincial in 2018 as a bit of a leeway to allow people to sell).

2.) FBT @20% – pretty good. Big tax – starts immediately. Wow . More people will get caught again. Deals will die. Also if property is over $3M – this will make it 25% for a foreigner to buy a Van West house. Then they have to pay 3% per year ($90K?) to leave it empty. Game over.

3.) The 2% spec tax – Strange name – it’s more of an absentee owner / empty home tax. It’s pretty sizeable. It’s going to be strange but somehow I think they are going to force it onto certain “principal residences” i.e. students, 10-Year visa people – who don’t qualify for really being a resident. Then – if they really pay tax in BC there is a tax credit. Good system.

4.) Full reporting of pre-sale transactions for tax purposes. I suppose that may help but you need to require a tax withholding for non-residents because otherwise – they just won’t pay.

5.) Unveiling all the hidden ownership – starting with collecting on new transactions and forcing existing transactions to be unveiled.

So – I would say that “Housing for Housing” has been supported and properties for non-residents etc – – that will be tough. What about all the Okanagan properties owned by Albertans – – It’s going to be interesting to see how many people bail!!!

Empty home tax hurts those with second homes

People who own seconds homes in Vancouver are suffering under the new empty home tax:

The Unfair Vancouver Vacant Homes Tax Coalition describes its purpose in the name. The group is calling on the city to do something as the Feb. 2 deadline for the empty home tax declaration approaches.

Rainer Borkenhagen says the group is made of members that are mostly retired and live across the country, but still own homes in Vancouver.

Borkenhagen himself lives in Gibsons, but owns a condo in Vancouver.

He said he tried to rent his condo once, but it turned out it was more practical to keep it and use it whenever his family needed it.

Read the full article here.

How sharp a correction?

Most economist are predicting a slower housing market in Canada, but how slow is too slow?

Southseacompany points to this article wondering how ‘sharp’ any correction would be:

Last week, the Bank of Canada hiked the overnight rate to 1.25 per cent, causing the credit union to note that Canadians have some of the highest levels of household debt in the world.

The interest rate hike — when combined with a new mortgage stress test for uninsured borrowers that came into effect on January 1 — could severely limit the purchasing power of many would-be home buyers, cooling the market dramatically.

But while most economists agree that these factors will dampen the market in the first few months of 2018, many believe it will eventually adjust to the changes. What’s more, some argue that Canadians debt levels aren’t as worrying as they might first appear.

“Household debt in Canada is seen by some as unsustainably high and a source of vulnerability for the financial system,” write National Bank chief economist Stéfane Marion and senior economist Matthieu Arseneau in a recent report. “But the international evidence suggests that Canadian household leverage and home prices are not abnormal.”

Read the full article here.