Friday Free-for-all! August 5th 2016

It’s the end of another summer work week and that means it’s time for another one our regular end-of-the-week news round-ups and open topic discussion threads.

It’s Friday Free-for-all time!

Here are a few recent links to kick off the chat:

Return to normal mortgage rates would crush Canadians
Prices driven by lending, not foreign investors
Sales drop, prices rise
Media runs big headlines around buyer tax
Will tax work-arounds lead to lost property?
Will collapsed deals end up in court?
Anecdotal panic
The google docs data spreadsheet
Eby seeks inquiry into tax info leak
Government will intervene

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

Condo king knew buyer tax was coming (via educated guess)

The recent announcement of a 15% foreign buyer tax was a surprise to a lot of people. Even finance ministry staff were kept in the dark about the tax.

One of the few exceptions seems to have been a very successful local condo marketer who also happens to be the chief fundraiser for the liberal government.

Mr. Rennie said he knew an additional property transfer tax for foreigners was coming about three weeks ago, but he figured it would be about 5 to 8 per cent. He said a more holistic approach would have created a tax targeting speculators of any nationality for flipping properties rapidly and “interfering in the market.”

But as Rennie points out, the polling showed that people were ‘frantic’ and specifically wanted a tax on foreign buyers. He has since clarified that it was an astute assumption based on those polls rather than inside information that led him to believe a foreign buyer tax was coming. He has offered to step down as the chief fundraiser if the BC liberal government asks him to.

Though the optics of a marketer having advance knowledge of a surprise tax in his market isn’t great, what advantage could be taken of this position?

So far the tax has mainly provided marketing opportunities and  big headlines of a 75% drop in sales even though most sales haven’t been recorded yet.  Nobody really knows what affect this tax will have on the market if any, so what would you have done with a 3 week advance notice that this tax was coming?

 

Seller raises price then offers tax discount to foreign buyers.

Here’s a good way to get your listing in the news:

One Metro Vancouver realtor says he will cut the sale price of his own Richmond home by 15 per cent for any international buyer, in a response to the province’s new levy against foreign citizens who want in on the region’s overheated housing market.

Eddy Chen says a person from Mainland China was in the midst of completing the paperwork on the purchase of his $1.98-million house last week when the government announced its new tax, which comes into effect Tuesday. The buyer walked away after the government’s surprise announcement because they could not get a home inspection or mortgage approved fast enough to avoid an extra $298,000 brought on by the new levy, he said.

“They said they don’t think it’s fair to foreign buyers, so they want to wait and see what happens [to the market],” he said. “There’s no point for them to rush it through, because they thought they were ripped off by those extra taxes.”

Now, he has upped the price to $2.35-million, but says he will take 15 per cent off for any foreign citizen hit by the new property transfer tax so they “have an equal opportunity to get the property.”

Thank goodness there’s still a sense of decency and fairness in the world.  Read the full article over at the Globe and Mail.

Friday Free-for-all! July 29th 2016

It’s a new day! The end of another week! The start of a long weekend! The dawn of a new tax!

It’s Friday and that means it’s time for another Friday Free-for-all post, our standard end-of-the-week news roundup and open topic discussion thread.

Here are a few recent links to kick off the chat:

Foreign buyer tax a NAFTA violation?
Housing crash a bigger woe than oil for Canada?
Tax draws criticism from housing experts
Ontario considering BC style foreign buyer tax
Buying property all-cash via shell companies suspicious
Tax affecting presales?
Toxic debate
Reporters suck at math
Encouraging loopholes discouraged
CMHC warns of overheated market

So what are you seeing out there? Post your news links, thought and anecdotes here and have an excellent long weekend!

Some thoughts on the Vancouver foreign buyer tax

Yesterdays surprise announcement of a 15% tax on purchase of real estate by foreign buyers has some people cheering, some jeering and some people scratching their heads. Here are a few thoughts pulled from yesterdays thread:

Franko sees it as a positive for affordability:

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.

Patriotz is a little more sceptical:

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.

MarKoz points out the obvious:

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.

LS in Arbutus says maybe not so easy to avoid the tax:

I wanted to point out that there are anti-avoidance measures in the legislation. An Anti-Avoidance Rule is typically a statutory rule that empowers a revenue authority to deny taxpayers the benefit of an arrangement that they have entered into for an impermissible tax-related purpose. Soooo I guess you can still gift your wife/kids money to buy a house, but you generally much more shenanigans than that would be caught in this type of rule. They are very wide sweeping these rules.

bullwhip29 points out how lucky some politicians are that the tax only applies to one area:

as luck would have it, mike de jong has all his eggs located just outside of greater vancouver and wont be affected by any of this (or least not in a negative way)

No matter what your thoughts are on this issue you’ve got to agree it’s pretty much the big news story in the Vancouver real estate market lately and it’s likely going to take a while to see what sort of effect it has on the local and related markets.