15% Property Transfer Tax

New Property Transfer Tax For Greater Vancouver Housing Market!

The provincial government has just implemented a 15 per cent foreign buyer tax on all residential transactions in the Greater Vancouver Regional District areas effective August 2, 2016. The tax will be added to the Property Transfer Tax and will apply to all residential properties purchased by foreign nationals or foreign-controlled corporations..

The new tax will be payable on applicable transfers registered with the Land Title Office on or after August 2 regardless of when the deal was completed. The tax will apply to any transfer fee that is a foreign national, foreign corporation, or taxable trustee. Foreign nationals are defined as people who aren’t Canadian citizens or do not have permanent resident status in Canada. (Permanent residents will have a valid permanent resident card issued by the Canadian government.)

Finance Minister Mike de Jong introduced the tax as part of legislation aimed at addressing low vacancy rates and high real estate prices in southern B.C.

He says recent government housing data indicates foreign nationals spent more than $1 billion on B.C. property between June 10 and July 14, with 86 per cent being made on purchases in the Lower Mainland area. The legislative package would also enable the City of Vancouver to amend its community charter in order to levy a vacancy tax. Just last May, de Jong said he was not in favour of a tax on foreign investment, saying he worried it would send the wrong message to Asia-Pacific investors.

According to Joe Oliver the former federal minister of finance, currently an independent director of Firm Capital Mortgage Investment Corp. These are his personal views;Attempts to tame price increases with federal policy demand caution. The goal should not be to drive down house prices. That would penalize homeowners, lowering the value of some houses below their mortgages. It could also trigger an economic downturn. Policies should avoid impacting regions where price increases are moderate (that is, pretty much anywhere not in the Greater Toronto and Greater Vancouver areas) and where both domestic and foreign investment is needed to counter sluggish growth. Finally, the last thing we need is for government to use a hyped-up crisis as an excuse to impose new taxes that would reduce housing affordability

Toronto’s mayor John Tory said on Thursday in response to a question from BNN; he’s not going to rush into a policy decision about his city’s red-hot housing market, despite heightened scrutiny after British Columbia intervened to cool the country’s other housing hot spot.I am not going to at this stage, state that I have reached a conclusion myself based on what’s going on anywhere, including Vancouver, that any particular tool or mechanism should be used to try to cool off housing prices, It’s a complicated matter, you’re dealing with a market place – governments can only macro manage things, not micro manage them.

Thomas Davidoff, a professor at the Sauder School of Business at the University of British Columbia Said:”Rather than charging a tax to foreign nationals, Davidoff said he would have preferred to see a policy that provides tax breaks to homebuyers who can demonstrate they are paying local income taxes, why drag nationality in when the real question is,Are you a local worker?

Kevin O Leary, Chairman of O Leary Financial Group joins BNN for a look at why he vigorously opposes government intervention in the housing market, despite warnings from the CMHC of it being problematic.

I agree with the above 3 comments from my own personal experience. In 1982, when my wife and I bought a cute old timer in Vancouver East side, mortgage rates were at 12.5% and at that time it was a bargain compared to 20% of the previous year. The real-estate bubble of 1976-1980 just burst in 1981, the average property value in Vancouver dropped more than half. An old home that was selling a couple of years earlier for $120,000 you could now pick up for $60,000. We paid $76,000 for ours. I remember that the market was getting brisk and we had to compete with multiple offers and there was also the element of foreign buyers . But we had a slight advantage the Government was helping local buyers with a $4,000 grant or a 2% cut on your mortgage rate. Before the price collapsed, a lot of other 1st time buyers were in a similar dilemma as today. I was prepared to move outside of Vancouver in order to own a home. The market eventually took its natural course and corrected itself and with a little help from the government. A lot of new buyers were able to afford a home in Beautiful Vancouver. I firmly believe that incentives are more effective than penalties or taxes,Italo Fionda.