B.C. Tax Targets Foreign Home Buyers
Since the past one year, soaring housing prices in Metro Vancouver have been one of the major concerns in the country. Vancouver is an extremely attractive property destination for foreign investors to secure their money.
Addressing the role of foreign investors in the red-hot housing markets of Vancouver, Canadian province British Columbia has announced an additional 15 percent tax on foreign home buyers in the greater Vancouver. It takes effect on August 2, 2016. The ultimate goal of the British Columbian government is to increase housing affordability for the local residents.
The Surprise Move
The benchmark price for a detached home in Vancouver has increased by more than 30 percent in the past year.
The surprise move comes after the government tracked all residential real estate transactions across British Columbia between June 10 and July 14, and found that foreign nationals invested more than $1 billion into B.C. property, of which more than 86 per cent was invested in Vancouver and the surrounding areas.
The Affected Properties & Areas
The newly announced tax applies to the sale of all residential properties such as single and multi-family dwellings, apartments, and condominiums within 22 communities in Metro Vancouver, and to buyers who are not Canadian citizens or permanent residents, as well as corporations that are either not registered in Canada or are controlled by foreigners.
The affected areas include the Greater Vancouver Regional District and other prescribed areas, but exclude treaty lands of the Tsawwassen First Nation.
Hiked Tax to Scare Most Foreign Speculators Off
Whether the tax hike will have the envisioned effect of restraining the flow of foreign investment in the residential real estate market and improving affordability for local residents or not, remains to be seen. But, surely, the rise in tax will have a significant effect on foreign buyers and sellers who have entered into agreements for purchase and sale before August 2, 2016.
Experts believe that the new property tax could cool demand. After all, very few foreign home buyers will be willing to pay $750,000 in tax for a $5-million house. But foreign speculators could get friends or family (who are permanent residents) to buy on their behalf in order to escape paying the tax.
Better Days Ahead for Vancouverites
Feverish foreign investment and a market struggling to build enough new homes have led to a spectacular house price boom in Vancouver. But a massive tax hike on foreign purchases will help manage foreign demand while new homes are built to fulfill the needs of local residents.
Hopes High for Housing Affordability
According to the Prime Minister, Justin Trudeau, rising home prices, uncertainty around being able to buy your first home or to be able to upgrade as you want to grow a family, is a real drag on the country’s economy and Canadians’ opportunities.
But as Canada plans to tax overseas investors buying homes in Vancouver, the local residents can have their hopes high of owning a home in the city. Search for the best residential properties on Condoinvancouver.