1003 replies to this topic

[Greg]

Why not just buy outside of the geographical limitations of this tax? You could still have invested in the Province, and as suggested above, rented in the GVRD until such time as you qualified for resident status. Everybody wins.

Some people like to own the home they live in when putting down roots.The province has the right to treat newcomers who have not yet received permanent resident status or citizenship as unwelcome, but then the Province should not be surprised if those folks actually feel unwelcome and take their skills, expertise, capital and income somewhere else instead of BC.

[lanforod]

Geoff Plant had a good suggestion today: apply capital gains to all houses, regardless of status. That would help control some of the costs.

 

Wait how is that a good idea? That just gives the government a bunch more money which they are **** at spending and seriously depletes the ability of homeowners to sell and move locally (which is a major local economy booster). What's the good side of that idea?

[LeoVictoria]

Some people like to own the home they live in when putting down roots.The province has the right to treat newcomers who have not yet received permanent resident status or citizenship as unwelcome, but then the Province should not be surprised if those folks actually feel unwelcome and take their skills, expertise, capital and income somewhere else instead of BC.

 

You should be able to apply for a rebate on the tax if you earn and pay income tax in the following 5 years or something.   Issue is capital coming in, buying up houses, and then the owners declaring no income and collecting low-income benefits from the state. 

[Mike K.]

There's far more to the announcement than just the 15% tax on foreigners buying real-estate in Metro Vancouver. A new superintended of real-estate will assume rule-making and regulation authority, and time's also up for dual agency representation. The 15% tax can also be increased to 20% or decreased to 10% depending on the efficacy of the new legislation. In fact there are quite a few measures that will be undertaken to regain consumer trust in the RE industry following what has been quite a tumultuous year.

 

Foreigners face 15% property transfer tax in Metro Vancouver as province moves to end industry's self-regulation

http://victoria.citi...elf-regulation/

[LeoVictoria]

There's far more to the announcement than just the 15% tax on foreigners buying real-estate in Metro Vancouver. A new superintended of real-estate will assume rule-making and regulation authority, and time's also up for dual agency representation. The 15% tax can also be increased to 20% or decreased to 10% depending on the efficacy of the new legislation. In fact there are quite a few measures that will be undertaken to regain consumer trust in the RE industry following what has been quite a tumultuous year.

 

Foreigners face 15% property transfer tax in Metro Vancouver as province moves to end industry's self-regulation

http://victoria.citi...elf-regulation/

 

The end to self regulation is what they announced a couple weeks ago.  It's just being bundled into this bill.

[VicHockeyFan]

^ ^ What trust has been lost in the real estate industry?  More people are using real estate professionals to buy real estate, for example in Victoria, than ever in our history.

 

I think a lot of stuff is really overblown.

[nagel]

^ ^ What trust has been lost in the real estate industry?  More people are using real estate professionals to buy real estate, for example in Victoria, than ever in our history.

 

I think a lot of stuff is really overblown.

Most of the public seemed to think shadow flipping was unethical, and something similar to this would be forbidden by other professional groups like accountants.  And then there was that couple pretending to be people begging to buy a house, but they were really just realtors looking for inventory.  So yeah, there's a strong impression that their self regulation is lacking.

[Mike K.]

The end to self regulation is what they announced a couple weeks ago.  It's just being bundled into this bill.

 

Right, that's good to clarify.

[SusanJones]

From Globe & Mail today

In Canada, of course, you pay no capital gains tax on your house, provided it is your principal residence. If you own property here but don’t live in it, you are taxable on the full amount of the increase in its value when you sell it. That’s true even if you live in it part-time, as long, of course, as you have a principal residence somewhere else.

This is a massive tax benefit for resident homeowners. In some parts of Vancouver, houses are being sold for literally 10 times what they were purchased for decades ago. All of that gain is tax-free if the house is your principal residence. But if you have purchased the property for an investment, if you’ve flipped it, or if you are planning to subdivide it and sell it off, it’s all taxable.

In other words, we already have a very significant two-tier taxation system for residential property.

Indeed, there is another such scheme, the Home Owner Grant, which reduces the amount of property taxes you pay each year on your principal residence. Admittedly, the grant doesn’t offer much value any more in Vancouver because the ceiling on eligibility has not kept up with the rising values of real estate in Vancouver.

But in other parts of the province, the grant is a very efficient way of distinguishing between houses that are lived in by their owners and houses that are owned by investors.

So there are at least two mechanisms already in place for distinguishing between resident homeowners and property investors. Do we need a third?

 

http://www.theglobea...rticle31093222/

[johnk]

Unintended consequences...
Prof Ian somebody on CBC's The Exchange today said it could actually push up prices in the short term as buyers accelerate purchases to get in under the wire.

[johnk]

http://www.theprovin...1609/story.html
 
Here's the problem.  Between 69,000 and 100,000 housing units are caught up in regulatory delays.  In a place that builds 20,000 per year.

Good point. Its a supply/demand problem. Developers want to build housing, its what they do. The land is there. The customers are there. The financing is there. But insane petty, obscure regs with clued-out politicians and myopic nimbys (CSV for eg)clog up the works

[Layne French]

Unintended consequences...
Prof Ian somebody on CBC's The Exchange today said it could actually push up prices in the short term as buyers accelerate purchases to get in under the wire.

 

Those prices were already rising though? how could you extrapolate what is "normal" vrs what is from the result of a taxation change in this un-normal market. 

I like hearing Ian Lee's views however in this case it if the growth moderates after implementation didn't it work? after all it has been going up like a rocket for the past year, was that due to the run up of this tax? 

[dasmo]

Like raising interest rates will push prices up and tightening credit rules further and increasing rent controls and rights. Oops did I say that last one out loud. Let's hope they don't get that serious!

[Layne French]

Like raising interest rates will push prices up and tightening credit rules further and increasing rent controls and rights. Oops did I say that last one out loud. Let's hope they don't get that serious!

Point I was making is that we are in uncharted waters and Ian Lee looking at what is happening and saying its because of xyz isn't really that impressive. its already happening regardless so it becomes of a matter of correlation does not equal causality.

[Mike K.]

It's important to note that wealthier Chinese buyers are not interested in price, they're interested in assets -- at whatever price. The fear is their money may be no good by the end of the decade and that's fuelling the insane rush to secure North American holdings.

 

The Chinese are spending $2 million while last year they were spending $1 million for the same properties. To them even 20% for transfer taxes will simply translate into a cost of doing business, but they key here, IMO, is not so much to thwart foreign investment, it's to recoup more money for housing projects in BC.

[VicHockeyFan]

Unintended consequences...
Prof Ian somebody on CBC's The Exchange today said it could actually push up prices in the short term as buyers accelerate purchases to get in under the wire.

 

It's in 8 days though.  

[VicHockeyFan]

It's important to note that wealthier Chinese buyers are not interested in price, they're interested in assets -- at whatever price. The fear is their money may be no good by the end of the decade and that's fuelling the insane rush to secure North American holdings.

 

The Chinese are spending $2 million while last year they were spending $1 million for the same properties. To them even 20% for transfer taxes will simply translate into a cost of doing business, but they key here, IMO, is not so much to thwart foreign investment, it's to recoup more money for housing projects in BC.

 

But it's not like the value of the purchase just goes up 15% when you pay the tax.

 

Buy the house for $2M, pay $300k tax, and you can not sell it theoretically for $2.3M the following day.  It's still a $2M house.  So you have to wait quite a while longer for appreciation, to recoup that 15%.

 

Now, if you do decide to unload it the following day and get your $2M back, that's a $2M house price to you or I, but a $2.3M house price if sold to another foreigner.

 

I get the feeling these guys will work around the tax.

 

I don't know, but in our culture, it might seem preposterous (and risky) that we'd ask a (Canadian) buddy or family member to take a house in their name to avoid the tax.  In other cultures, might not be a big deal.

[LJ]

It's important to note that wealthier Chinese buyers are not interested in price, they're interested in assets -- at whatever price. The fear is their money may be no good by the end of the decade and that's fuelling the insane rush to secure North American holdings.

 

The Chinese are spending $2 million while last year they were spending $1 million for the same properties. To them even 20% for transfer taxes will simply translate into a cost of doing business, but they key here, IMO, is not so much to thwart foreign investment, it's to recoup more money for housing projects in BC.

I agree. The Chinese are paying interest to purchase bonds just to get their money out of the country. Paying a premium on real estate isn't going to slow them down. They will just use a proxy or a numbered company to make the purchase avoiding even the existing property transfer tax.

[LJ]

Wait how is that a good idea? That just gives the government a bunch more money which they are **** at spending and seriously depletes the ability of homeowners to sell and move locally (which is a major local economy booster). What's the good side of that idea?

It's not. How many remember back to the halcyon days of Paul Hellyer where he floated the idea that the government should tax people on the equity they had in their homes. Trudeau's looking for money, first a carbon tax then another tax then another tax......

[Mike K.]

But it's not like the value of the purchase just goes up 15% when you pay the tax.

 

Buy the house for $2M, pay $300k tax, and you can not sell it theoretically for $2.3M the following day.  It's still a $2M house.  So you have to wait quite a while longer for appreciation, to recoup that 15%.

 

Now, if you do decide to unload it the following day and get your $2M back, that's a $2M house price to you or I, but a $2.3M house price if sold to another foreigner.

 

I get the feeling these guys will work around the tax.

 

I don't know, but in our culture, it might seem preposterous (and risky) that we'd ask a (Canadian) buddy or family member to take a house in their name to avoid the tax.  In other cultures, might not be a big deal.

 

They don't care about value. They care about safe assets. Even if the real-estate industry were to crash a Canadian asset worth 1/4 of the value they paid for it is still more than an asset in China worth nothing or one that has been seized by the state.