A New tax on foreign house buyers in Vancouver

  • Recently, the city government of Vancouver amended the Property Transfer Tax Act in order to levy a 15% transfer tax on foreign entities and taxable trustees that purchase residential property in the Greater Vancouver Regional District. (New tax on foreign house buyers in Vancouver) The new tax is not Grandfathered and went into effect on August 1, 2016 (only eight days after it was passed).

    Basically, the new measure created a real estate foreign house buyers tax throughout what is known as the Greater Vancouver Regional District. Vancouver has had one of the most expensive real estate markets in the world over the past few years and this taxation measure was an attempt to use fiscal policy to depress prices.

    Who Qualifies as Foreign House Buyers in Vancouver

    For those looking for a quick primer on the Vancouver Real Estate Foreign House Buyers Tax:

    • Under the modified language, “foreign entities” are individuals who are not permanent residents of Canada or are not Canadian Citizens. Foreign Corporations are defined as those corporations who are incorporated in Canada but controlled by a foreign national or foreign corporation (unless listed on the Canadian Stock Exchange) and those that are not incorporated in Canada.
    • Taxable trustees include any trustee of a trust who is a foreign national foreign corporation or a beneficiary who is a foreign national or foreign corporation which holds an interest in the residential property in question.
    • The Greater Vancouver Regional District includes: Anmore, Belcarra, Bowen Island, Burnaby, Coquitlam, Delta, Langley City and Township, Lions Bay, Maple Ridge, New Westminster, North Vancouver City and District, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, Surrey, Vancouver, West Vancouver, White Rock, and Electoral Area A.  Any Tsawwassen First Nation lands are excluded from the terms of the new law.

    Winners, Losers, and Effects from the Vancouver Real Estate Foreign House Buyers Tax

    Obviously, the big winners, at least after the market settles down, should be Canadian nationals looking for new property, Canadian companies or individuals looking for investment properties, or foreign investors who don’t mind the tax but were hoping for more available inventory.

    Losers may include foreign investors who had not yet closed contracts as of August first, Foreign House Buyers in Vancouver on work visas (who pay Canadian taxes but who will still be subject to the terms of the new law). And businesses trying to induce foreign workers to Vancouver.

    Proponents see the move decreasing the price of new homes substantially.

    Some opponents have suggested that the tax is unlikely to help the economic sectors that it is designed to help while others have even suggested that the long-term effect would be to increase prices or unleash unintended consequences.

    The legality of the Real Estate Foreign House Buyers Tax in light of Canada’s obligations under international trade agreements will likely still have to be hashed out in Courts.

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