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.
For those looking for a quick primer on 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.