4 ms·

A disaster for people who believe Canadian citizens and permanent residents should be able to afford to buy a home in their own city. Great for those who own r

by hoodoof 10y ago

A disaster for people who believe Canadian citizens and permanent residents should be able to afford to buy a home in their own city. Great for those who own real estate and sell it.

et-al 10y ago
It seems like the Canadian government is responding: > Foreign investors will have to pay an additional 15 percent in property-transfer tax as of Aug. 2 and city of Vancouver was given the authority to impose a new tax on empty homes. The additional tax on foreign investors is a good idea, but I wonder how it will be enforced, especially when ownership is often hidden behind trusts.
- Zombieball 10y ago
  My instinct is that it will likely be a small source of income for the government. Will it help with affordability issues for locals? Unlikely.
- goodcanadian 10y ago
  [edited for accuracy] Technically, it is a British Columbia provincial tax which applies only in the metro Vancouver area. I am curious to see what, if any, affect it has.
- enraged_camel 10y ago
  >>and city of Vancouver was given the authority to impose a new tax on empty homes. I wonder how they will actually enforce this. I mean, one can furnish a home, have utilities remain active and leave a few lights on and make it look like someone is actually living there. Add some random noise generation (pretty easy to set up with home automation or other, similar methods) and you can fool basically anyone who isn't actively watching your door 24/7.
  - tempestn 10y ago
    IIRC they're planning to use a number of sources. Things like utilities - so at a minimum you'd have to pay for and use a reasonable amount of electricity, water, etc. in the home. Even garbage/recycling collection would be a give-away. Insurance companies will also be a source of info, as insurance rates differ based on occupancy, so the companies have an incentive to determine the same. Finally anonymous reporting (ie from neighbours). Sounds like it should be pretty effective to me. The last bit least so, but utilities + insurance should go a long way. It's going to be a lot easier to just find a decent tenant (easy to do when housing is in such short supply; charge slightly below market rent if you want your pick from many applicants) than to do all the work to fake occupancy.
  - hx87 10y ago
    > you can fool basically anyone who isn't actively watching your door 24/7 How easy is it to fool a surveillance camera pointed at your door 24/7 with an automated system trained to detect human movement watching it?
- raquo 10y ago
  That tax is just a smokescreen. There are numerous loopholes and problems with it, so many that it's surely deliberately engineered for maximum buzz but minimum effect. BC and Vancouver have been playing hot potato with this issue for a while with no one doing anything to address the problem. For example, it very narrowly targets foreign citizens who are not permanent residents or citizens of Canada, completely missing "investors" who have just bought Canadian permanent residence for cheap, do not earn income in Canada, and are now buying property in their safe haven. This scenario is unfortunately all too common. About $100K in interest payments via Quebec's investor immigration program, no other requirements.
- ayuvar 10y ago
  A huge portion of BC (and Canada's) economy since the oil price crash has been FIRE, so I would imagine there is no interest in bursting the real estate bubble. The foreign investor tax is a low-effort attempt to skate through another election and maybe pick up a few bucks on the other side. An actual solution to this problem will involve cooperation between the province and the feds at the very least to handle Canada's lax money laundering laws and the Quebec immigrant investor program, as other posters have said. And you are correct in that there have already been realtors caught and censured in BC for offering to help their clients sidestep this new tax using a white proxy buyer or a cut-out trust. However, an actual solution is likely to also tank real estate values, which is reasonable when you think about how the average single detached home in Van is selling for a huge multiple of average wage.

by hoodoof 10y ago

A disaster for people who believe Canadian citizens and permanent residents should be able to afford to buy a home in their own city. Great for those who own real estate and sell it.

et-al 10y ago

It seems like the Canadian government is responding: > Foreign investors will have to pay an additional 15 percent in property-transfer tax as of Aug. 2 and city of Vancouver was given the authority to impose a new tax on empty homes. The additional tax on foreign investors is a good idea, but I wonder how it will be enforced, especially when ownership is often hidden behind trusts.

Zombieball 10y ago
My instinct is that it will likely be a small source of income for the government. Will it help with affordability issues for locals? Unlikely.
goodcanadian 10y ago
[edited for accuracy] Technically, it is a British Columbia provincial tax which applies only in the metro Vancouver area. I am curious to see what, if any, affect it has.
enraged_camel 10y ago
>>and city of Vancouver was given the authority to impose a new tax on empty homes. I wonder how they will actually enforce this. I mean, one can furnish a home, have utilities remain active and leave a few lights on and make it look like someone is actually living there. Add some random noise generation (pretty easy to set up with home automation or other, similar methods) and you can fool basically anyone who isn't actively watching your door 24/7.
- tempestn 10y ago
  IIRC they're planning to use a number of sources. Things like utilities - so at a minimum you'd have to pay for and use a reasonable amount of electricity, water, etc. in the home. Even garbage/recycling collection would be a give-away. Insurance companies will also be a source of info, as insurance rates differ based on occupancy, so the companies have an incentive to determine the same. Finally anonymous reporting (ie from neighbours). Sounds like it should be pretty effective to me. The last bit least so, but utilities + insurance should go a long way. It's going to be a lot easier to just find a decent tenant (easy to do when housing is in such short supply; charge slightly below market rent if you want your pick from many applicants) than to do all the work to fake occupancy.
- hx87 10y ago
  > you can fool basically anyone who isn't actively watching your door 24/7 How easy is it to fool a surveillance camera pointed at your door 24/7 with an automated system trained to detect human movement watching it?
raquo 10y ago
That tax is just a smokescreen. There are numerous loopholes and problems with it, so many that it's surely deliberately engineered for maximum buzz but minimum effect. BC and Vancouver have been playing hot potato with this issue for a while with no one doing anything to address the problem. For example, it very narrowly targets foreign citizens who are not permanent residents or citizens of Canada, completely missing "investors" who have just bought Canadian permanent residence for cheap, do not earn income in Canada, and are now buying property in their safe haven. This scenario is unfortunately all too common. About $100K in interest payments via Quebec's investor immigration program, no other requirements.
ayuvar 10y ago
A huge portion of BC (and Canada's) economy since the oil price crash has been FIRE, so I would imagine there is no interest in bursting the real estate bubble. The foreign investor tax is a low-effort attempt to skate through another election and maybe pick up a few bucks on the other side. An actual solution to this problem will involve cooperation between the province and the feds at the very least to handle Canada's lax money laundering laws and the Quebec immigrant investor program, as other posters have said. And you are correct in that there have already been realtors caught and censured in BC for offering to help their clients sidestep this new tax using a white proxy buyer or a cut-out trust. However, an actual solution is likely to also tank real estate values, which is reasonable when you think about how the average single detached home in Van is selling for a huge multiple of average wage.