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how much are the property taxes in vancouver? I know in San Francisco its around 1.15%. A 1M condo pays, 15k in property taxes a year. So vancouver just increas

how much are the property taxes in vancouver? I know in San Francisco its around 1.15%. A 1M condo pays, 15k in property taxes a year. So vancouver just increased this 15k by 2.25k and made it 17.25k? This seems negligible.. A 20% increase in business class plane tickets from China would have a bigger effect than this..

Retric 10y ago
People can afford to spend X on a house per year. After expenses the rest caverns a loan at some interest rate. So roughly 2.25K per year / ~0.05 = 45k lower property values. Or 4.5% drop on a 1 million dollar house which is a significant move. Over six months you would gain some vale from inflation making a 3.7% in line with expectations. However, this assumes people mostly buy property to live on. You get a stronger impact on investment property which is why people are predicting 15% or so.
F_J_H 10y ago
15℅
- grzm 10y ago
  Off-topic: The ℅ typo for % (which is due to an Android keyboard layout if I understand correctly) always catches my eye. What other typos like this are people aware of? What can be done to prevent them?
ansy 10y ago
You misunderstand. This is a 15% premium on the entire purchase price. So for a $2M home the tax would be $300k [1]. [1] http://www.theglobeandmail.com/news/british-columbia/bc-to-target-foreign-real-estate-buyers-with-new-tax/article31096550/ http://www.theglobeandmail.com/news/british-columbia/bc-to-t...
- FireBeyond 10y ago
  I'm surprised that this has a material effect. I can't imagine that someone who is willing to buy a $2M home not to live but to park money from overseas is somehow not willing to pay $2.3M.
  - robryan 10y ago
    I think that would be true if all potential locations had the tax. As they are just parking their money, the exact city they buy into doesn't matter too much to them outside of the economics.
  - refurb 10y ago
    The Vancouver housing market is one of many. If all it takes to avoid the tax is to buy a place in Toronto or Seattle, then why not?
  - jsmeaton 10y ago
    If investors are buying with the intent to flip properties for a profit in the future then the tax significantly limits that profit. It'd make more sense to buy in other markets without such a tax. If the intent is to just park money then a 15% cost to do so might or might not make sense.
  - lawnchair_larry 10y ago
    I suspect it's a sign that they're a lot more leveraged than one might expect. These people are not paying cash as long as money is near-free. They'd be total fools to pay 100% of 1 house instead of 20% on 5 houses. So consider a conventional mortgage that typically requires 20% down and you get it back when you sell, plus a profit. With these rules, they now have to pay 20%+15% to hold it, and they lose the latter portion to the government, plus significantly higher tax annually. I'd guess they're good enough at this game that they're even more leveraged than the 20% conventional downpayment requirement and probably using the (bubble inflated) equity to print new money out of thin air and get another property. I have no idea what's actually going on but this is how I've seen people speculate on real estate in other markets and seems like the obvious thing to do. I would even guess that there are ways of borrowing against money that is still in China, which subverts their restrictions on moving money. I also predict that this hiccup will be invisible within 6 months, for two reasons. 1. Nobody goes shopping for houses in December and January because it's cold and there is Christmas/Lunar New Year etc, especially with the storms this year. 2. These restrictions are going to have loopholes and a market this big has an implicit bounty on finding them. They'll figure out how to get Canadians to hold the title to dodge the 15% foreign tax and they'll sign rental agreements with their lawyers kids/pets and say it's officialy rented or whatever else they need to do.

Retric 10y ago

People can afford to spend X on a house per year. After expenses the rest caverns a loan at some interest rate. So roughly 2.25K per year / ~0.05 = 45k lower property values. Or 4.5% drop on a 1 million dollar house which is a significant move. Over six months you would gain some vale from inflation making a 3.7% in line with expectations. However, this assumes people mostly buy property to live on. You get a stronger impact on investment property which is why people are predicting 15% or so.

F_J_H 10y ago

15℅

grzm 10y ago
Off-topic: The ℅ typo for % (which is due to an Android keyboard layout if I understand correctly) always catches my eye. What other typos like this are people aware of? What can be done to prevent them?

ansy 10y ago

You misunderstand. This is a 15% premium on the entire purchase price. So for a $2M home the tax would be $300k [1]. [1] http://www.theglobeandmail.com/news/british-columbia/bc-to-target-foreign-real-estate-buyers-with-new-tax/article31096550/ http://www.theglobeandmail.com/news/british-columbia/bc-to-t...

FireBeyond 10y ago
I'm surprised that this has a material effect. I can't imagine that someone who is willing to buy a $2M home not to live but to park money from overseas is somehow not willing to pay $2.3M.
- robryan 10y ago
  I think that would be true if all potential locations had the tax. As they are just parking their money, the exact city they buy into doesn't matter too much to them outside of the economics.
- refurb 10y ago
  The Vancouver housing market is one of many. If all it takes to avoid the tax is to buy a place in Toronto or Seattle, then why not?
- jsmeaton 10y ago
  If investors are buying with the intent to flip properties for a profit in the future then the tax significantly limits that profit. It'd make more sense to buy in other markets without such a tax. If the intent is to just park money then a 15% cost to do so might or might not make sense.
- lawnchair_larry 10y ago
  I suspect it's a sign that they're a lot more leveraged than one might expect. These people are not paying cash as long as money is near-free. They'd be total fools to pay 100% of 1 house instead of 20% on 5 houses. So consider a conventional mortgage that typically requires 20% down and you get it back when you sell, plus a profit. With these rules, they now have to pay 20%+15% to hold it, and they lose the latter portion to the government, plus significantly higher tax annually. I'd guess they're good enough at this game that they're even more leveraged than the 20% conventional downpayment requirement and probably using the (bubble inflated) equity to print new money out of thin air and get another property. I have no idea what's actually going on but this is how I've seen people speculate on real estate in other markets and seems like the obvious thing to do. I would even guess that there are ways of borrowing against money that is still in China, which subverts their restrictions on moving money. I also predict that this hiccup will be invisible within 6 months, for two reasons. 1. Nobody goes shopping for houses in December and January because it's cold and there is Christmas/Lunar New Year etc, especially with the storms this year. 2. These restrictions are going to have loopholes and a market this big has an implicit bounty on finding them. They'll figure out how to get Canadians to hold the title to dodge the 15% foreign tax and they'll sign rental agreements with their lawyers kids/pets and say it's officialy rented or whatever else they need to do.