7 ms·

Foreigners, especially the billionaire type, can and have been setting up shell corporations through which to purchase Canadian real estate. The proposed measur

Foreigners, especially the billionaire type, can and have been setting up shell corporations through which to purchase Canadian real estate. The proposed measure will do nothing to stop this practice. The measures proposed by the Canadian government are likely just political posturing and indented to "pull the wool over the eyes" of Canadian voters because the housing bubble/crisis has reached epic proportions and everyone is talking about it.

dmalik 4y ago
This is correct. The Beaverton has a good satirical article that gave me a chuckle talking about this. https://www.thebeaverton.com/2022/04/canada-to-ban-foreign-homebuyers-who-refuse-to-set-up-dummy-corporations/ https://www.thebeaverton.com/2022/04/canada-to-ban-foreign-h...
- deskamess 4y ago
  The Beaverton has been hitting it out of the park recently.
  - GLGirty 4y ago
    Is that because the beaverton writers are getting better, or because the world is getting more ridiculous?
- throwaway2037 4y ago
  Cripes. This is crazy good. I read for about 30 mins. This feels like The Onion from 10 years ago! Example headline: <<Gay teen moves to Toronto, must once again live in closet>> Perfect fit with this discussion!
bryanlarsen 4y ago
We don't have implementation of the bill yet, just the budget line. Obviously the government knows about this problem, so if they take measures to prevent it, then we'll know they are actually serious. Note that a corporation is not consequence free. An owner occupied home pays no tax on capital gains. A corporation owned one is double taxed.
- sumedh 4y ago
  > A corporation owned one is double taxed. Are the corporations buying for capital gain or for rental income?
  - puszczyk 4y ago
    I think if the corporations/foreigners but to rent, this is OK--the house is on the rental market and doesn't sit empty. The problem arises if ppl park money in the real estate and the units are empty: - This is often "luxury" housing which prevents a more regular buyer/renter-friendly housing units to be built. Another problem is that some units are converted to airbnbs, and they start to compete on the hotel/business/vacation short-term rental market instead of being rent out for long term for people who live/work in the area. I'm based in the EU, and this is what I've seen in some of the cities/neighborhoods here. I know very little about Canada's real estate market. In Poland another phenomenon (not sure how widespread outside of PL) is that ppl buy large-ish apartments and split them into multiple rooms or studios and rent them out to students or ppl early in their career. This inflates prices (as the capital that would have been invested in the stock market goes to housing), but otherwise the number of units increases, so probably less of an issue in the grand scheme of things.
- 627467 4y ago
  > A corporation owned one is double taxed. this statement only matters for the current conversation if taxes raised through this mechanism helped maintain property price levels where the taxes are being raised.
- gpderetta 4y ago
  The typical workaround in UK is that instead of selling the house, the corporation that directly or or directly owns it is sold instead, usually on a tax haven.
  - a_c 4y ago
    UK property prices surged a lot in the past year, especially in smaller cities. I wonder if the UK government is going to do something about it
GypsyKing716 4y ago
This feels like nationalism, in delivery no matter how true it may be.
- jwond 4y ago
  It's really crazy to me that so many people have apparently come to believe that it is bad for countries to implement measures that protect the interests and well-being of their own citizens above those of foreigners.
joelthelion 4y ago
Could a better thought out measure achieve the same goals? How would you do it? I feel a strong tax on houses you don't personally live in (because you rent them or because you're a company) could be efficient, but I'd love to hear other people's take on the subject.
- pards 4y ago
  The sale of investment properties is already subject to capital gains tax.
  - powellzer 4y ago
    Which is an incentive to not sell and instead take out a low interest loan using the properties as collateral. Many cities do have a Homestead exemption which reduces the real estate tax for primary residences.
  - joelthelion 4y ago
    I mean a strong yearly tax on home ownership with an exemption for primary residences.
    - chii 4y ago
      Why should investment properties be taxed worse than say, stocks? If property is expensive, it means there's a demand for it. The price is a good signal that the area needs more properties built. It's only the gov't (local gov't perhaps, or NIMBYs) that are stopping it from happening. Raising taxes isn't going to fix the problem. It only forces existing investors who are on the margins to get pushed out.
      - joelthelion 4y ago
        > Why should investment properties be taxed worse than say, stocks Because they are a fundamental human need, and in limited supply. Good land is fundamentally limited. You can't build more of it.
baybal2 4y ago
jollybean 4y ago
Most foreign buyers are not billionaires, that said, the foreign buyer loophole seems bad.
the_only_law 4y ago
> The measures proposed by the Canadian government are likely just political posturing and indented to "pull the wool over the eyes" of Canadian voters because the housing bubble/crisis has reached epic proportions and everyone is talking about it. Politics, particularly here in the west, is beginning to feel like exclusively this to me.
funksta 4y ago
Exactly. Without an airtight national beneficial ownership registry, this "ban" is just theatre and pandering for votes
mzs 4y ago
There is no law yet so no implementation that shell companies can skirt. You are getting ahead of the horse. This is a signal from the Canadian government to foreign investors that Canadian housing could no longer be a safe investment for their money shortly. https://pm.gc.ca/en/news/news-releases/2022/04/13/helping-young-people-get-housing-market https://pm.gc.ca/en/news/news-releases/2022/04/13/helping-yo...

dmalik 4y ago

This is correct. The Beaverton has a good satirical article that gave me a chuckle talking about this. https://www.thebeaverton.com/2022/04/canada-to-ban-foreign-homebuyers-who-refuse-to-set-up-dummy-corporations/ https://www.thebeaverton.com/2022/04/canada-to-ban-foreign-h...

deskamess 4y ago
The Beaverton has been hitting it out of the park recently.
- GLGirty 4y ago
  Is that because the beaverton writers are getting better, or because the world is getting more ridiculous?
throwaway2037 4y ago
Cripes. This is crazy good. I read for about 30 mins. This feels like The Onion from 10 years ago! Example headline: <<Gay teen moves to Toronto, must once again live in closet>> Perfect fit with this discussion!

bryanlarsen 4y ago

We don't have implementation of the bill yet, just the budget line. Obviously the government knows about this problem, so if they take measures to prevent it, then we'll know they are actually serious. Note that a corporation is not consequence free. An owner occupied home pays no tax on capital gains. A corporation owned one is double taxed.

sumedh 4y ago
> A corporation owned one is double taxed. Are the corporations buying for capital gain or for rental income?
- puszczyk 4y ago
  I think if the corporations/foreigners but to rent, this is OK--the house is on the rental market and doesn't sit empty. The problem arises if ppl park money in the real estate and the units are empty: - This is often "luxury" housing which prevents a more regular buyer/renter-friendly housing units to be built. Another problem is that some units are converted to airbnbs, and they start to compete on the hotel/business/vacation short-term rental market instead of being rent out for long term for people who live/work in the area. I'm based in the EU, and this is what I've seen in some of the cities/neighborhoods here. I know very little about Canada's real estate market. In Poland another phenomenon (not sure how widespread outside of PL) is that ppl buy large-ish apartments and split them into multiple rooms or studios and rent them out to students or ppl early in their career. This inflates prices (as the capital that would have been invested in the stock market goes to housing), but otherwise the number of units increases, so probably less of an issue in the grand scheme of things.
627467 4y ago
> A corporation owned one is double taxed. this statement only matters for the current conversation if taxes raised through this mechanism helped maintain property price levels where the taxes are being raised.
gpderetta 4y ago
The typical workaround in UK is that instead of selling the house, the corporation that directly or or directly owns it is sold instead, usually on a tax haven.
- a_c 4y ago
  UK property prices surged a lot in the past year, especially in smaller cities. I wonder if the UK government is going to do something about it

GypsyKing716 4y ago

This feels like nationalism, in delivery no matter how true it may be.

jwond 4y ago
It's really crazy to me that so many people have apparently come to believe that it is bad for countries to implement measures that protect the interests and well-being of their own citizens above those of foreigners.

joelthelion 4y ago

Could a better thought out measure achieve the same goals? How would you do it? I feel a strong tax on houses you don't personally live in (because you rent them or because you're a company) could be efficient, but I'd love to hear other people's take on the subject.

pards 4y ago
The sale of investment properties is already subject to capital gains tax.
- powellzer 4y ago
  Which is an incentive to not sell and instead take out a low interest loan using the properties as collateral. Many cities do have a Homestead exemption which reduces the real estate tax for primary residences.
- joelthelion 4y ago
  I mean a strong yearly tax on home ownership with an exemption for primary residences.
  - chii 4y ago
    Why should investment properties be taxed worse than say, stocks? If property is expensive, it means there's a demand for it. The price is a good signal that the area needs more properties built. It's only the gov't (local gov't perhaps, or NIMBYs) that are stopping it from happening. Raising taxes isn't going to fix the problem. It only forces existing investors who are on the margins to get pushed out.
    - joelthelion 4y ago
      > Why should investment properties be taxed worse than say, stocks Because they are a fundamental human need, and in limited supply. Good land is fundamentally limited. You can't build more of it.

baybal2 4y ago

jollybean 4y ago

Most foreign buyers are not billionaires, that said, the foreign buyer loophole seems bad.

the_only_law 4y ago

> The measures proposed by the Canadian government are likely just political posturing and indented to "pull the wool over the eyes" of Canadian voters because the housing bubble/crisis has reached epic proportions and everyone is talking about it. Politics, particularly here in the west, is beginning to feel like exclusively this to me.

funksta 4y ago

Exactly. Without an airtight national beneficial ownership registry, this "ban" is just theatre and pandering for votes

mzs 4y ago

There is no law yet so no implementation that shell companies can skirt. You are getting ahead of the horse. This is a signal from the Canadian government to foreign investors that Canadian housing could no longer be a safe investment for their money shortly. https://pm.gc.ca/en/news/news-releases/2022/04/13/helping-young-people-get-housing-market https://pm.gc.ca/en/news/news-releases/2022/04/13/helping-yo...