Vancouver installs 15% foreign buyer tax

By Leith van Onselen

British Columbia’s (BC) Premier, Christy Clark, has unveiled a new proposal to levy an additional 15% property transfer tax on foreign buyers in a bid to rein-in runaway housing costs in Vancouver. From CTV News:

The government took aim at foreign buyers Monday, highlighting housing data that indicates they spent more than $1 billion on B.C. property in a five-week period starting June 10, with 86 per cent of that spending recorded in the Lower Mainland area.

Clark’s Liberals have signalled for months that change was coming for the real estate industry, tackling unscrupulous sales practises…

Clark said recent housing data played a large part in the government’s decision to levy the additional property transfer tax on foreign buyers.

“There is evidence now that suggests very wealthy foreign buyers have raised the overall price of housing for people in B.C.”…

“If we are going to put British Columbians first, and that is what we are intending to do, we need to make sure we do everything we can to try and keep housing affordable,” said Clark. “Ultimately, the goal is to affect the demand by making sure it’s maybe a little tougher for foreign buyers to find their way into our market”…

The additional tax for foreign buyers takes effect Aug. 2. It means a foreign buyer would pay an additional $300,000 in tax on a $2-million purchase.

Excellent policy. In addition to curbing demand, the additional funds raised can be spent for the benefit of the domestic population, for example on public services, infrastructure, or simply paying-down debt.

The foreign buyer tax is also long overdue.

Just last month, SBS Dateline aired a disturbing report examining the large-scale migration/investment of wealthy Chinese into Vancouver, which has forced house prices to astronomical levels and left a swathe of empty homes.

The Dateline segment followed a report presented to the City in March which found just under 11,000 empty homes in Vancouver, most of which are  apartments or condos. There have also been recent widespread reports of immigration fraud by rich Chinesemoney laundering into Vancouver real estate, and other dodgy dealings by corrupt Chinese in Vancouver property.

In short, the BC and national government needs to crack-down hard on dirty foreign money, and this 15% stamp duty is a very good start. Otherwise, Vancouver risks becoming a resort town for wealthy foreigners, rather than a community.

Australian states should immediately raise their foreign buyer stamp duties to 15%.

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Comments

      • Even with an extra 15% loading its still cheaper than Beijing.

        Given the recent stories of factory closures and social unrest coming out of China its still probably a safer cheaper option than leaving the cash in China.

        Vancouver has become a Chinese laundry for corruption money, as is Sydney.

  1. Australian states should immediately comply with Australian law and require proof of purchaser’s FIRB approval/compliant residency status to register the transfer of title

    • ^^^ This. How can you even consider having additional taxes on foreign buyers if you’re not bothering to identify them in the first place?

    • AlbyManglesMEMBER

      as straya is a banana republic maybe a 15% tax going straight to the states pockets would then encourage enforcement of the law just like how bribes work in 3rd world countries

  2. Awesome! Now Australia will become more competitive in enticing and luring Foreign property buyers! Aussie Aussie Aussie!

    You guys are crazy if you think we’ll implement the same kind of tax here. You’re wrong, sorry.

      • Yes, maybe one of our own news outlets could also team up with “global due diligence firm IPSA International” and conduct a similar investigation here? Looks like a pretty effective template they would already have to work with given the results? Low cost even?

    • AlbyManglesMEMBER

      what a read, thanks, and the comments after could be a carbon copy of MB comments

    • Yes, stunning work. Anything done here would be snide in comparison. Not even sure we have the journos to deal with stuff like that.

  3. Fantastic, great news for Strayan property, such hospitable haven, so welcoming than those canadian idiots. With foreign buyers and rate cuts, onwards and upwards! With a slab of beers and a pack con*oms, I will be joining Reusa’s party!

  4. 30%, retrospective and proof of identity on transfers from now. The plane ticket home can be paid from the sale proceeds if they decide to sell out. No big deal.

  5. What about the taxes by Dubai and HK on foreign buyers.

    WA and SA charge the kids of 457 visa workers steep fees for studying in government schools. About time the other states did the same. With no exceptions for low-income 457 visa workers. All 457 visa workers are meant to be on above $54k/year anyway.

    They should stop bringing their kids here if they are here on an illegal salary.

  6. Neville Gearless

    The tax is not going to release all those vacant properties, it is levied on purchases only and no effect on existing. Just drive prices even higher.

    • Audit the titles records for FIRB compliance
      2yrs since KO’Ds “crackdown”
      Why hasn’t this been done?
      The sham continues

    • SwittersMEMBER

      Vancouver/BC is now considering the application of a vacant property tax to address that very issue. Check out the Macro links.

  7. But Colin Barnett said he wants to get more and more chinese students to university’s in WA so that they can buy sorry study for a degree. And he said while they are here they could look around and hopefully all that lovely perth land would take thier fancy and they would buy it. The additional stamp duty raised could be use to pay for the removal of the perth homeless from the CBD. That cant happen if we start charging extra taxes. It might put off all those students.

  8. reusachtigeMEMBER

    Sadly this world is getting more and more rashist against foreigners every single day!

    • I agree this tax is as dumb as stamp duty, a 1 off sugar hit. We should be going for a broad based land or vacancy tax instead.

  9. Chodley Wontok

    For those wishing to skirt these new rules, I offer my services as proxy buyer for illegal purchases of property at the princeling discount of 7.5 per cent.
    Kind Regards,
    Chodley

  10. More details:
    http://www2.gov.bc.ca/assets/gov/taxes/property-taxes/property-transfer-tax/forms-publications/is-006-additional-property-transfer-tax-foreign-entities-vancouver.pdf

    This part is interesting:
    Tax Avoidance
    All property transfer transactions are subject to audit and all additional property
    transfer tax returns will be reviewed and verified. The audit period is six years from
    the date the transfer is registered at the Land Title Office.
    Where transactions involve Canadian citizens, the Canadian citizen’s social insurance
    number must be collected and their identification verified against official government
    issued identification such as a Canadian passport. Invalid social insurance numbers or
    other discrepancies on a return will lead to an audit and investigation of the transaction.
    Anti-avoidance provisions exist and will be enforced to ensure all foreign entities report
    and pay the additional tax as required, including examining circumstances where
    Canadians hold property in trust for a foreign entity or are trustees where a beneficiary
    may be a foreign entity.
    Failure to pay the additional tax as required or purposely completing the general or
    additional property transfer tax return with incorrect or misleading information may
    result in a penalty of the unpaid tax plus interest and a fine of $200,000 for corporations
    or $100,000 for individuals and/or up to two years in prison. The penalties apply to
    anyone who participates in tax avoidance.
    Property transfers will be monitored for compliance and the province will follow up
    with those businesses or individuals filing incomplete or incorrect general or additional
    property transfer tax returns.

  11. and this (from here:https://news.gov.bc.ca/releases/2016PREM0080-001346) –

    Fourth, amendments to the Vancouver Charter provide the legislative authority for the city to implement and administer a tax on vacant homes. The City of Vancouver will design the framework of the vacancy tax, including details like the tax rate, when it will apply and any necessary exemptions.

  12. Given how much these laundry folk are overpaying for property, I doubt this will have any real effect.

    Australia will eventually go for a negative tax on foreign purchasers, along with a series of first foreign homebuyer grants.

  13. – But (according to my info) real estate prices in Vancouver were already in the first stages of reversing.

    – As a CEO of one real estate services company had said: “It’s like driving a car. When the driver lifts his/her foot from the gas pedal, the car will continue to move/drive, it’s still moving forward, it still has momentum. Only it takes some time before it becomes clear that the car is no longer accelerating but is actually slowing down. And when it comes to real estate in Vancouver it’s clear that the driver has lift its foot from the gas since early april (2016). It’s only a matter of time when people will become aware that the Vancouver real estate market is cooling down”.
    – In that regard this legislation is a matter of “too little, too late”.

    • Until the Chinese government next decides to juice their economy by creating a few more trillion $ in new debt. Then the gas will go straight back on.

      Without such measures there is the potential for this situation to still get much much much worse. The Chinese will keep juicing hard as their economy will collapse without it.
      As an example of how crazy it gets in China, Shenzhen’s house price has increased 100% IN ONE YEAR…..

  14. Michael MatusikMEMBER

    one tax rule – everything is taxed at 20% – income, consumption and business – drop all other taxes/charges – and no passport/no buy regardless of property type or stage of delivery

    • Wouldn’t that just lead to more cash in hand work and under the counter sales? If a tax is tied to land it is harder to avoid.

    • everything is taxed at 20%
      Ouch!
      Saving up to buy a car, put a few grand in the bank – 20% tax on deposit. Take it out to buy the car – 20% tax on withdrawal. Buy the car – 20% tax on car. Ouch! Ouch! Ouch!

    • I like your idea of no passport no buy as a basic principal.

      In addition we then need flexibility to allow off the plan sales with mandatory rental requirements (no vacancies over, say, 3 months or higher tax applies) supported by mandatory income tax on the property, at the top income tax threshhold level, if the property is left vacant. The ATO can assume an annual rental income of, say, 5% of the average purchase price of multiple living structures or free standing homes within say 2 kilometers of the property (this information can be obtained from the states which already compile these stats). Of course money laundering and FIRB requirements also need to be policed.

      The above described process allows for continued expansion of rental property stock to meet demand and reduce rents (immigration and a host of other distorting taxes and regulations also need attention but what I suggest is a good start).