As published on westernstandardonline.com, Tuesday 10 August, 2021.
Foreigners will soon have to pay to play in the Canadian real estate market, says Blacklock’s Reporter.
Offshore speculators face a first-time federal equity tax of $10,000 to $12,000 a year in Canada’s priciest housing markets.
The Finance department said the tax is to take effect January 1.
“Houses should not be passive investment vehicles for offshore money,” the department wrote in a statement.
“They should be homes for Canadian families.”
The 1% annual charge would tax condos, townhouses and single-family homes owned by foreign buyers not living in Canada.
The so-called “under-used housing tax” applies to property left vacant at least six months of the year.
“This is an important measure,” Finance Minister Chrystia Freeland testified April 30 at the Senate national finance committee.
“We don’t want to encourage any sort of speculation on housing.
“Housing is such an important issue for all of us. Given that our population is growing we must build, build and build again new housing every year.
“Housing must be there to provide shelter for Canadian families. Housing shouldn’t be taken over by speculators. That tax is one of the measures we’re bringing in to ensure that remains the case.”
The tax is worth $175 million a year, by Budget Office estimate.
Scofflaws who don’t file face $5,000 fines and a 5% surcharge on unpaid taxes.
The tax would be charged at 1% of the most recent sales price or a property’s assessed value, whichever is greater.
One percent of value is the equivalent of an average $11,751 a year in Vancouver and $10,503 in Toronto, based on sales price data from the Canadian Real Estate Association.
The Commons on June 9 by a 180-147 vote endorsed a Conservative motion proposing a temporary ban on residential real estate sales to offshore foreigners.
“Housing has never been less affordable,” said Conservative MP Brad Vis (Mission-Matsqui, B.C.), sponsor of the motion.
“Both the prime minister and the finance minister acknowledge we have a housing supply crisis.”
“We have not waited for the Conservatives,” replied Prime Minister Justin Trudeau.
The prime minister called the equity charge “Canada’s first national tax on vacant property owned by non-resident non-Canadians.”
But a Liberal appointee to the Senate protested the tax was “ideological.”
Sen. Yuen Pau Woo (B.C.) earlier said Canadians, not foreign speculators, were to blame for bidding up house prices.
“The very folks who peddled stories about rampant foreign buying in Vancouver and the uncritical media who bought into those stories did more to harm housing affordability than the foreign buyers themselves,” Woo wrote in an April 20, 2018 tweet.
Woo in a 2019 interview with the Hong Kong daily South China Morning Post also complained Canadians didn’t like rich Asians.
“We can’t use the fact money laundering has been found to be a serious problem as a kind of licence to now have free rein on the so-called problem of Asian capital,” Woo was quoted in an interview.
“Canada is very proud of being an immigrant nation, but for some weird reason we don’t like the rich ones.”