As of August 2, 2016, foreign buyers of residential property in the Vancouver area will have to pay an extra 15 percent tax. The new tax, which was unveiled this week by the government of British Columbia (B.C.), is part of provincial plan to slow the foreign speculation that many blame for making the region’s homes the most unaffordable in Canada.
Last month, the Real Estate Board of Greater Vancouver said its benchmark price for detached properties in Vancouver had risen above $1.5 million.
The rules only apply to home purchases in Metro Vancouver, excluding the treaty lands of the Tsawwassen First Nation.
The additional tax on the purchase of a home selling for $2 million to a foreign national will amount to an additional $300,000 in taxation. Currently, all B.C. residents pay a one per cent tax on the first $200,000 of their purchase, two per cent on the remaining value up to $2 million, and three per cent on any portion above that.
The B.C. government stated that the revenue from the additional tax would be used to fund housing, rental and support programs, adding that the new rules aim to make housing more affordable for middle-class buyers.
Vancouver Mayor Gregor Robertson welcomed the changes, stating that “I’ve been calling for years now for the province to take bold action to deal with housing affordability, and the impact of global capital on our market here,”
“It’s too early to judge whether or not it will have a significant impact, but it’s good to see, particularly on the high end of the market. We need an intervention there.”
However, the opposition party in the B.C. legislature, the New Democratic Party of B.C., has criticized the tax, suggesting it unfairly singles out foreign people instead of foreign money.
“It penalizes new immigrants who are working and living here, but don’t have citizenship yet . . . I fear we’re going to be back in six months fixing this problem” said NDP member of the B.C. legislature David Eby.
Nonetheless, the government’s plan clearly states that the defintion of a foreign national is someone who is not a Canadian citizen or permanent resident. Consequently, new permanent residents settling in the Metro Vancouver Area will not see the tax applied to their purchase of a home.
The Metro Vancouver Area includes Anmore, Belcarra, Bowen Island, Burnaby, Coquitlam, Delta, Langley City and Township, Lion’s Bay, Maple Ridge, New Westminster, North Vancouver City and District, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, Surrey, Vancouver, West Vancouver, White Rock and Electoral Area A.
The additional tax applies on all applicable transfers registered with the Land Title Office on or after August 2, 2016, regardless of when the contract of purchase and sale was entered into.
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