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A roundup of opinions about a Toronto 15% foreign tax

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Real Estate Professional | 26 Sep 2016, 08:15 AM Agree 0
A number of industry stakeholders have had their say – including our own readers
  • T.C.S | 26 Sep 2016, 10:47 AM Agree 0
    I think that they have to be cautious with how it is implemented. They cannot do the quick knee jerk reaction they did in B.C. Set a start date when all new transactions will get affected. Also it would be more prudent to increase the tax on the sale of a property that a foreign owner has. Create an ownership scale that dictates a higher capital gains tax within certain time periods of ownership. If they own for 0 to 5 years they are taxed at a rate of 50 %. this will reduce the flip mentality. As well do not allow foreign investors to assign transactions. they must close and take title, this way the government will not have to chase the builders to get original sale documents.

    The market may self cool on its own, so caution has to be exercised here. This could force an artificial cooling that will have more of a negative affect. The actual numbers of foreign investors may be lower in the GTA market then some people believe, so lets get the real numbers before moving forward.
  • Bob Edwards | 26 Sep 2016, 10:54 AM Agree 0
    This is a very ill advised tax.Foreign investment creates good high paying jobs. Our foreign investment in the GVRD dropped from over 2 billion in the month or so before the tax was announced to 17 million in about a month after. Foreigners searching to buy in Vancouver has dropped by over 90% yet searches by foreigners looking to invest in Seatlle increased over 100 percent at the same time. Capital will always go where it is appreciated. Our BC governments stupid tax and the loss of billions in investment is going to create a lot of jobs in Seattle and other investment friendly cities.
  • TH | 26 Sep 2016, 11:08 AM Agree 0
    How about affordability?
    Our young generation is nearly doomed to be able to ever own their own home in Toronto and even more so in Vancouver.
    Not sure if the foreign tax is the answer to this problem, but clearly something has to be done before most of our youth will be tenants in real estate owned by foreign investors.
  • Tony Bal | 26 Sep 2016, 11:11 AM Agree 0
    Agree with Bob Edward
  • MAKE IT 20% | 26 Sep 2016, 11:33 AM Agree 0
    TH is 100% correct.
  • Bob Grant | 26 Sep 2016, 11:40 AM Agree 0
    It seems to me that the only answer government has is to add another tax to the situation!

    What about a reduction of taxes to allow our first time buyers to be able to step up and purchase!
    1) No more land transfer tax.A purchase in Toronto of under $400,00.000 very hard to find.The rebate should be applied to the down payment.
    2) No more levies on new construction.
    3) Make all costs to purchase for a first timer tax deductible including CMHC fees.
    4) Allow first timers to deduct their first three years cost of owning that home.
    5) Consider a subdivision with a land lease. The first time buyers would get a home and be able over time to pay off the land lease. The Malvern subdivision was done that way.

    These are probably not realistic but it is a different way to view the problem. Government in my opinion is not about making housing more affordable but only in creating a perception of this .
  • RT | 26 Sep 2016, 12:18 PM Agree 0
    In Vancouver, with the exception of Realtors and construction jobs, we were on a downward slide to obtain qualified workers. Heavy foreign investment isn't creating jobs it's preventing jobs from coming into the city. Employers are leaving the city because they can't attract qualified employees. Unless your offering a strong 6 figure income (which is beyond the ability of small business, our largest employer), people will not move to Vancouver because they can't afford a home and to top it off, there is no rentals available as most of the foreign owned investment properties sit empty. Something had to be done and I applaud the BC government for having the common sense to step up and do the right thing as unpopular as it might be for real estate investors.
  • Peter B. Realror | 26 Sep 2016, 01:01 PM Agree 0
    There's likely no REAL proof that the 15% tax had any real effect of the Vancouver market. Likely, it was co-incidental with a natural slip due to overvaluation. It did, however, give the tax person an extra chunk of cash that will likely not go towards affordable housing.
    Want truly affordable housing?
    We live in a free market and prices will only drop when inventory is higher than demand or overvaluation snaps the market. To create affordable housing, the government has to:
    -Either subsidize it heavily (so tax payers are paying for it) or
    -Allow more construction of "starter" homes to provide more lower-cost selection that will ultimately cause a lowering of average prices.
    (How easily we forget about the supply-demand curve, eh!) or
    -go full Communist and dictate sq ft per person.

    Sadly, there are some who would go for the 3rd option.

    Toronto is hungry for tax dollars and they will line up all of the "experts" that will help it happen.

    Will that suddenly help those that cannot afford their first home (or even a rental)? Hell no.
  • Don johnson | 26 Sep 2016, 01:53 PM Agree 0
    High property prices is a direct result of government taxes- permit fees - restrictive zoning - and red tape causing significant delays to build - the law of supply and demand is simple - demand in low supply makes prices rise - a new home is roughly 1/2 taxes and fees and interest eat costs caused by government - now they want to add a new tax over and above the ridiculous land transfer fees and Hst charges - if they are worried about foreigners not paying tax on profit answer is simple have lawyers send copy of property owners ship sale to rev Canada when there is a foreign national involved - with fintrac already mandatory there is no reason capital gains taxes can not be collected - this foreign tax is a way to get more money from the largest savings account most citizens have - that's their home !!!
  • JW | 27 Sep 2016, 10:28 AM Agree 0

    Some people think that there is no other choice, but to copy whatsoever Vancouver has done in to chill the Toronto (so called over heating" real estate market). I think this kind of thinking is a bit naive. The Toronto situation is entirely different from the Vancouver situation. There is not much land in Vancouver, the housing supply in Vancouver is limited. In Toronto, it is entirely a different story. There is a lot more land here and, and housing is still very affordable in Toronto. In spite of the rising price of houses in Toronto, there are still many spacious condos and townhouses at pretty affordable prices, esp. for the professional starters in the Toronto outskirt areas.

    Don't be carried away by the irresponsible comments of some other people, indicating that imposing high taxes on foreign buyers is a must. Actually, the soft costs of a real estate transaction is very high already, such as, the Land Transfer Tax, the Legal Costs, the Real Estate Commissions HST, the carrying costs of owing a property, etc.... It is not that easy for "foreign buyers" to speculate or flip houses in Toronto for reasonable profits within a short period of time. In addition, by the time many "foreign buyers" sell their properties, after paying all the taxes, the carrying costs, and the currency conversion, I just doubt whether there are, indeed, handsome profits left behind, esp. when the Canadian currency has been declining in the past years.

    A lot of the foreign buyers usually buy condos for their kids studying in Toronto. Due to the drop of Oil Prices and the stagnant Canadian Economy, what other alternatives that Canada, esp. Toronto can offer to attract foreign investors are: Education and, perhaps, Real Estate. And if we even shut our doors in these industries, both Ontario and Toronto will be facing unnecessary hardship in our economy.

    If you look deeper at the areas where the houses are rising in Toronto, you will realize that there is a good association of the house prices and the schools in those areas. The better the schools are, the faster is the house-rise in those good school areas; however, the scores of the good schools can fluctuate from year to year. In another words, many foreign investors "just don't buy any houses in Toronto". They are also very selective, and they are also just taking a chance in buying.

    I think what Toronto has to do is, not to concentrate on thinking about imposing Foreign Taxes "blindly". They should spend more efforts to improve the Toronto Transportation problems.

    The reason why many working people prefer to live in Downtown Toronto is due to the poor transit systems in Toronto. If our subway-net is better, like those of London and New York, many people will feel at ease to move away from downtown Toronto. No money to improve the sub-way system ? I think the problem comes from how the passengers is charged. The commuters should be charged the distance they travel, instead of paying for a token to travel whatever distance they want to travel. This will make our TTC operation more profitable, leaving us more money to make improvements and extensions.

    Parking at the subway stations can also be a nightmare. This indirectly motivates passengers to drive all the way to downtown instead of leaving their cars at the subway stations. If the City of Toronto improves the TTC system and the parking, here will be more people choosing to leave in the sub-urbs. This will easy the housing market in Toronto considerably, esp. in the longer run.

    Also, consider introducing the "Elevated Bus" and "High Speed Train" in Toronto, connecting the neighboring towns to downtown Toronto. this will make commuting to Toronto a lot faster and easier. Better public transportation will definitely contribute to the easing of housing market in downtown Toronto.

    If you compare the Toronto housing market with comparable cities in North America, the houses in Toronto are NOT overpriced at all. Any if you compare with the first class international cities in the world, the Toronto houses are still a the bottom prices. Don't kill our Toronto and Ontario economy by being a copy cat of Vancouver.

    Just imposing heavy taxes to foreign investors and be a copy cat of Vancouver will cause considerable casualty in the Toronto and Ontario Economy.

    Please take a look at this:

  • 20% wouldbnice | 28 Sep 2016, 04:03 PM Agree 0
    Gee zez
    How long did that take???
  • Arizia | 01 Oct 2016, 11:58 PM Agree 0
    There are so many people care about if a 15% foreign buyers tax should be add on foreign home buyers. I rather would like to talk about if our Canadian cash resources are being abused by anybody who is not a Canadian immigrant or a Canadian citizen. Why should someone who does not have a job can have a mortgage but for someone who's reporting tax every year and have proven down payments is not qualified to have a mortgage or some finance need from the bank?
  • djd | 04 Oct 2016, 12:21 PM Agree 0
    The historically high ratio of home ownership is considered to be one of the stabilizing forces that makes Canada so such a great country to live in. The foreign buyer tax is intended to moderate the influence of AFFLUENT FOREIGN BUYERS on Canadian real estate. By doing so, it helps to keep the Canadian market in balance and within reach of Canadian buyers. Meanwhile, taxes flow into Canadian coffers.

    How can that possibly be bad.

    It's fascinating that the only people that seem to be against the foreign buyer tax are those making commissions from the sale of properties. The higher the value, and the higher the volume of sales, the higher the commission. I would imaging that people who already own homes will be equally critical. These people don't care about creating zombie neighborhoods as long as the get their money.

    How self-serving can you possibly be?
  • Pete | 05 Oct 2016, 11:39 AM Agree 0
    Exactly!! It's already started to happen.
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