Real Estate Professional forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Agents argue over foreign tax suggestion

Notify me of new replies via email
Real Estate Professional | 18 May 2016, 08:15 AM Agree 0
Real estate veteran stirs controversy with foreign homebuyer tax argument
  • Menno van Driel | 18 May 2016, 10:57 AM Agree 0
    This is what we should do with those darn foreigners. Take their money and give them nothing in return. No house, no investments, just nothing. That's the way we like to do business!
  • Linda | 18 May 2016, 11:50 AM Agree 0
    If a non resident owns property on Prince Edward Island their property taxes are approximately 40% higher than that of a resident.
  • Brian | 18 May 2016, 12:08 PM Agree 0
    Non citizen should not be able to own free-hold homes. Restrict them to condos only and with higher taxes.
  • James Oberian | 18 May 2016, 12:28 PM Agree 0
    Rome is burning and Nero is fiddling...
  • Kenna W-E | 18 May 2016, 12:40 PM Agree 0
    Did we not have a 20% tax on foreign buyers before?
  • Broadbent | 18 May 2016, 01:55 PM Agree 0
    Ladies and gentlemen,

    In the 1980's Hong Kong money came pouring into Willowdale, North York (C14) and the Markham region. The rush of investment was so great that the Town of Markham at that time was hundreds upon hundreds of requests to have residential addresses changes to avoid the existence of 14 and 44 as a postal address for homes.
    When China took back Hong Kong and the Chinese investors realized that it was still business as usual, they put their Canadian properties up for Sale... a sudden rush of Chinese investment money left C14 and Markham ..and in its wake, the average Canadian Homeowner lost equity in the value of their property. This especially hurt New First Time RESIDENTIAL HomeBuyers.

    Within the last few years, we have seen the world in an economic crisis that leaves very few locations of stability. The wealth that has shifted over to the East is producing new Millionaires there every single day. Though Chinese Federal law limits Chinese citizens to no more than $50,000 of their money money allowed to be outside China, International Banks and Foreign Governments are simply to attracted to the quick and immense flow of Administrative Wire Transfer Fees and Land Transfer Taxes, to ever seriously considering limiting the cash Cow!

    Historically low interest rates, a weak value of the Looney and concern over the longevity of the US dollar and the Euro has made Vancouver and Toronto real estate the commodity of choice for new Chinese money.

    This time however, when the investment Tsunami pulls back out to sea... the devastation of a 30% to 50% over valuation will come back to haunt Canadian Homeowners who actually live in their houses and contribute to Canadian Society. In Vancouver at least 10,800 foreign owned homes were left empty for more than a year. The National post identified at least 30% of Vancouver is Foreign owned. Imagine the real number that they have not been able to identify yet.

    We cannot blame the Chinese investors for taking advantage of our open borders and easy access. We are a population of 36 million that seemingly have ceased to produce future taxpayers (children) for our Government. For this reason, our country has been opened up to anyone willing to put money into the Federal and Provincial coffers, regardless of the long term consequences.

    Yes it's true, the devalued Looney is good for Canadian Exports,..which is great for Canadian exporters...however, for those of you living in the real world of Canada, where very little of what we consume is produced here, it simply means a higher cost of living for all of us.
    Have you noticed while the cost of your groceries ( except meats ) have remained the same more or less, the packageing of those groceries have shrunk by 15% to 20%. This translates into a hidden 15% to 20% increase in food. ...and a larger increase in house rental and purchase costs...

    With most young Canadians unable to believe they will ever be able to afford a house and other Canadians worried they may never be able to afford to retire... who will stand up to get the Country back on track and stop the demise of the Canadian middle class.

  • terry s | 18 May 2016, 03:09 PM Agree 0
    You can't just blame foreigners for the high real estate prices. I'm constantly asked by those born and raised here in Canada in my neighbourhood "How much is my house worth this month?" My answer is always the same "If your not selling, it's only worth what you paid for it." In all cases it's those same people who want the prices to rise so they can pocket the profits. I can see in any new development "FOR SALE" signs going up within months (if not weeks) after moving in and not all of them are foreigners trying to make a quick buck.
  • Peter B. Realtor | 18 May 2016, 05:13 PM Agree 0
    Emotions aside, what, exactly does a foreign property buyer bring into Canada? More tax dollars? No. Same land transfer tax. More money for professional (Realtors)? Not really. Perhaps a bit more commission based on a higher selling price but inconsequential compared to the cost of the item to a domestic buyer. More money for a lawyer? Not really as the transaction cost will likely not change.
    More employment? No as the buyer is buying a property to rent or as an investment or for family.
    So really, what benefit is there for a foreign buyer to buy a property in Canada? For Canadians, nothing really.
    On the other hand, being that we live in a supply and demand world, the demand is pushing the cost so high that only the rich can afford to buy these properties. It's not only Vancouver property (Vancouver is to the East what Toronto is to the West... all about me, me, me.)
    Other properties are also being bought up and held by "buy and hold" companies that buy hundreds or thousands of acres of farm land and hold as an investment. So who really owns Canada?
    There should be limits or appropriate taxes imposed. They will not dissuade the buyers but hopefully pump some cash into our deficit ridden governments.

    On the other hand, foreign competition rules being what they are and what they will be after the protection regulations are dismantled due to their being labelled as "anti competitive" by the world court (when did we give them the keys to our homes?), there will be nothing to keep a foreign company that is holding farming land in Canada from growing crops on that land and exporting ALL of it just so we can import back at a higher cost. Remember oil anyone?
    So those of you who scream "xenophobia" at any mention of a tax on foreign buyers, pull your heads out and think on it.
  • Derek | 19 May 2016, 02:49 PM Agree 0
    Pretty simple , don't lend foreign buyers borrow money from our banks( Royal Bank use to have a Limit it was removed about 5 months ago ) which in the end makes Canadians look like we have a higher debt ratio than we have . Let foreigners bring the cash with them , this will stop the leveraging that any smart buyer would use if there speculating on the market . You can not borrow money from US banks as a Canadian to buy property in the US anymore , China stopped the inflation on there housing market in 2008 or 2009 restricting the financing of foreign buyers .
    I shake my head. We really need to get back to the K.I.S.S principal . We seem to love making up more methods to create more taxes through more bureaucracy which means you actually only get 10 cents on the dollar received .
  • Shawn Laghai | 19 May 2016, 05:30 PM Agree 0
    This issue is much worse than just taxing foreign investors and is not only in Vancouver, as an example Toronto also has this problem.
    Taxing them will not help because the investors are buying and registering under one of their family or friend’s name and address which will show that is purchased and occupied by Canadian resident.
    Authorities has to find out, who are the investors (owner)? Are they really Canadian who made the money in Canada or overseas and did they pay their taxes? Or these investors are from other countries, that they are hiding their illegal assets in Canadian properties, under their relatives and friend's name, which brings some other tax issues like foreign investor’s income tax as well as capital gain tax. Since they are buying under someone else's name which are Canadian resident, they avoid paying proper Tax.
    I am in Toronto Ontario. Hear and perhaps in other major cities, high percentage of buyers are foreigner especially Chinese.
    When the salesperson has an offer for his/her client and facing multiple offer with 20 others competing offers, which most of them are foreigner especially Chinese and look like the buyer is under the age of 30 and will pay 25% to 40% over asking price, cash (no financing). We wonder when and how they made this money.
    This will bring another problem and a question for the rest of us which as soon as the new property tax (Assessment ) will be set, CAN THE REST OF US (real Canadian residents) AFFORDED? And also our own young generation cannot afford buying their home.
    I think one solution is that.
    1- As soon as someone buy a property with 20% or more cash down payment (especially, Any offer without financing clause), the Buyer's salesperson and the lawyer both, independently reported it to Revenue Canada. (This should be part of FINTRAC). Which the Revenue Canada can investigate to know if the tax has been paid or even is it clean money (Properly and legally made)? Or who is the real owner?
    2- As soon as the closing and the change of ownership happen, the local property tax starts with the new paid price. This way will be fair for the Buyer (Since he/she paid for it), The Government (property tax department) and the rest of Canadian property owners, and also will be safer for the Buyers and Lenders.
    3- For all other property owners, the yearly property tax to be increased with the yearly inflation rate, which is announced by the government of Canada. For the new property owners, yearly property tax to be increased from the time they bought and the price they paid, Or the Yearly Tax Increase starts from this year onward for exiting owners at the rate of national inflation rate which is announced by the Government of Canada until the owner ship changes.

    I am in favor of foreign investor as long as they pay their taxes and not hiding it under false owner’s name. We as Canadian worked hard and paid our taxes to have a good, safe and affordable country. We have to keep it the same way for our children. We should not allow foreigners to come and abuse it and not pay their share.

    Shawn Laghai

  • Mark Ranger | 24 May 2016, 07:36 AM Agree 0
    Foreigners should be able to buy Canadian real estate with the stipulation that it be new purpose built real estate. That way the additional demand of foreign buyers will not cause prices to rise as they add to the inventory rather than take away from it and they stimulate employement with the additional new construction and all those industries which revolve around it. WIN / WIN.
  • Greg Blue Ocean | 29 May 2016, 04:46 PM Agree 0
    Prince Edward Island established the Island Regulatory Appeals Commission to deal with, not only immigrant purchases but all non-residents of PEI. This limits waterfront purchases(165ft) and real property purchases ( 5 acres). On top of this, anyone that is a non-resident will not be eligible to receive the resident tax credit that can be as high as 40%.
  • Lysanne Brault, Ottawa, Ontario | 30 May 2016, 07:12 PM Agree 0
    I believe we need to protect all property types from foreign investors by just making it more expensive through what used to be a 25% land transfer tax that we had to protect agricultural property. This should be applied to all types. Also the capital gain exemption on primary residence should not apply , unless they are landed immigrants or canadian citizen. Since it is an investment and one not owned by a canadian, the gain should be taxed as income at marginal rate. This will accomplish two things: given the price the foreigners are willing to pay, it may slow down the increase in price in their priviledged locations: Toronto and Vancouver , by eliminating some. It will put money in the province and federal governement coffers to compensate for the many negative consequences of high foreign real estate investment in communities, and hopefully it will help keep the prices of homes and land within canadian hands and reach.
Post a reply