The legal challenge against the B.C. government’s foreign buyer tax is slated for June, and West Coast sales agents will be keeping a close eye on it.
“There needs to be some kind of control that keeps people from buying up everything in Vancouver, but I think it’s an unfair tax,” said Pete Shpak, an associate broker with MLA Realty, who fields the occasional call from American buyers.
“I had clients from Bellingham, Washington, who bought a presale condo and waited three years for it to be ready—they were an older couple who were ready to retire and wanted to spend half their time in Vancouver—and before it was complete they were hit with this 20% tax. This is an older couple.”
A Chinese citizen named Jing Li has launched the motion against the province, claiming the tax—recently increased from 15% to 20%—contravenes foreign treaties, and is both discriminatory and illegal. It’s also speculated that the suit could snowball into a class action lawsuit.
Shpak’s clientele is mostly local, but he counts the odd foreign buyer, usually from the United States, among them. Or at least he used to.
“I’ve helped Americans in the past, and those phone calls don’t occur as much as they used to,” he said.
“When they do call, I ask them if they’ve heard about the foreign buyer tax and they often say they haven’t, and the conversation stops there.”
Shawn Anderson of the Engel & Völkers VANCITYliving will be following the case closely because the government could be on the hook to return large sums of money.
“I know Tom Davidoff [who submitted testimony on Li’s behalf], who’s consulting on this case, very well, and it will be interesting to see what pans out,” said Anderson. “It would be very unfortunate if the government had to return this money. But, if that’s the law, it is what it is.”
Anderson is leery of taxing foreign buyers because it won’t solve the any of the issues plaguing Vancouver. Moreover, the tax applies retroactively to purchases that hadn’t already been registered to the Land Title Office, and that rankles Anderson.
“I’m probably more against the tax because it won’t help with affordability,” he said. “It’s not going to turn a $4mln house into a $600,000 one; it won’t turn a $1mln condo into a $500,000 one, which isn’t affordable for a lot of people, either. There could have been other measures. I don’t like the way the tax was implemented because it was poor business practice to impose a foreign buyer ban on pre-existing contracts—that’s just wrong. They could have said something like ‘It’s effective from midnight onwards,’ but instead it’s retroactive. It’s like saying, ‘Hey, those shoes you bought last year, well, by the way, you owe us an extra 20%.’”
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