“I’ve seen 20-year-olds pay for condos with cash,” Jay Flemming, a sales agent with Core Assets Real Estate, told REP. “Their parents give them the money to get it out of the country.”
Foreign students can be exempted from paying the foreign buyer tax—likely because they were nominated under the Ontario Immigrant Nominee Program— so their parents purchase Toronto properties in their name for them to ostensibly live in, however, Flemming says that doesn’t always happen.
“Many of them don’t live there,” he said. “They’ll rent apartments or live in dorms. It’s truly an amazing tax loophole—just have a kid in school over here.”
Eugene Kaplun, a sales agent with REMAX Infinite, says many of his foreign clients are Chinese and, as another strategy used to circumvent the 15% foreign buyer tax, buy preconstruction units that won’t be closed for another five years, by which time they expect to have received their permanent resident cards, thus precluding them from being taxed.
However, not everybody buys property in their children’s name. According to Kaplun, many foreign buyers don’t mind paying the 15% tax up front because there are ways to get it back. Although it is possible to recoup the tax money through the condo unit’s appreciation in the five or so years before closing, Kaplun says it would be too much of a gamble because the market could go south, and that there other ways to guarantee a tax reimbursement.
“The good case scenario is there are loopholes,” he said. “If you have been studying and you get a permanent resident card, you can apply to get the 15% tax you paid back.”
Another strategy used to dodge the foreign buyer tax is to apply for the Quebec Immigrant Investor Program (QIIP), whereby immigrants provide the government interest-free loans in exchange for citizenship. The rest of Canada had a similar program that’s now defunct, but Quebec has jurisdiction over its immigration and has kept the QIIP operational.
“We’re a stable economy and there’s room to expand, so they see it as an opportunity,” said Kaplun. “Canadian computer science is among the best in the world, our banking system is one of the safest in the world, and so they feel comfortable parking their money in Canada. They want their kids to grow up in a stable environment with free health care and great education, so Toronto is the place to go for them.”
Has Vancouver’s 15% tax done its job?
Foreign buyer influence now better understood
Foreign buyers, most of whom are Chinese, have found ways to circumvent the foreign buyer tax, often with the help of their children.