Vancouver Wields Foreigner Property Tax After $1 Billion Inflow
The additional property transfer tax will apply to foreign nationals and overseas corporations registering the purchase of residential property in the Metro Vancouver area starting Aug. 2, the province of British Columbia said Monday in a statement as it moved to cool a market that’s shot beyond the reach of many buyers.
“While investment from outside Canada is only one factor driving price increases, it represents an additional source of pressure,” British Columbia Finance Minister Michael de Jong said in the statement. “This additional tax on foreign purchases will help manage foreign demand while new homes are built to meet local needs.”
Foreign nationals invested more than $1 billion in British Columbia property from June 10 to July 14, according to data the government began collecting this summer. More than 86 percent of that was in Vancouver and the surrounding region, according to the statement.
Public pressure for a crackdown has been mounting in Vancouver, where the price of a detached home rose 38 percent in June from a year earlier to C$1.6 million.
“Right now the market is so hot I don’t think we’ll have an impact of prices falling,” Bryan Yu, senior economist at Central 1 Credit Union, said by phone from Vancouver. “The dominating factor remains that we still have low interest rates and metro Vancouver has a high employment rate so there’s still demand. We’d also need to see more supply to turn prices.”
The additional tax on a $2 million home will amount to C$300,000. Revenue from the levy will help fund a new program for provincial housing and rentals, the government said.
Also as part of legislation introduced today, the city of Vancouver was given the authority to impose a new tax on empty homes. Vancouver Mayor Gregor Robertson has said homes which aren’t lived in or rented out are essentially business holdings that should face similar levies.
British Columbia is also amending legislation to end self-regulation of the real estate industry.