Over the past few years, Vancouver has become one of the most expensive cities in the world in which to invest in real estate. Of course, those of us living in Vancouver know why! Our city is one of the most vibrant in the world, with incredibly diverse cultural offerings, a beautiful location on the water, a world-class university, and plenty of green space. Our proximity to the wonders and beauty of the surrounding British Columbia also cannot be beat. As such, it is no surprise that our real estate market has become so expensive. As a measure to mediate these rising costs, the government enacted a 15% property tax on international corporations, trusts, and foreign house buyers in Vancouver. What follows is Team Kerr’s quick explanation of some of the ins and outs of this tax.
The new tax was received with mixed reviews and for good reason. While some folks appreciate the effort to drive down home and property costs for Canadian locals, others question whom it will really impact. The tax on foreign house buyers in Vancouver passed through the government at an unheard of rate, and many are questioning whether there has been proper research on the potential impacts of this new legislation. Additionally, foreign house buyers in Vancouver that were in the midst of a deal are not grandfathered in – that is, if they have yet to close on their property they must now tack another 15% onto it.
In short, no it’s not. Other countries have implemented taxes and measures to stymie foreign property investors driving up local markets. Australia requires foreigners to go through an application process, Great Britain requires foreigners selling non-permanent homes in the country to pay a tax that can be as high as 28%, and non-citizens buying or transferring homes in Hong Kong are required to pay an additional 15% as well.
There is no question that housing in Vancouver is expensive and continues to increase. Those behind crafting this legislation argue that the cost of a detached home in the city increased 39% in the past year from C$1.2 million to C$1.56 million. The 2014 median household income in Vancouver is approximately C$76,000/year. There is a clear discrepancy here, and the Vancouver real estate home buyers tax was enacted in hopes of addressing that issue. Time will tell if it actually will. Whether you are for or against the tax, however, it is hard to argue that the housing market in Vancouver for renters, owners, and potential buyers is an expensive one that doesn’t match the average income of Canadian residents.
As real estate professionals at Team Kerr, we are in the middle of dealing with this new legislation. While a lot of things will be changing in the coming months and years, one thing will remain the same. Team Kerr is here to provide you with the best real estate agents in the market that will aim to get you the best deal on your new Vancouver property – turning your dream home into a reality.
For more information, please have a look at those two links: