8 elm condos.Foreign buyers bring hot property market? The property market in Vancouver, Toronto and other places has a high fever. After the local government stepped in to cool down, the Canadian government also announced on the 3rd that it would tighten the tax rules for foreign buyers to buy homes in Canada.Please Visit: 8 elm condos to Get Your VVIP Registration Today!
The gist of the new rule is to ensure that only Canadian residents can enjoy the capital gains tax exemption policy for primary home ownership.
According to Canada’s existing self-housing tax exemption policy, the sale of major self-housing in Canada is not required to report and pay capital gains tax. However, if you sell non-primary self-housing or non-self-occupied property, you must pay capital gains tax according to the appreciation of the property. Canadian media reported that some non-Canadian residents took advantage of this tax exemption policy to falsely declare houses for sale as the main self-housing in order to evade taxes. But it has pushed up house prices in Vancouver and Toronto, Canada. For this reason, the new policy announced by the Canadian government on the 3rd stipulates that the policy of exemption from VAT for the sale of mainly self-housing is only for Canadian residents, while overseas buyers are naturally not exempted.
“the government changes the tax policy to close the tax loophole,” Canadian Finance Minister Bill Mono said. “We will ensure that the main owner-housing tax exemption policy is only for Canadian residents, and that each household can only designate one property as the main home.”
The property markets in Vancouver and Toronto have been hot over the past year. According to Agence France-Presse, house prices in Vancouver rose 31% in the 12 months to August 31 this year, while those in Toronto rose 17%. The 2016 Global Real Estate Bubble Index released by UBS at the end of September analyzed real estate in 18 international cities around the world. Vancouver’s real estate bubble risk is among the highest.
Before the Canadian government introduced a new tax policy, in order to “cool” the overheated property market, the government of British Columbia, where Vancouver is located, has decided to impose a 15% property transfer tax on foreign buyers from August 2. According to this policy, with the exception of Canadian citizens and those with permanent residence in the country, all foreigners will be charged this fee when they buy homes. In addition, companies not registered in Canada or controlled by foreigners will face the same “treatment” when buying homes.
After the implementation of this policy, home sales in the Vancouver area fell by 26% in August. To further curb the overheated property market, the Vancouver government also announced that it would levy a “vacancy tax” by 2017.
Opinions are divided on the Canadian government’s move to tighten tax rules for foreign buyers to pay taxes on local home purchases.
Josh Gordon, an assistant professor at the School of Public Policy at Simon Fraser University in Canada, believes that the Canadian government’s approach is “wise”, which will send a “signal” to foreign investors.
“I think the policy itself will play a role, but the biggest impact is the message it sends,” Gordon said. “it shows that the federal government is aware that the demand of foreign buyers is a big problem [causing the housing market to ‘heat up’. And want to solve it.”
However, other experts believe that strengthening tax policies will not stop foreign investors. “it won’t stop the housing market from heating up,” said Bob Allen, a real estate lawyer in Toronto. “as long as people think they can make a profit from investing in real estate, they won’t give up.