Daniels Brampton.Cool down the property market. In the face of stubbornly high housing prices, the Canadian government announced on the 3rd that it will tighten the tax rules for foreign buyers to buy houses locally to ensure that only Canadian residents can enjoy the preferential policy of exempting major self-owned homes from capital gains tax.Please Visit: Daniels Brampton to Get Your VVIP Registration Today!
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 exposed that some non-Canadian residents took advantage of this tax exemption policy to falsely declare houses for sale as mainly self-housing and evade taxes. This has pushed up house prices in Vancouver and Toronto, Canada.
To this end, the Canadian government announced on the 3rd of the new policy, the sale of mainly self-housing exemption from VAT policy is only for Canadian residents, and overseas buyers are naturally not exempted from the scope.
“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%.
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, 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.”