Vancouver Unveils New Tax for Foreign Home Buyers
Foreign home buyers in the Canadian city of Vancouver will face an additional 15% property transfer tax beginning next week, the provincial government of British Columbia said Monday. The new tax legislation comes as concerns grow about skyrocketing prices in housing markets in Vancouver and Toronto and the role that foreign buyers may be playing. Some real-estate officials say Chinese buyers, in particular, have helped fuel price increases for high-end Vancouver homes.
The benchmark price for a detached Vancouver home increased 39% to nearly 1.6 million Canadian dollars ($1.2 million) in June from a year earlier, according to the Real Estate Board of Greater Vancouver.Based on homes of that value, a foreign buyer would have to pay an extra C$240,000 under the new tax law.
The new tax, which is to take effect Aug. 2, will apply to foreign corporations and individuals buying residential properties in Vancouver. It is in addition to the province’s general property transfer tax, the British Columbia government said.
The general transfer tax equals 1% on the first C$200,000 of a home’s value and 2% on the remaining value up to C$2 million.
The province will also allow the city of Vancouver to impose an annual vacancy tax on some residential properties that are left uninhabited.
Canada’s federal government said this year that it would help fund an effort to collect data on the role of foreign buyers in the country’s housing markets, which officials have acknowledged isn’t well understood. Separately, Ottawa has taken steps in recent years to limit risky borrowing, including a move to increase the minimum down payment required for more expensive homes.
The province of British Columbia released preliminary data earlier this month suggesting that foreigners were involved in 5% of real-estate transactions in metropolitan Vancouver, accounting for 6.5% of the overall value. The data were collected over a period of 19 days in June.
Individuals who aren’t citizens or permanent residents of Canada must file an Additional Property Transfer Tax Return at the time the transfer is registered, according to the provincial government. Those who don’t pay could face a fine of C$100,000 for individuals or C$200,000 for corporations and up to two years in prison, the government said.