Inflation, rising interest rates create caution across Metro Vancouver’s housing market VANCOUVER, BC –…
Although there may be no single or easy way to cool off the red hot real estate markets of BC, the province already has a couple of measures in place to help.
A foreign buyers’ tax of 20 percent applies to homes in Metro Vancouver, Fraser Valley, Central Okanagan, and the Capital and Nanaimo regions. As well, the City of Vancouver implemented an empty homes tax, stipulating that properties deemed empty will be subject to a tax of 1% of the property’s assessed taxable value. Furthermore, standard property transfer tax fees range from 1 to 3 percent on specific portions of a property’s value, plus another 2 percent on the portion of value over $3 million.
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As the BC government considers additional measures (such as higher property taxes on second homes, on families whose main income comes from outside Canada, and on homes valued at more than $3 million) to help bring real estate markets down to reality, it may be helpful, or at least comforting, to compare the taxes and fees that other global cities impose on their local and foreign buyers.
Like BC, Ontario has a tax for foreign buyers – the Non-Resident Speculation Tax. This is a 15 per cent tax on the purchase or acquisition of an interest in residential property located in the Greater Golden Horseshoe Region by individuals who are not citizens or permanent residents of Canada or by foreign corporations (foreign entities) and taxable trustees. As well, a land transfer tax, ranging from 0.5 to 2.5 percent based on the value of the land, applies when you acquire land or a beneficial interest in land.
Singapore has a long history of restricting the purchase of real estate by foreigners, which may require prior government approval. A 15 percent foreign buyers’ tax has been in place since 2013, and there are extra fees for foreigners buying a second home. The amount of the seller’s stamp duty (also known as a “flipping tax”) depends on how soon a property is resold and on when it was purchased. For instance, a property bought on or after March 11, 2017 is subject to a rate of between 4 and 12 percent if it’s held for up to three years (after which time, there is no duty payable).
Australia has a foreign investment framework, under which foreigners must apply for foreign investment approval before purchasing residential real estate. Established (as opposed to new) dwellings generally cannot be owned by foreigners. Application fees vary, but for residential land of $1 million or less, the fee is currently $5,500.
State government taxes, or stamp duty, and foreign purchaser additional duty may apply. Rates vary widely; as an example, for a $1 million new investment property In New South Wales, the general stamp duty, foreign purchaser surcharge of 8 percent, mortgage registration, and transfer fee works out to approximately $120,770.
So, although Conor Dougherty’s article points out that Metro Vancouver homeowners are “reacting from a place of deep anxiety, even desperation, about their own or their loved ones’ ability to access the housing market”, BC is not alone in the high market demand and strains that it faces. We can look to many other cities, worldwide, that have successful measures in place to help with similar pressures. There is still a lot to learn.
 Properties are considered to be vacant if they have been unoccupied for more than 180 days during the tax year (Jan 1 – Dec 31). Failure to make a property status declaration will result in a property being deemed vacant and therefore subject to the Empty Homes Tax (http://vancouver.ca/home-property-development/empty-homes-tax-frequently-asked-questions.aspx#pdSet46415).
 Please note, this list may not be exhaustive.
 The Golden Horseshoe Region is comprised of 21 geographic areas, including the City of Toronto.