BC could get sued for there 15% tax on Foreign buyers (properties)

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kono

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Australia has a similar tax on foreign investors why haven't they been sued? Are they part of NAFTA?
I hope this doesn't fly because we need this here in Southern Ontario.
In BC, people (Canadians) are being priced right out of the property market. If you do nothing they could in theory own most of the prime real estate in Canada. No?
 
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GaryLi

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USA is in NAFTA and tons of foreign buyer restrictions, also Mexico. Prices are going to come down but historically mortgage rates have risen so rates might go up.
 
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basketcase

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It would be amusing that Chinese investors sue BC over this as China has a law that restricts land purchases to residents of at least a year.
 
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Planner

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Why .....its our country we can make our rules its our country abide by our rules or go elsewhere
 
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GaryLi

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Most lawsuits will be seller suing buyer for backing out or not having enough money for closing.
 
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nuprin001

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kono said:
Australia has a similar tax on foreign investors why haven't they been sued? Are they part of NAFTA?
I hope this doesn't fly because we need this here in Southern Ontario.
In BC, people (Canadians) are being priced right out of the property market. If you do nothing they could in theory own most of the prime real estate in Canada. No?
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Well, no. Australia isn't a part of NAFTA. It would be rather difficult for Australia to be part of the NORTH AMERICAN Free Trade Agreement.

GaryLi said:
USA is in NAFTA and tons of foreign buyer restrictions, also Mexico. Prices are going to come down but historically mortgage rates have risen so rates might go up.
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I'm in real estate. I've helped foreign buyers buy real estate in the US. The only serious impediment to foreigners buying real estate in the US that I'm aware of is getting credit in the US. That's not a free trade issue: that's a records issue with foreign buyers not having a credit history that US credit agencies recognize and are therefore unable to project whether the buyer will pay back their loan.

There's also FIRPTA, but that's a tax withholding after selling real estate in the US. If a foreign seller sells US real estate and then pays the proper taxes on that realized profit, any remainder is available for return (though many foreign sellers don't take advantage of that, not filing taxes at all if they're not US residents).

There are practical difficulties for foreign buyers in the US, but there are vanishingly few legal ones. The US actively WANTS foreign buyers to buy in the US.

Foreign buyers hurt first time homebuyers, yes, and FTHs are a critical part of any real estate market, but when foreign buyers boost the price of real estate in a market, it's the existing homeowners who benefit enormously. That generates real wealth for homeowners, which isn't a bad thing.
 
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GaryLi

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Well yes they do see their homes go up in price and most perceive that as value. But really they don't gain anything unless they sell that home which probably is their principle residence. And after you sell you have to downgrade on the next home to have any real gains. They don't want to downgrade so what they do are HELOCs and CHIPs which really is just them borrowing more and more. Next thing you know this tax comes, their home prices drop, they lose value and they are stuck with whatever remortgage, heloc or chip they deluded themselves to take out.

This whole bubble wasn't sustainable anyways. It pisses off too many voters.

Nuprin, What is your opinion on this foreign buyer tax and what will this do to home prices? Do you think rates will rise?
 
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nottyboi

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I read that only about 3.3% of sales are to foreigners. I think what is more common is Canadian kids of chinese citizens being funded by parents to buy property. I also wonder about landed immigrants, are they considered foreigners?
 
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fuji

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Planner said:
Why .....its our country we can make our rules its our country abide by our rules or go elsewhere
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I think the focus will be on the retroactive impact. It impacted people who had ALREADY signed a deal and put down a deposit.

It does seem like in cases like that, where a deposit was paid before the tax was announced, that it's a little unfair.

Seems like the act should have exempted sales where a deposit had already been paid on the day the act was announced, so that people would have full information when entering into a sale.
 
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james t kirk

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Nothing Chinese hate more in this world than paying taxes.

Should be interesting
 
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james t kirk

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The whole real estate market in not only Vancouver but the GTA has gone fucking insane. I'm seeing little bungalows in mimico going for a million bucks. I used to think it was sustainable but not any more. The risks to the broader economy are too great and frankly Canada as a nation becomes susceptible to any economic malaise in China.

I think Toronto needs a similar tax and in addition the addition of tighter mortgage rules here. The number one thing that comes to mind is the raising of the minimum down payment required to buy a house.
 
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Smallcock

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I think the Chinese impact in Toronto is way overblown. Chinese are having some effect but mostly in the top end of the market (multimillionaire dollar homes). So long as they're paying property taxes and utilities on those mansions, it's good for us. So long as they're spending money buying luxury cars, clothes, food in Toronto that's good for us. Unlike Vancouver, there are no streets filled with vacant houses in Toronto, nor in the GTA.

The reasons for the price growth of real estate in Toronto is limited supply and low interest rates. People are in record levels of debt - this is a Canadian issue not a foreign investor issue. Canadians wanting to get into the market for fear they will never be able to if they wait are pushing prices up, not foreigners in Toronto. It's Canadians in the bidding wars for homes priced at $1 million, not foreigners.

Pushing low rise prices beyond the reach of many buyers is probably a good thing considering how many condos have gone up. We need to ensure that those get bought up since the condo market is always the most vulnerable to collapse. Besides, density is a good thing. Building upward rather than outward has been the blueprint for major cities around the world and that's the focus of Toronto. I see that as a positive.
 
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GaryLi

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nottyboi

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There will be lawsuits as buyers back out of deals forcing others to back out of deals and a bit of a cascade. Then there is the litigation over deposits as reneging buyers seek recovery. They can claim many things and even that they could no longer afford the property due to the tax and the deal was null and void as the selllers failed to disclose the tax liability. (which they did not know about of course). Its kinda like a house burning down before the deal closes....but with no insurance.
 
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Smallcock

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GaryLi said:
Finance minister here is "looking very closely" at Vancouver.

http://globalnews.ca/news/2861138/m...after-foreign-buyer-tax-announcement-realtor/

Sales already dropping 75% in some areas of Vancouver.

They should had made this a federal tax. Speculators and homeowners here are going to have ample time to plan when to sell in the coming months.
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Vancouver and Toronto - and every other market are different from each other.

I don't think this tax should be introduced anywhere else, let alone federally.

At least the government should wait to see how it plays out in Vancouver. Maybe it'll be a success but maybe it won't solve the problem and even exacerbate it (e.g. that 15% tax may be passed on to the next buyer making real estate even more expensive).
 
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Smallcock

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james t kirk said:
I'm seeing little bungalows in mimico going for a million bucks.
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True but these are only being bought because of the lot size for basic flips. Even in areas of Scarborough, bungalows are being sold for big money. Right afterward, they're torn down and McMansions go up in their place because the lot size is 40 - 50 feet frontage. The developer throws in $400,000 to build the new house and sells the new home for $1.7 million +

Most of the land on these bungalows is 'wasted space' - giant lawns - that are converted into new luxury living space via mansion, so the price tag makes sense. Pockets where bungalows with large lots exist are prime for flips and it's happening all across the city.
 
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frankcastle

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Feb 4, 2003
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Smallcock said:
I think the Chinese impact in Toronto is way overblown. Chinese are having some effect but mostly in the top end of the market (multimillionaire dollar homes). So long as they're paying property taxes and utilities on those mansions, it's good for us. So long as they're spending money buying luxury cars, clothes, food in Toronto that's good for us. Unlike Vancouver, there are no streets filled with vacant houses in Toronto, nor in the GTA.

The reasons for the price growth of real estate in Toronto is limited supply and low interest rates. People are in record levels of debt - this is a Canadian issue not a foreign investor issue. Canadians wanting to get into the market for fear they will never be able to if they wait are pushing prices up, not foreigners in Toronto. It's Canadians in the bidding wars for homes priced at $1 million, not foreigners.

Pushing low rise prices beyond the reach of many buyers is probably a good thing considering how many condos have gone up. We need to ensure that those get bought up since the condo market is always the most vulnerable to collapse. Besides, density is a good thing. Building upward rather than outward has been the blueprint for major cities around the world and that's the focus of Toronto. I see that as a positive.
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Totally agree if foreigners want to bring money into the country I'm fine with it.

If houses become unaffordable the market will correct itself. If I were investing in real estate that would be a big concern in the back of my mind.
 
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