B.C. government introduces new tax to foreign homebuyers

In an effort to cool off the surging prices of housing in the greater Vancouver area, the B.C. government has introduced a 15 percent tax to non-residents looking to purchase real estate in metro Vancouver. The new tax falls on top of the already hefty land-transfer fee.
According to the CBC, foreigners have spent $885 million on Vancouver property in just five weeks – however analysts are unsure of how much the foreign interest is driving up the prices in the Vancouver market, in contrast to other factors, such as a lack of social housing, problems with zoning, and low interest rates.
The government, however, is hopeful that this action will reduce the demand for houses in the greater Vancouver area and make housing more affordable.
The tax will apply if the buyer is a non-resident foreign citizen, a corporation incorporated outside of Canada or controlled by non-residents, or a trust in which the trustee or one of the beneficiaries is a non-resident.
Even though the regulations are clearly laid out, opposition provincial NDP house critic David Eby says there are still loopholes.
According to Eby, non-residents could still acquire Vancouver property through corporations in which the majority of voting shares are domestically controlled without paying the new tax. Further, the new tax is only applied after the new homes are registered on the provincial property registry. This means that non-residents could potentially purchase properties under development and flip them before they are registered.
In addition to the issues brought up by Eby, the new tax may drive more international buyers to another Canadian real estate hotspot: Toronto. As a result, the Toronto area will likely need to implement a similar tax. According to Ontario’s Finance Minister Charles Sousa, he welcomes the change and will be watching the situation unfold in Vancouver to see if the same changes would be viable in his province.