UPFRONT
HEAD TO HEAD
Should overseas real estate investors be taxed? As foreign investors continue to be blamed for frenzied markets, Vancouver’s mayor has called for a tax on non-Canadian buyers
Collin Bruce
Michael Sjerven Mortgage broker Verico Vivid Mortgage
President and broker Canadian Mortgages Inc.
“CRA rules say that foreign buyers are to pay capital gains when selling their property unless they can show that they or a family member are living in the property as a primary residence. The issue is that some foreign buyers are buying properties through relatives in Canada, but then file taxes as nonresidents so they don’t pay any taxes. In order to combat this, many other countries, such as Australia and the United Kingdom, have introduced much stricter rules and much higher taxes for foreign buyers. It appears that foreign buyers may be contributing to the loss of affordable homes for Canadians – and a loss of tax dollars.”
“This is a very complex and difficult question to answer. As much as I believe in free enterprise and trade, we may need to start protecting our own citizens more. It makes sense to charge both a higher property transfer tax and increase annual property taxes paid to the city for any owners who aren’t residing in the country. Canada should also discontinue the investor visa program and not allow wealthy immigrants to easily move here. Studies have shown that immigrants under the investor visa program contribute far less to society (including taxes) compared to skilled workers moving to Canada. Higher taxes on foreigners ... may be a trend in the coming years.”
“There is little doubt that in certain segments, foreign buyers are playing a role. Taxing foreign buyers may cool the market in some segments, but it could also lead to Canada falling in prominence as a destination for wealthy immigrants. If immigrants with money are driving the housing market, they are driving our economy as well, and we wouldn’t want that to stop, now would we? Most lenders already require 35% down for these buyers; perhaps mandating that may be a better solution. This would ensure that our foreign buyers are strong hands, less likely to let go during periods of market turbulence.”
Broker/owner Dominion Lending Centres Mortgage Mentors
Alan Jaskolka
ARE FOREIGN INVESTORS REALLY THE PROBLEM? As home prices in the nation’s overheated markets spiral out of reach for many Canadians, the mayor of perennial hotspot Vancouver has spoken up on the need for foreign buyers to be taxed. However, the discussion is clouded by the lack of reliable figures about foreign ownership. According to recent data released by CMHC, foreign ownership of condos in the nation’s two hottest markets is relatively paltry: 3.3% in Toronto and 3.5% in Vancouver. However, anecdotal evidence puts the proportion of foreign buyers much higher than that – up to two-thirds of residential Vancouver purchases over a period of two quarters, according to one informal survey.
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21/06/2016 3:48:04 AM