August 2nd marks the day the B.C government has passed legislation on a 15% tax on the price of houses sought to be bought by foreigners in the Metro Vancouver region.
The tax is meant to be a solution to the current housing crisis the province has found itself in. Demand for housing in the Metro Vancouver area reached overwhelming heights leaving suppliers in a struggle to keep up with it. This has raised house prices to nearly unbearable figures and fingers have now been pointed at foreign buyers.
In all fairness, Canada, and Vancouver in particular, have seen a rise in migrants as the years turn. Stats have also been revealed indicating foreigners account for up to 5% of houses bought in Metro Vancouver.
However, some might argue whether such numbers are high enough for the tax to have any significant impact on the demand in the housing market.
Deals that have been made and not closed before the day the tax commences are also not exempted. This has led to a public outcry by realtors and investors alike and seems to be the tax’s main sources of criticism. Both groups feel that the tax has caught them off guard and more time should have been given between the dates of the tax’s declaration and its implementation.
This has left most foreign investors in a frenzy to close their deals before the August 2nd deadline. Some have been successful whilst others have failed, partially because there was still debate on whether pending deals would be exempt from the tax after it becomes law. Apparently, this is not the case and foreign investors fortunate enough to close deals before the deadline will potentially be saving them a relatively significant amount of money. To put it into greater perspective, foreigners will be required to pay taxes of up to $300,000 for a 2 million dollar home.
The tax only applies to the Metro Vancouver region as of yet and the BC Finance Minister, Mike de Jong, has stated that the government will closely monitor the impact it has in its proposed aim of improving housing affordability.