As a real estate agent, the newly implemented foreign property transfer tax in Metro Vancouver (beginning August 2nd) is surely something you’ve been made aware of. However, the viewpoints are conflicted and confusing and it’s okay to feel a little nervous.
To put it simply, when foreign home-buyers want to purchase in Metro Vancouver, they’ll be slapped with an additional 15% in property tax in an effort to encourage affordability amongst middle-class home-buyers.
In an article by CBC, Vancouver Mayor, Gregor Robertson states that the changes are “overdue”. He also mentions, “I’ve been calling for years now for the province to take bold action to deal with housing affordability, and the impact of global capital on our market here”. However, in the same article from CBC, Real Estate Board of Greater Vancouver, Dan Morrison said, “Implementing a new real estate tax, however, with just eight days’ notice and no consultation with the professionals who serve home buyers and sellers every day needlessly injects uncertainty into the market.”
You already know that property is pricey in Vancouver. But why is it so expensive? It was estimated by government data that between June 10th and July 14th, more than $1 billion worth of property was purchased by foreign buyers with 86% of sales being in the lower mainland.
So, let’s talk numbers. An article from the Vancouver Sun laid it out nicely and stated, “a $2-million home in the Lower Mainland would see an extra $300,000 in tax if purchased by a foreign citizen. That would rise to $1.5 million on a $10-million home”. Basically, 15% added on to housing sales may discourage foreign buyers looking to invest in property and instead, allow middle class families to actually be able to purchase those homes instead.
Feeling confused and wondering what this means for you as a REALTOR®? Right now, all we can state are the facts. Some people think the news is great and long overdue while others believe it may cause problems for the market. As Chief Executive of Sotheby’s International Realty Canada, Brad Henderson states in an article by Financial Post, “how the new tax is policed will be important in determining its impact.”
For now, time will tell. In the meantime, all you can do is research how to overcome potential investment obstacles while continuing to practice methods that make you an exceptional agent.