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Poll results: Investors on Toronto foreign tax

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Justin da Rosa | 30 Sep 2016, 08:15 AM Agree 0
With rumblings of a potential tax in Toronto growing, investors have had their say
  • Kris Kooblall | 30 Sep 2016, 09:03 AM Agree 0
    These are simply the facts:

    He cites, among others, the influence B.C.’s 15% foreign tax – which went into effect in early August -- will have on foreigners who will instead choose to park their money in Canada’s largest city.

    “Foreign, especially Chinese, buying is often motivated by finding a safe place to hedge against geopolitical risk.
    Political tension in China has elevated that perceived risk, resulting in capital flight,” Oliver wrote. “The obvious implication of the B.C. tax is that high-end foreign buyers, attracted to Canada’s stable political environment, will gravitate to the GTA where housing is substantially less expensive than in Vancouver.”

    Housing is a social and economic good and its primary function is to house Canadian families. It is not intended, nor should it be an investment tool.

    Canadian families have to live in proximity to their work and lives.

    Canadian families pay, on average, per family, per year in excess of $30,000.00 in direct and hidden taxes and foreigners not paying a tax on the purchase of Canadian residential real estate are being subsidized.

    A single detached average price in Toronto is approx. $1.2 Million dollars and 15% tax amounts to $180,000.00 which is collected in 5 to 6 years from the average Canadian family.

    Foreigners purchasing Canadian residential real estate are subsidized by Canadians in excess of $100.00 per day and invariably, these investments are not used exclusively for housing families; they are often used for extraneous purposes which may be flipping and re-selling for a profit and are often empty and there is an opportunity cost and a crowding out effect in this purchase.

    The Vancouver Mayor Mr. Gregor Robertson speaks with clarity and being informed which are seemingly completely missing in his opposite number here in Toronto, Mr. John Tory.

    The Premier of Ontario, Ms. Kathleen Wynne and Ontario's Finance minister, Mr. Charles Sousa pronouncements typify indecision and there is a cost to this indecision.

    Both suggest a concern that the imposition of a 15% tax may have reverberating effects, yet they are both not sure.
    One wonders if in an important province such as Ontario, there is such indecisiveness in a critical issue as the housing crisis at the highest levels, it begs the question......

    Housing and affordability by Canadian families and the resulting economic risks to the Canadian economy regarding regional disparity as captured in the June 2016 Bank of Canada's Report is not only a vitally important issue; it transcends partisan politics and affects not only the current generation but generations of Canadians to come.

    We are all consumed here and it affects each and every one of us.
    • Brock | 01 Oct 2016, 11:22 AM Agree 0
      Your analysis is not looking at the entire picture. There are other benefits to the Canadian economy than just taxes. Building properties creates jobs as does furnishing the property etc. This is a significant injection into our economy. Not to mention when foreigners visit they spend their funds on tourism and food etc. All of this helps the economy creates other jobs which creates tax revenue as well. It isn't as simple as trying to keep out people.
      Not to mention if we want to attract other good paying jobs to the area companies think twice if they have difficulties hiring employees to work in their city. As an example Microsoft in Vancouver is welcomed but then they have troubles getting computer software engineers to move to Vancouver for the jobs (sorry there are not enough engineers in Sask. or the maritimes to attract Microsoft to move here. We need forgeign workers sometimes as well.)
      Further as an example of another poorly thought out situation. I am a Canadian born and raised. I work for a bank. My wife is a CPA, well trained and currently a CFO for a mid sized company. But she is American so she is technically a forgeiner. We can not buy a different house in Vancouver with out paying an extra 15% now. The price of housing for us just went up 15%. I guess that is markets and they don't want people like me and my family (educated and dual employment)
      The facts are introducing a 15% tax will not solve the problem. It is not free market. We need foreign investment in Canada, the solution lays in increasing supply. End of the day it is not possibly or a god given right for every person to get their own single family home downtown Vancouver or Toronto. Some of us will have to live in the suburbs.
  • Applauding Kris | 30 Sep 2016, 11:21 AM Agree 0
    Thank you Kris for the straight facts!!!
    I hope you get a great number of readers and have spread more wisdom that so many lack.
    The only winners in a NON 15% FOREIGN TAX are the asian real estste agents and those that already have home ownership, expecting rising equity, only beneficial to themselves! While locking out/destroying Canadian first time buyers.
  • | 30 Sep 2016, 11:48 AM Agree 0
    Welcome to the world of big city living!
  • Nee | 30 Sep 2016, 11:51 AM Agree 0
    In a lot of countries Canadians cannot buy homes Without restrictions and in some countries we cannot own homes out right we must have a local partner. Our politicians have to wake up to the problem and have affordable homes for us. How dear these foreigners buy up our properties flip them and take the money out of the country without no regulations. We need to look after our own. Something has to be done now. If I can think of it why not the politicians what's taking them so long.
  • | 30 Sep 2016, 11:52 AM Agree 0
    It happens in every big city around the world, deal with it and accept it. That's how free capitalists societies work!
    • Kris Kooblall | 30 Sep 2016, 03:48 PM Agree 0
      Thank you for the enlightenment.
    • MFenn | 01 Oct 2016, 09:28 PM Agree 0
      It's delusional to think otherwise.
    • MFenn | 01 Oct 2016, 10:36 PM Agree 0
      PS: The intended word was 'illusory'.
  • | 30 Sep 2016, 11:55 AM Agree 0
    You dont like it, move to a smaller more affordable city! Simple solution...
  • Peter | 30 Sep 2016, 01:01 PM Agree 0
    Hong Kong has similar 15% tax on foreign investors and 7.5% on local residents. This policy has not solved the housing affordability for locals. The winner is the Government. BC Government has no intention to reduce the property transfer tax. We still pay GST on buying a house and condo. To help our citizens making their purchase, our government could consider giving up their take on the transaction. Or, taking the transfer tax and GST when we sell our properties.
  • MF | 30 Sep 2016, 06:49 PM Agree 0
    It's not how market's work. Beating up on foreign investors is the way Venezuela has been doing business; and it's becoming an economic pariah; never mind how touchy-feely it may make the nationalists there.

    Punitive taxation on foreigners does not strengthen the market; at stake, rather, is the long term reputation of Canada for serious economic management. All Diefenbaker's rants against foreign investors 60 years ago did not achieve a thing.

    "Welcome to Caracas-on-Bay-Street" is not serious.

    • Kris Kooblall | 01 Oct 2016, 01:23 AM Agree 0
      It's not how market's work. Prime residential real estate is not a market or part of a market.

      It's intent and main purpose is to provide homes for families and not to be used as an investment tool for the purpose of flipping and making a profit at the expense of depriving Canadian families of purchasing the home for living purposes.

      Our prime residential real estate is not an inducement for foreigners to purchase and re-sell as in investments of stocks and commercial businesses and interests.

      Venezuela has accommodated the questionable and quasi-ridiculous policies of the late Mr. Chavez and moved away from foreign commercial investments, which is very different from what is happening in Canada and many other developed countries (such as Australia, New Zealand etc) residential real estate.

      Today in Vancouver, many Canadian families will never be able to purchase homes for their families.

      This is not punitive taxation on foreigners; this is applying a subsidy for foreigners to purchase prime residential real estate excluding Canadian families in the process who pays taxes and foreigners do not.

      Our prime residential real estate is not an item for foreign investment when Canadian families are unable to purchase same to house their families.
  • MFenn | 01 Oct 2016, 07:53 PM Agree 0
    Mr. Kooblall's ideas would not have been out of place in Ulbricht's East Germany or Zhivkov's Bulgaria. To deny that property is subject to market forces of supply and demand and to imply that Canada is there to insulate Canadians from the real estate market is to project an untenable illusion, even if it was the sort of illusion in which Canadians such as Prime Minister Diefenbaker - out of his depth - once indulged to no profit, with his rants against foreigners and Bay Street.
    At stake here is the long term international credibility of Canada as a soundly managed economy: something in the interests of - if not always in the awareness of - all Canadians. The illusions of Mr. Kooblall, Mr. Diefenbaker - indeed, the attempt at the defiance of supply and demand by the command economies of dictators Ulbricht and Zhivkov and others - have never worked in the past.
    • Kris Kooblall | 02 Oct 2016, 10:42 AM Agree 0
      Mr. Fenn, thank you your comment.

      I do not wish to deny that the sale of residential real estate is subject to the supply and demand forces in the residential real estate market. What I am saying is that housing is an economic and social good and its main purpose is to provide homes for Canadian families; it is not intended for investment.

      Canadian families are crowded out in the process of purchasing homes as their income and affordability are subject to forces in our economy and foreign buyers simply have an advantage. Secondly, many foreign buyers do not use these homes as their main residence and Canadian families do.

      In order to achieve efficiency and to comply with the intent and main purpose of housing, Canadian families have to be to compete in a level playing field and in this specific instance of foreigners paying a 15% tax, Canadian families are subsidizing foreigners in excess of $100.00 per day.

      This is an unfair and an indirect tax against Canadian families.

      Enabling Canadian affordability in purchasing homes for their families simply has nothing to do with preventing foreigners from investing in Canada in our stocks and bonds, commercial business and interests, etc. Foreigners are encouraged and welcome in acquiring our instruments of investments.

      Please have a read of the Bank of Canada June, 2016 report on what the economic cost to our economy is with regard to the regional disparity in affordability for Canadian families purchasing homes for their families to reside in.

      http://www.bankofcanada.ca/wp-content/uploads/2016/06/fsr-june2016.pdf
    • MFenn | 04 Oct 2016, 02:11 AM Agree 0
      But you can't just assume, taking account of the difference of house prices regionally and then averaging out the prices, that this calculated average is somehow what house prices somehow 'ought' to be; the market does not work in this way. Bureaucrats and politicians might sometimes be pleased to make noises to this effect, but supply and demand in the market is not going to produce some redistributive 'ideal' price based on some abstract average in a country as large and diverse as Canada. The Bank of Canada report also refers to the lending habits of the Big Six banks in Canada; and seeing as the banks will sometimes not even give mortgages to condo developers unless they have already sold 80% of them pre-construction, then the usefulness and even need for investors' finance is clear. "You can't buck the market" is a piece of advice which economists and investors can usefully take on board.
      Also, it's frankly bordering on the communistic to propose to take away property rights from people who have paid the market value for their property. Not even the French Revolution did this. Communistic restrictions are not the historic basis either of North America's prosperity or of the strength of the real estate market. 'Succeeding' in driving away investors like some Diefenbaker-style home grown version of Bolivarian revolutionaries in Venezuela is not what has in the past strengthened, or will in the future, strengthen Canada's economy or real estate market.
  • MFenn | 01 Oct 2016, 07:58 PM Agree 0
    " I am a Canadian born and raised. I work for a bank. My wife is a CPA, well trained and currently a CFO for a mid sized company. But she is American so she is technically a forgeiner. We can not buy a different house in Vancouver with out paying an extra 15% now. The price of housing for us just went up 15%." Brock: This measure is totally against the spirit of NAFTA and I expect that a clear cut case will be presented in the courts against it.
  • MFenn | 01 Oct 2016, 09:26 PM Agree 0
    An example of how a 15% punitive tax on foreigners would work in Ontario, if introduced: In an area such as Sault-Ste-Marie, if a couple - one Canadian and one American - tried to buy a house with a mortgage on their joint spousal income, they would likely be forced to live on the US side of the border because Canada would effectively not "allow" the couple to live on the Canadian side because of the 15% punitive tax.

    This of course might fill a tiny minority of Canadian xenophobes with delight at "punishing" Americans for being American; but such a view would be utterly unrepresentative of what the great majority of Canadians would think is fair and right.

    It is for British Columbians, with their widely self-professed sense of liberal values, to ask their consciences whether a comparable situation in BC is fair and right also.

    The illusion that a 15% tax of foreigners would supposedly strengthen the real estate market is not how markets work, either.
  • A strong vote of 15% tax on foreigners | 01 Oct 2016, 10:30 PM Agree 0
    I lived in smaller city in Ontario, house situation is very different than Toronto. 15% foreigners tax should have been on long time ago.

    Toronto has flux of immigrants, it needs special treatment. Unfortunately houses become #1 commodity on market attract foreigner to invest in Toronto/Vancouver. Real estate bubbling wave from China already come here. Unfair, unfair to our local citizens especially our next generation. Government shall act quickly as possible on this matter. Impose at least 15% tax on foreigners purchasing house in Toronto. This is a good way to avoid their short term investment and profit taking.

    Ask simple questions: who build the cities? who build our economy?
    Answers are: Our Canadian citizens, our next generation. Foreigners won't do, that is why they are foreigners. Util they become Canadian citizens, it is a different story, they will probably contribute to this country til then.

    If Ontario government and Toronto city managers cannot even get this clarified, I doubt if they are fit and sharp enough to be good leaders.

    15% is not high, house tax could be higher than 15% for foreigners.



    • MF | 01 Oct 2016, 10:34 PM Agree 0
      It's not how markets work, it hasn't worked before and in the long term driving away investors won't help the international reputation of Canada's markets.
  • A strong vote of 15% tax on foreigners | 01 Oct 2016, 10:40 PM Agree 0
    I agree with your points.

    Government shall act fast on restriction of buying houses, put 15% at least tax on foreigners.

    On the other hand, government shall encourage and set up tax incentive for foreign investors to put money into manufacturing and enterprises, as a result, this would help to create jobs in Canada, boost economy.
  • A strong vote of 15% tax on foreigners | 01 Oct 2016, 10:45 PM Agree 0
    Kris, I agree with your points. Thanks.

    Government shall act fast on restriction of buying houses, put 15% at least tax on foreigners.

    On the other hand, government shall encourage and set up tax incentive for foreign investors to put money into manufacturing and enterprises, as a result, this would help to create jobs in Canada, boost economy.

    Canada shall build up a strong image to the world - not only a best country to live, but also a strong economy to sustain.

  • Suniti Pande | 01 Oct 2016, 11:53 PM Agree 0
    At last someone speaks for Canadians! with clarity. The mayor, developers and others are not interested in the common man, they have conflict of interest and benefit from protecting money flow into their pockets and positions. They should not be the ones deciding on the common good.
    I recently bought in Vancouver and have come through bruising bidding wars. It is extremely unpleasant to compete against foreign millionaires who use housing as investment and not somewhere to live, nor be part of community, nor contribute to the local everyday economy.
    • MF | 03 Oct 2016, 03:00 PM Agree 0
      So the market sets aside supply and demand in favour of some 'common man' empathy, however defined? Really? Contractors need finance; and why do contractors find private investor finance so attractive and necessary? Do you know why? This is why: it's substantially because in Canada banks won't even lend new condo contractors the money until up to 80% of the units have been sold, pre-construction. It's no use saying: go away private investors - especially foreign investors - and leave it...to the banks? to the tax payer, even? By reputation, banks have probably even less human 'empathy' than investors. Granted you might not have known this, but in any case markets supply and demand work is not going somehow to be changed because of the introduction of human 'empathy'.
  • Kris Kooblall | 02 Oct 2016, 10:22 AM Agree 0
    To Brock's view:

    /Your analysis is not looking at the entire picture. There are other benefits to the Canadian economy than just taxes. Building properties creates jobs as does furnishing the property etc. This is a significant injection into our economy. Not to mention when foreigners visit they spend their funds on tourism and food etc. All of this helps the economy creates other jobs which creates tax revenue as well. It isn't as simple as trying to keep out people./

    Applying a 15% tax against foreigners has nothing to do with investment by foreigners. Foreigners are free to invest in our instruments of investment, stocks bonds, T-bills, commercial interests and business etc. However, purchasing homes not for the purpose as their main residence crowds out purchases by Canadian families who will use these homes as their main residence. Nothing at all to do with tourism.


    /Not to mention if we want to attract other good paying jobs to the area companies think twice if they have difficulties hiring employees to work in their city. As an example Microsoft in Vancouver is welcomed but then they have troubles getting computer software engineers to move to Vancouver for the jobs (sorry there are not enough engineers in Sask. or the maritimes to attract Microsoft to move here. We need forgeign workers sometimes as well.)/

    Not applicable to the subject issue.


    /Further as an example of another poorly thought out situation. I am a Canadian born and raised. I work for a bank. My wife is a CPA, well trained and currently a CFO for a mid sized company. But she is American so she is technically a forgeiner. We can not buy a different house in Vancouver with out paying an extra 15% now. The price of housing for us just went up 15%. I guess that is markets and they don't want people like me and my family (educated and dual employment)/

    If you are a Canadian, you can purchase without the 15%.

    /The facts are introducing a 15% tax will not solve the problem. It is not free market. We need foreign investment in Canada, the solution lays in increasing supply. End of the day it is not possibly or a god given right for every person to get their own single family home downtown Vancouver or Toronto. Some of us will have to live in the suburbs./

    The 15% is not aimed at solving the problem; however it attempts to prevent the anomaly of Canadian families subsidizing foreign buyers in the case of the 15% tax, in excess of $100.00 per day per Canadian family which is an indirect tax on Canadians. Why are you against paying the 15% tax, I am not, as it goes to our government that provides the essential life services here in Canada? Living in the suburbs is not a solution as it imposes huge national employment costs and introduces provincial and regional migration logistics which are not even in the picture. Can you re-locate to another location if you do not have a job there?
    • MFenn | 03 Oct 2016, 02:51 PM Agree 0
      But it's illusory to think that supply and demand can be driven out of the real estate market. It's illusory also that markets somewhat work differently according to the stage at which a buyer's possible residence application happens to be. It's not how markets work.
  • MF | 05 Oct 2016, 05:27 AM Agree 0
    "Canada shall build up a strong image to the world - not only a best country to live, but also a strong economy to sustain." If you study the reason for the accolades which you attribute to Canada, it's not taxation that has strengthened the economy; and it's not taxation which has made housing more affordable or increased its availability.
    'A strong vote': If as you profess you are interested in making housing more affordable and in increasing its availability, you can keep up the pressure on local politicians' officials to process planning applications and you can encourage the finance - domestic or foreign - of pre-construction condo investment, because in Canada often banks will not even give mortgages to developers until up to 80% of a new condo's units have been sold pre-construction. But punitive taxation won't increase the availability of housing or make it more affordable.
  • Chris Young | 05 Nov 2016, 10:43 PM Agree 0
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  • Scott | 07 Nov 2016, 08:38 AM Agree 0
    Mr. Kooblall wrote the below somewhere above:

    "...with preventing foreigners from investing in Canada in our stocks and bonds, commercial business and interests, etc. Foreigners are encouraged and welcome in acquiring our instruments of investments."

    I would point out that some (not all) foreign buyers come from cultures and countries where the government(s) thought nothing of helping themselves to the contents of citizen's bank accounts and seizing their property. The reality is that some immigrants, refugees and foreign buyers do not trust our banking systems because of their experiences in their country of origin. On the other hand, there is a long tradition of land holding its value, being passed down in a family and in some cases growing in value.

    I think this is part of the reason why there is so much foreign investment and involvement in Canada's real estate market. The fact that our country is so highly regarded by domestic and foreign buyers is something to celebrate.
    • ammythomas95 | 02 Feb 2017, 08:08 AM Agree 0
      My mothers neighbour is working part time and averaging $9000 a month. I'm a single mum and just got my first paycheck for $6546! I still can't believe it. I tried it out cause I got really desperate and now I couldn't be happier. Heres what I do,

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  • Gordon | 15 Apr 2017, 05:39 PM Agree 0
    I had a conversation with a native of Taiwan about China investing in real estate there in Taipei. It has had a huge impact on higher prices which means most people living there can not afford to get into the market. It has also reduced the supply of homes so the competition for available properties is very high. Many young people are being forced to continue to live with their parents even after they get married. This caused a lot of stress on both the parents and the adult children. It also forces people to stay in homes longer so the turnover rate of the real estate market is lower. We don't want the same thing to happen here.
    When I was looking at a job opening in Bermuda, I was informed that they have a 25% tax on property purchases for foreign buyers and some areas are not even allowed if you are not native or citizen. That tax is not refundable so if you want to get it back, you need to add it into your selling price which will cause the tax to be compounded.
    I think the tax is a deterrent to foreign speculators which will keep prices lower and supply higher for new buyers living here in Canada.
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