Proposed tax targets investors

Leading economists have proposed a unique tactic for reining in one of the country’s hottest housing markets.

Economists at UBC’s Sauder Business School and Vancouver School of Economics, as well as economists at Simon Fraser University have banded to together in a bid to encourage B.C. government to tax foreign investors in a bid to cool the hot housing market.

The group is suggesting the government create the B.C. Housing Affordability fund, which would provide a payout to local residents from funds charged to foreign owners.

“The goal is to support those living in parts of the province that have seen skyrocketing real estate prices, while also making our local markets less attractive to investors who wish to avoid taxation or park cash,” Thomas Davidoff, a real estate economist and part of the group, said in a release.

The proposal is to charge a 1.5% surcharge to foreign owners of vacant properties.

“We are certain the sum would actually be much higher as current systems for data collection don’t provide a full picture of vacancy rates,” Davidoff said. “An added bonus of the BCHAF reporting process is that it will help us gain a much more accurate picture of the problems of homes left vacant and property owners who do not or have not paid their share of Canadian taxes.”

According to the release: “most homeowners and landlords would be exempt from the surcharge. As an incentive to move unoccupied suites into the rental market, the policy also allows for owners to receive exemptions for rental income they receive from non-family members reported to the Canada Revenue Agency.”

The economists estimate the fund would raise over $90 million per year in Vancouver alone.

“We are certain the sum would actually be much higher as current systems for data collection don’t provide a full picture of vacancy rates,” Davidoff said. “An added bonus of the BCHAF reporting process is that it will help us gain a much more accurate picture of the problems of homes left vacant and property owners who do not or have not paid their share of Canadian taxes.”
 
 

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COMMENTS

  • by Don R Campbell 2016-01-20 12:47:46 PM

    A 1.5% tax:

    1. Will have very limited (if at all) effect on those buying and holding in that market. Let's be realistic If you can afford to buy, hold and keep empty a multi-million dollar property. A 1.5% tax will NOT slow down the demand

    2. Average price of condos in the region has been fairly stable since 2009.

    3. Is an 'optics' move. Seeming to do something.... then everyone can applaud and feel good.

    4. The drop of the Canadian dollar will off-set any 'tax on foreigners' that could be put on. Canada is on sale at a deep discount.

  • by kread 2016-01-20 1:15:55 PM

    This would cost 1.5% to administer, for a net gain of 0.
    And the big question is - how would this be determined?
    Also, what I don't get is how these empty houses are being insured? There is only very expensive insurance of limited duration
    available for vacant properties.

  • by MK 2016-01-20 2:43:08 PM

    This tax proposal would set forth the "law of unintended consequences". Stay out of it government. You no not what you do.

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