Canada used to be a really good place for foreign investment buying and renting/flipping houses pre-2008. My dad had around 50 properties in the Nova Scotia region just before the crash and the income from that was barely taxable (as a UK citizen, although I don’t remember specifics of how that worked). I can totally see why countries want to avoid foreign investment like that inflating local prices for citizens. Tbf he was renting them specifically to those with criminal records because most landlords used to have background checks, so there was a bit of a market, and it’s probably a little better than the general flipping price inflation.
Canada to ban foreigners from buying homes
331–340 of 817 posts
Re: Canada to ban foreigners from buying homes
#332We need to end or put limits on the Primary Residence Capital Gains Tax Exemption which is uncapped in Canada, unlike the cap of 200k in USA. It is unfair to renters and it is leading to insane housing prices. It is unfair to renters because renters do not have an equivalent 100%, completely unlimited tax-free investment vehicle. We have Tax-Free Savings Accounts, limited to ~$5k contribution per year, and we have RR…
In exchange we get population mobility; without this tax break homeowners would be very reluctant to ever sell their house and move someplace else. Also, housing capital gain isn't completely tax free; we all pay increasing amounts of property tax as the value appreciates. Although those taxes are baked into rents so maybe that's a wash depending on one's point of view. Policy is hard and unintended consequences are…
But they cap tax free gains in the states at 200k, do we see mobility barriers in that jurisdiction?
Also, I believe what you're describing does exist in the states in the form of a "1031 exchange".
Re: Canada to ban foreigners from buying homes
#333It is full loopholes like people with 10 year visas, work visas, student visas are exempt. We have University students with $31million Vancouver mansions in their name. Our tax system is screwy where we have very low property taxes and high employment tax. The whole west side of Vancouver claims poverty level incomes on average (like qualifies for government tax rebates bad), yet it is the most expensive land in the…
> Our tax system is screwy where we have very low property taxes and high employment tax
I agree, but I think we both know how well fixing that will go down with the absolutely massive voting group that is seniors.
Re: Canada to ban foreigners from buying homes
#334> Freeland will introduce legislation that allows Canadians under the age of 40 to save as much as C$40,000 ($31,900) for a home downpayment within a new tax-exempt vehicle, the person said. I'm not an economist but this seems pretty dumb? To the extent that it helps someone afford a home that they can save tax-free for it, the same is true of some of the people they're bidding against, driving up the price they ulti…
It is not actually possible to increase the supply of good suburbia. The virtue of a suburban home is to be on a large plot of land with low-intensity neighbors and convenient vehicle access to places, and this genuinely can’t scale very far. Even if you have infinitely much land, you will never build enough roads or lanes. We can increase the supply of other things which are also called “housing” but are fundamental…
> It is not actually possible to increase the supply of good suburbia.
Dallas seems to be doing it by organically creating a multi-core urban metropolis. Infinite suburbia only fails if you assume that each metropolitan area can only have a single urban core.
Re: Canada to ban foreigners from buying homes
#335Earlier quoted context omitted.
Is it so far fetched to assume some realtors may be juicing the bidding to... Of course not, and I didn't say that I'm completely against reforming the real estate industry and the bidding process. But it won't fix expensive housing. It's all bullsh*t if it doesn't address scarcity. In 2016 we had had 10 years of 2% population growth in Vancouver and 1.2% housing stock growth and we wanted to blame foreign investors,…
To summarize, you argue that it's a supply-side problem and not a demand-side one.
To summarize, you argue that it's a supply-side problem and not a demand-side one.
That is not an accurate summary. Earlier...
Either we limit Canada's crazy-high immigration rate (1% of population every year) or we build more homes which is mostly gated by illiberal zoning laws passed by municipalities. But both of these policies are very popular so you'll be swimming upstream, politically
Re: Canada to ban foreigners from buying homes
#336Earlier quoted context omitted.
> I feel like it’s almost an attempt to appease citizens by blaming the issue on “foreigners” (always a move that is popular with politicians) Yeah the Right loves to blame poor foreigners while the Left prefers to blame rich foreigners but at the end of the day they at least agree that it is never the voters themselves who are to blame.
It's low interest rates to blame
Interest rates just went over 5% so I guess we'll test this hypothesis soon?
Re: Canada to ban foreigners from buying homes
#337Earlier quoted context omitted.
You're fighting scarcity. You still won't win the bidding war - it just won't be as one-sided. Stop championing scarcity by blaming scapegoats. Either we limit Canada's crazy-high immigration rate (1% of population every year) or we build more homes which is mostly gated by illiberal zoning laws passed by municipalities. But both of these policies are very popular so you'll be swimming upstream, politically. While yo…
> Stop championing scarcity by blaming scapegoats. Either we limit Canada's crazy-high immigration rate (1% of population every year) or we build more homes which is mostly gated by illiberal zoning laws passed by municipalities. But both of these policies are very popular so you'll be swimming upstream, politically. I'm all for building more houses in cities/high demand areas, but doesn't Canada only have a populati…
>doesn't Canada only have a population growth rate of around 1%/yr? It seems like you could easily build your way past that without giving up the advantages of immigration and a little population growth.
You would think that wouldn't be too hard, but housing construction in Canada has been seriously lagging even at a countrywide level[1] with housing units per capita continuing to trend downward. And then of course it doesn't help if major metros see population growth rates faster than this.
[1] https://dailyhive.com/vancouver/canada-new-housing-populatio...
Re: Canada to ban foreigners from buying homes
#338Earlier quoted context omitted.
Is it so far fetched to assume some realtors may be juicing the bidding to... Of course not, and I didn't say that I'm completely against reforming the real estate industry and the bidding process. But it won't fix expensive housing. It's all bullsh*t if it doesn't address scarcity. In 2016 we had had 10 years of 2% population growth in Vancouver and 1.2% housing stock growth and we wanted to blame foreign investors,…
To summarize, you argue that it's a supply-side problem and not a demand-side one.
It has always been but people who vote (homeowners) have a vested interest to shape the narrative to be a demand-side problem.
The only loss when building more dense housing in urban areas is the existing owners whose views are blocked. Otherwise it seems to generally increase the tax base, support more businesses (when mixed-use housing is built), and increase renter mobility.
Re: Canada to ban foreigners from buying homes
#339> During last year’s election campaign, Trudeau’s party also proposed a ban on “blind bidding” for houses -- the prevailing system by which offers are kept secret when someone is auctioning a home. This is such a huge deal. Anyone who has had to go through the process of buying a home through a bidding war knows how unfair and one-sided this process is. It take a high-pressure emotional situation, and gives all of th…
Interesting. Is the process for home buying in Canada always blind-bidding or is there a regular practice similar to Australia where people show up for an in-person public auction?
Re: Canada to ban foreigners from buying homes
#340Focusing on foreign buyers is a distractionary tactic. The primary cause of housing value spiking comes down to investors and speculators. Combat those, and the marketplace will return to sane valuations: • Speculation tax of 50% of the assessed or sold home value (whichever is greater) of any home held for less than two years, decreasing on a daily basis to 0% over years 3 through 8. Exemptions can be had due to ext…
> Individual non-business landlords cannot derive more than 50% of their income from rental properties
Properties are one of the top income generator for (pure) retirees. How would you ensure they can retire and still have income via properties?
I guess you can add clausal to exclude {retirement_age} ownership? Hopefully nobody uses them as proxy. Tricky huh?