101–110 of 1001 posts
Foreigners, especially the billionaire type, can and have been setting up shell corporations through which to purchase Canadian real estate. The proposed measure will do nothing to stop this practice. The measures proposed by the Canadian government are likely just political posturing and indented to "pull the wool over the eyes" of Canadian voters because the housing bubble/crisis has reached epic proportions and ev…
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It could be that there is a sufficient amount of housing (built or being built), but that it is often not occupied on account of just being an asset in a wealthy person’s portfolio. In this case it could be seen as wasteful to build more, and too much of an oversupply could lead to an economic collapse if it’s on a big enough scale. The other possibility is that they are building more homes, and want them to be purch…
>> being an asset in a wealthy person’s portfolio Why wouldn't that wealthy person rent the property out and get better ROI? Keeping it empty does not make sense to me.
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We don't have implementation of the bill yet, just the budget line. Obviously the government knows about this problem, so if they take measures to prevent it, then we'll know they are actually serious. Note that a corporation is not consequence free. An owner occupied home pays no tax on capital gains. A corporation owned one is double taxed.
The typical workaround in UK is that instead of selling the house, the corporation that directly or or directly owns it is sold instead, usually on a tax haven.
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We don't have implementation of the bill yet, just the budget line. Obviously the government knows about this problem, so if they take measures to prevent it, then we'll know they are actually serious. Note that a corporation is not consequence free. An owner occupied home pays no tax on capital gains. A corporation owned one is double taxed.
> A corporation owned one is double taxed. Are the corporations buying for capital gain or for rental income?
The problem arises if ppl park money in the real estate and the units are empty: - This is often "luxury" housing which prevents a more regular buyer/renter-friendly housing units to be built.
Another problem is that some units are converted to airbnbs, and they start to compete on the hotel/business/vacation short-term rental market instead of being rent out for long term for people who live/work in the area.
I'm based in the EU, and this is what I've seen in some of the cities/neighborhoods here. I know very little about Canada's real estate market.
In Poland another phenomenon (not sure how widespread outside of PL) is that ppl buy large-ish apartments and split them into multiple rooms or studios and rent them out to students or ppl early in their career. This inflates prices (as the capital that would have been invested in the stock market goes to housing), but otherwise the number of units increases, so probably less of an issue in the grand scheme of things.
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The root cause in Canada is that a lot of the older generation, existing home owners, have put their investments in buying second or third homes as income properties, and for a lot of Canadians (I read that 1/3 of Canadian home owners have one or more additional properties) that's the nest egg now. For years now homeowners have used HELOCs (Home Equity Line of Credit), to effectively 100% finance an additional home p…
> For years now homeowners have used HELOCs (Home Equity Line of Credit), to effectively 100% finance an additional home purchase by using the HELOC for the downpayment, and a mortgage for the rest. Banks hate this, but it's legal. If banks actually hated it, they would simply not write the loan. Why do you think they hate it?
I say "banks hate this" as unsubtle shorthand here. Obviously they don't hate it enough to refuse people additional mortgages (it's all secured by tangible assets at the end of the day) but they certainly aren't as happy about it as if people had a 20% downpayment in cash rather than pulling it from a line of credit.
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It's not about the "economy", it's about people being able to buy a roof over their head. Foreign investors simply don't belong in that space at all.
Exactly, and I honestly wish there were measures to fine owners that have empty homes as well. Many people would disagree with me, but to me it's not about economics. We need a way to fight the idea of hoarding homes, a basic human right, as being an "investment".
Having your housing stock bought up as holdings by nonresidents is not great. It hollows out the communities by having choice housing sit empty and it raises the cost of living for everyone who is actually there. I'm interested to see how this plays out. It seems pretty heavy handed. Zoning denser housing or placing limited restrictions on square footage may proved smarter in the long term. That said, two years is pr…
Perhaps, but Canada has no ability to enforce that. That would fall under the purview of the provinces, who have likely passed that down to the municipalities.
I'm a homeowner in Toronto and I don't think this will help. They've eliminated a small number of buyers from the market but have added other incentives like a first home buyers tax credit that will only fuel the fire - Australia tried this with tragic results. >> working with provinces and territories to develop and implement a Home Buyers’ Bill of Rights and bring forward a national plan to end blind bidding. Blind…