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Foreign residential property buyers to be taxed at 15% in Vancouver

economist.com

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Re: Foreign residential property buyers to be taxed at 15% in Vancouver

#41

Post by mywittyname »

hellogoodbyeeee wrote: post #38
velodrome wrote: post #30

The Canadian housing market is currently in a bubble. The same can be said about the Australian housing market. Canada http://i.huffpost.com/gen/1100960/thumbs/o-BMO-HOUSE-PRICES-... http://static5.businessinsider.com/image/54aea0136da8118f2ae... Australia https://1.bp.blogspot.com/-NuIUphAP17w/Vth6P3w2FzI/AAAAAAAAC... http://www.propertyobserver.com.au/images/stories/keenjan2.p...

A bubble is a more complex phenomenon than large price increases. A bubble is inflated by speculation that isn't rooted in anything except the rising price. If rich foreigners are buying property to summer in because they like the weather, then not a bubble. If rich foreigners are buying property because the property has gained X% in price every year for the last ten years but they don't know anything about the speci…

It looks like foreign buyers are also speculating. The difference is that it seems that foreign buyers are interest in long-term holding (instead of quick flips) and they are paying in cash.

So there's no risk of them being forced to sell at the bottom, like what happened to Americans, because there will be no 5/1 ARM that needs to be refinanced. Since these buyers paid in cash, so most of them will be able to weather a storm.

Re: Foreign residential property buyers to be taxed at 15% in Vancouver

#42

Post by kennywinker »

saosebastiao wrote: post #26
lintiness wrote: post #16

Earlier quoted context omitted.

sounds like you guys should dump as many of these properties on these fool heads as possible. you can buy them back in a few years for a lot less.

Exactly what came to my mind. I saw this same behavior happening in 2005. When there is no marketable cash-flow producing use of investment property, you are in a bubble.

And the phenomenon is even worse now. If you sold a property in 2005 in Vancouver, I bet you wish you'd held on to it.

As someone else said, it's only a bubble when it pops. Good luck timing that.

Re: Foreign residential property buyers to be taxed at 15% in Vancouver

#43

Post by skylan_q »

This tax won't do much to impact the market directly as foreign capital makes up about 4-8% of the purchase activity, which is elevated but not outrageous. Foreign funds also buy at the same average price as local funds so it's not about rich buying mansions.

The larger impact will be on locals thinking "this is the end of chinese money, so the market will tank!", which will scare them away from the market.

Re: Foreign residential property buyers to be taxed at 15% in Vancouver

#44

Post by newacct23 »

bluedino wrote: post #5
adaml_623 wrote: post #2

What's the reason for this? Is it because it's bad for real estate in a living city to be used as an investment vehicle?

It's free money, and it looks really good as protecting local interests. A Chinese or Russian millionaire looking to buy property in Vancouver is going to buy whether it's $5 million or $5.75 million

>A Chinese or Russian millionaire looking to buy property in Vancouver is going to buy whether it's $5 million or $5.75 million

I don't know why you believe this to be true but it isnt

Re: Foreign residential property buyers to be taxed at 15% in Vancouver

#45

Post by kennywinker »

sergers wrote: post #29

A move by local government to drum up votes for upcoming election. Make it look like we doing something, at the same time raising additional budget with the tax surplus. I think it's too little very late. 15%tax on illicit funds is just cost of doing business ( with says around it too). Quote from a localasian realtor to me: "now my client can't buy the 9million dollar house he wanted for investment cause of tax." in…

Damn right it looks that way!

My uncle, a Vancouver real estate agent, was talking about how the market had all but halted it's growth just a few months before this change was announced.

I'm not informed enough to know for sure, but I'd guess this is the provincial government trying to take credit for that slowdown after the fact.

Re: Foreign residential property buyers to be taxed at 15% in Vancouver

#47

Post by raquo »

atemerev wrote: post #46

If foreign investors are happily buying "overpriced" properties at huge premiums, why not simply build more?

Because you'll never build enough. Global demand surpasses potential local supply by a huge margin. Prices won't even begin to drop.

Re: Foreign residential property buyers to be taxed at 15% in Vancouver

#48

Post by roymurdock »

velodrome wrote: post #30

The Canadian housing market is currently in a bubble. The same can be said about the Australian housing market. Canada http://i.huffpost.com/gen/1100960/thumbs/o-BMO-HOUSE-PRICES-... http://static5.businessinsider.com/image/54aea0136da8118f2ae... Australia https://1.bp.blogspot.com/-NuIUphAP17w/Vth6P3w2FzI/AAAAAAAAC... http://www.propertyobserver.com.au/images/stories/keenjan2.p...

What position have you taken to profit from this bubble, and how has that position performed since inception?

There should be a rule on HN that whenever someone calls a bubble, they must also share an estimate on how long the bubble has been building, when it will burst, and how to profit from said bubble. They should also have to disclose whether or not they have any skin in the market of the supposed bubble asset.

Re: Foreign residential property buyers to be taxed at 15% in Vancouver

#49

Post by pesfandiar »

jpollock wrote: post #40

The last paragraph indicates the precise problem with this policy - it isn't adhering to the terms of the free trade agreements that Canada has signed - both NAFTA and the "China Foreign Investment Promotion and Protection Agreement" require that offshore investors be treated the same as onshore. The CFIPPA [1] is clear on the subject: 1. Each Contracting Party shall accord to investors of the other Contracting Party…

I don't know much about the legal aspects of international agreements like that, but is real estate considered an investment vehicle like e.g. bonds and stocks? You'd think there should be some exceptions, since real estate is enabling local communities, and you know, provides shelter for people to live in.

Re: Foreign residential property buyers to be taxed at 15% in Vancouver

#50

Post by mywittyname »

The province could pass a law that allowing them to seize the assets of a foreign owner who does not occupy or rent their residence. Have this law apply to companies that hold single-family residence as well.

If it passes legal muster, the threat of losing your property is probably enough to dissuade a lot of foreign investors.

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