Vancouver Taxes Foreign Home Buyers To Ease Housing Shortage

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WhatInThe

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Vancouver has started taxing foreign home buyers an additional 15% to help lower prices and make more affordable housing. They say foreign buyers have helped inflate local market housing prices.

https://www.theguardian.com/world/2016/aug/02/vancouver-real-estate-foreign-house-buyers-tax

Wether buyer is domestic or foreign a sale is a sale. Unless they can prove it's a scam, money laundering or some type of market price fixing. Additional and higher price sales should bring in taxes which in turn could be used to subsidize housing.

Sounds like Vancouver is simply at the peak of a bubble. In many housing bubble areas in the US housing also became inflated and cost of living went up. Some of these things are just a cycle.
 

"Additional and higher price sales should bring in taxes which in turn could be used to subsidize housing."

What a delightfully Socialistic concept.
 
Ray said:
"Additional and higher price sales should bring in taxes which in turn could be used to subsidize housing."

What a delightfully Socialistic concept.
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It is a socialist concept and I didn't word that statement right. I was trying to make the point why not just let the market go up/run it's course without taxing anyone additional. A higher sale price equals more taxes. Fewer sales and/or lower prices reduce tax revenue. Personally it seems Vancouver owes some growth or prosperity to foreign investments so why not go with it. The question is this hot real estate creating new construction and/or maintenance jobs for the local economy.
 

It's making it increasingly difficult for all but the very rich to buy a home in Vancouver. By the by, Canada is a socialist country in some ways. Different strokes for different folks. Lol.
 
Shalimar said:
It's making it increasingly difficult for all but the very rich to buy a home in Vancouver. By the by, Canada is a socialist country in some ways. Different strokes for different folks. Lol.
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That's what happens in a housing boom area. Has it gotten to the point sales are just between investors. A lot of times if a property is sold several times in a year or two they are investors/flippers only.
 
Shalimar said:
It's making it increasingly difficult for all but the very rich to buy a home in Vancouver. By the by, Canada is a socialist country in some ways. Different strokes for different folks. Lol.
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Sydney is experiencing the same problem. The overseas buyers are mostly Chinese and the market is so corrupted that we now have towers of apartments that are mostly unoccupied. Local first time buyers are being completely frozen out and there is still a shortage of affordable rental properties.
 
WhatInThe said:
It is a socialist concept and I didn't word that statement right. I was trying to make the point why not just let the market go up/run it's course without taxing anyone additional. A higher sale price equals more taxes. Fewer sales and/or lower prices reduce tax revenue. Personally it seems Vancouver owes some growth or prosperity to foreign investments so why not go with it. The question is this hot real estate creating new construction and/or maintenance jobs for the local economy.
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I think the main issue is that housing prices have gone up to the point where it's totally out of reach even for a middle class, both partners working type couple. When extreme hovels are costing over a million dollars and are unlivable, what is the average person to do? That also means that rental accommodations are harder to find because they've either been sold out from under renters or the rent to cover HUGE mortgages is so high that the average person can't afford it. I watched a news thing with a single dad, two kids and he was forced to move because his landlord was cashing in and his rent which had been around $1800 per month was now going to have to go up to $2500 per month. But his wage wasn't going up and he had been at his limit with the $1800.

As I understand it too, some of the realtors in Vancouver had developed a system whereby, a house would go on the market, it would sell quickly and before the deal was even finished, that same house might have sold a couple more times because the 'new first owner' was turning it over before he took possession. And of course, he was doing it for a profit which means higher prices on that same property. I think I recall hearing that a house could sell up to three times before the first sale was finalized and in many of these cases, the flippers were foreign.

Shalimar, because you live closer and are likely to have paid more attention than I, maybe you could clarify that if I'm incorrect anywhere.

Certainly it does mean more property tax money coming in to the Vancouver City Hall, but what good is that if the working class can't find a place to live? And apparently Vancouver is in the same state as Warrigal said is happening in Australia, towers of empty apartments!
 
This cycle played out in Florida and California during the boom years. Yes it does eventually cause inflation and/or higher cost of living. A rule of thumb on salaries and rent or mortgage used by many is that when month rent or mortgage is more than 1/3 of monthly salary "the rent is too darn high".

I wouldn't tax foreign buyers but on unused property where taxes are paid simply make sure the owner keeps up the property and/or fine them and if they don't pay prohibit other activities until the fines are paid. Unkept property is a huge problem in this type of environment but it is owned even if by a bank or government.
 
SifuPhil said:
I think that 1/3 rule, while it used to be valid, is now pretty much out the window.
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Yeh that's an ideal ratio not necessarily practical or reality. Some experts say if more than 20% of income is used for credit related bills, not mortgage or rent you are already sunk. My guess is that 1/4 would be more common. When average rent or mortgage goes to 2500 a month that means someone has to make 10,000 a month or devote a weeks pay to rent. After taxes (another week or so)and other bills that goes fast. If foreigners can travel regularly for business or pleasure they probably have the income or favorable exchange ratio.

Here right now there are houses selling where the mortgage and tax bill are getting closer and closer. A house recently sold for 130,000 after selling for 225,000 in the 1990s. Tax bill almost 10K a year, so even after the mortgage is paid off that's an 800 a month tax bill. A senior without a strong pension and ss is done. This sort of pricing forces a rent market.
 

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