Homelander feels discriminated against in CA! “Nationality-based taxes are among the worst kinds of protectionism.” https://t.co/eeEolALkUj
— U.S. Citizen Abroad (@USCitizenAbroad) September 13, 2017
The above tweet references the following comment by Muzzlednomore;
The full text of this Wall Street Journal article was sent to me by someone who reads here but does not post. It demands some response from this community! It’s written by an American who is (rightly, in my opinion) upset by Vancouver’s real estate tax on foreign ownership.
Amongst the article’s notable quotes is: “Nationality-based taxes are among the worst kinds of protectionism.” Instead of ranting solely against a Canadian tax of this nature it would have been marvelous if the author had acknowledged the nationality-based tax imposed by her own government against all its sons and daughters – including her! – who no longer live within its borders. Perhaps the author is unaware. Perhaps Brockers would like to enlighten her.
https://www.wsj.com/articles/canadas-tax-on-being-american-1505171378 I haven’t copied the full text of the article here for copyright reasons. I hope a non-paywall version becomes available
As per Muzzlednomore’s request:
Here is a link to the article, enjoy and if you can comment …
Citizens of every country need to rise up and make their voices heard to their Governments through their representatives, as I have done in the US as a Dual Citizen. Have written many letters and submission recently to the taxreform2017@finance.senate.gov email, (believe that is closed now) and indicated my willingness to dump my US Citizenship once I return to Live in Canada, where I was born, if they do not repeal FATCA here and hopefully move to residence based taxation.
Only thing is, sometimes I think they do not care,……………….
Yet the taxes referred to in the article are, in my opinion, perfectly justifiable. Vancouver has been hit hard by mostly-Chinese predatory investors who buy and sell properties to each other while sitting home in Shanghai, as though they are pieces in a stamp collection. Meanwhile, everyone else is being shut out of the market.
But rather than ban or limit foreign purchases altogether, as more and more cities are doing, Vancouver is smartly using taxes to tip the balance more in favor of genuine end users. I wish more places would tax empty homes in a slight attempt to bring sanity to the markets.
At least the 1% levy can be justified in a simple declarative sentence. Someone should invite the American author of the article to move to Vancouver full-time and thereby save herself the 1% tax…and then discover how her native country wants to royally screw her many times worse, and without a remotely justifiable reason.
“Renting our place out for at least six months a year would circumvent the tax. Except that our condo rules require a minimum lease of six months. This is impractical given that we want to be there during the summer and allow friends and family to stay periodically throughout the year. Even worse, if we did decide to rent, we’d be liable for “deemed disposition” taxation and would have to file a Canadian return, even though we’re Americans.”
Leaving aside the irony of an American complaining about having to file a tax return in Canada “even though we’re American!”, the author seems to think she should be able to buy a second home and use it as much or as little as she chooses and not be taxed locally. It might be difficult to achieve such a pleasant outcome if she had bought a second home in a US state. Maybe that’s exactly why she chose a condominium in Vancouver – as a tax-free investment. And now the loophole has been wisely and justly closed. Good for Vancouver.
So we have an American that chastises Canada for maintaining its sovereignty and caring about its citizens?
A good example of ignorant American entitlement. Analogous to the much-described white privilege?
From what I’ve read, Vancouver was forced to take steps to prevent the real estate market from shutting out locals. It appears that native New Zealanders much wish for Auckland to do the same, because it is also suffering from chaotic and excessive Chinese investment.
By the way, it is possible that the author has a bank account in Canada, since she has real estate there. I supposed she filed the FBARs.
Thanks for posting this, USC Abroad.
Vancouver definitely had to take some sort of action but I would have preferred to see a tax on uninhabited real estate no matter who owns it. I think that would have looked less like a modern-day “head-tax” on foreigners.
At any rate, it provides us an opportunity to comment on the “head-tax” placed on all of us.
Canadians owning a second hone in Florida pay double the property tax;
https://www.aol.com/2010/06/15/florida-real-estate-taxes-retain-dual-class-system/
@ Peet
Good find.
It’s quite clearly not a tax on Americans, it’s a tax that applies to all nationalities equally. It amuses me that the author appears to feel quite put out at having to pay a tax to Canada for property in Canada. At the same time, it’s quite reasonable to assume that she would support the idea that all Americans should “pay their fair share” to the USA regardless of their actual location.
I also wonder if she has bank accounts in Canada to maintain her apartment and life while living there.
This lady might find out the hard way just what unreasonable tax and penalty policy actually looks like now Canada is sending US person owned accounts back the oh so friendly chaps at the IRS.
Probably laments the US’s defeat in the War of 1812.
If this Vancouver property were to be sold, would the gain be taxable by Canada, US, or both?
@Plaxy. I’m no expert but I believe the gain would be taxable by both countries. The gain would be taxable in Canada because it is Canadian source income but the property is not her principal residence. The US would tax it because because the IRS taxes all of the world-wide income of US citizens. Chances are, however, she could claim a foreign tax credit on her US return to offset the taxes paid to Canada. If the property was bought in 2002, the gain is likely pretty significant. Pretty rich for an American to be complaining about Canada taxing the retirement “savings” of Americans.
Bet she has never heard of FBAR; if the IRS figures it out she’ll really have something to whine about!
Thanks maz57.
She might not be at risk from FBAR, if she bought through a US account and a US mortgage, and uses the property in Vancouver purely as a little bit of America-abroad to visit when she likes without any obligation to contribute to the costs of the Vancouver infrastructure and services she uses.
I don’t suppose she sees herself as a tax evader, but in fact she’s exactly the reason the rest of us, who are not tax evaders, are now treated as suspected tax criminals almost everywhere. She’s a genuine American “offshore” tax dodger – in this case, trying to dodge Canadian taxes.
And now she’s been caught. She bought before the foreign buyer tax was imposed, but she’s been caught by the empty homes tax. She could get round that one by renting the place out for half the year, but then she’d be caught by the deemed disposition tax. And it seems from what you say that she can’t sell without paying Canadian tax on the (no doubt considerable) profit.
Perfect. A spot of justice. Thank you Vancouver.
I’ve watched Vancouver real estate prices soar beyond rational over the past 28 years that I have even had any interest in the real estate market. You already know my view on FBAR and FATCA however if you expect my support on vilifying the tax measures taken to rectify the real estate market, then you have another thing coming. In these 28 years, I have seen real estate prices rise beyond my ever hoping to own a home, nor even my kids with a good paying job, they won’t ever have the ability to buy a home unless something is done. We have seen predatory purchasing of homes by foreign investors who don’t give a shit that they are pricing the market beyond any hope of locals ever being able to purchase a home of their own.
Canadians should not have to sacrifice their land to foreigners or be forced out of our cities. And like it or not, the empty home tax is only the first step in correcting what should have been corrected 20 years ago by slamming the door on foreign ownership of Canadian land.
Who’s that addressed to? I don’t see anyone here vilifying Vancouver tax measures. Just the opposite.
MuzzledNoMore: “Vancouver definitely had to take some sort of action but I would have preferred to see a tax on uninhabited real estate no matter who owns it. I think that would have looked less like a modern-day “head-tax” on foreigners.”
It’s not a head-tax on foreigners. The writer is just trying to claim that it is:
“A few months later, Vancouver introduced an annual “empty home tax” equal to 1% of the property’s assessed value. Since the levy is inapplicable if your Vancouver home is your principal residence, it’s obviously aimed at foreigners like us.”
It hasn’t dawned on her that Canadians might own second homes in Canada.
I think that would have looked less like a modern-day “head-tax” on foreigners.”
http://vancouver.ca/home-property-development/empty-homes-tax-questionnaire.aspx
The problem is not limited to residential real estate:
“According to Sharon Townsend, executive director of the South Granville BIA, a lot of commercial landlords don’t care about rental income at all. Retail buildings are increasingly owned by developers focused on a long-term vision, she says—people with deep pockets who are happy to squat on a place for decades, with or without renters, to await the sweet returns of future redevelopment. For these retail barons, the actual “retail” part isn’t important.”
http://vanmag.com/city/city-informer-empty-stores-biggest-shopping-streets/
It took her awhile but the author of this article has responded to the comments. I wonder if she knows that there is reciprocity in Florida. See Peet’s comment:
http://isaacbrocksociety.ca/2017/09/12/canadas-tax-on-being-american-why-not/comment-page-1/#comment-7995631
BTW, nobody does it better than the USA when it comes to violating signed treaties.
Funny how Ms. McCallum brings up Chinese investors. Pretty much the only reason why Beijing agreed to FATCA was because they want to track down some of this capital that’s been laundered out of China and fled overseas, and some very sneaky folks at the US Treasury sold them on bullshit promises of “reciprocity”.
As for this:
Plus, there’s the little issue of signing treaties and then violating them.
https://en.wikipedia.org/wiki/Foreign_Investment_in_Real_Property_Tax_Act
More example of the U.S.’ level of regard for tax treaties:
http://isaacbrocksociety.ca/2014/12/10/u-s-treasury-admits-people-dont-emigrate-to-high-tax-countries-to-avoid-u-s-tax/
re miss McCallum’s comments ”
I am not a Canadian and therefore, Vancouver cannot be my primary residence”
One does not have to be Canadian in order to have a primary residence in Vancouver.
She may have case trough the NAFTA dispute mechanism whereby Canadian residents/businesses have to be treated equal to Americans/Mexicans and vice versa
From Ms. McCallum’s response (thanks, EmBee!): “First, I am not a Canadian and therefore, Vancouver cannot be my primary residence.” What?!!! I know several non-dual American-only permanent residents of Canada who own their own homes here in Canada. I went out for dinner with one last night. Does she mean she’s not a “permanent resident” of Canada? That’s quite different from saying you’re not Canadian. If I’ve learned anything about using one’s pen as a sword it’s that words really matter.
@ Peet
“She may have case through the NAFTA dispute mechanism whereby Canadian residents/businesses have to be treated equal to Americans/Mexicans and vice versa.”
Hmmm, it seems to me that since Canada and Mexico use RBT and the USA uses CBT then there is some anti-NAFTA unequal treatment going on and it isn’t by Canada and Mexico. An American residing in Canada/Mexico is not being treated equally with Canadians/Mexicans and this is by decree from the USA not Canada/Mexico. Actually I think it has been mentioned a few times that FATCA is contrary to the NAFTA treaty and I think US CBT is too.
I’d say that it should be made that you have to be RESIDENT in Canada in order to buy and own property. A Canadian’s right to buy a home should be protected. Canada shouldn’t be put up for sale to the highest bidder and as I stated clearly in my response to her. Our children should not have to mortgage their entire life to be able to buy a home in the Lower Mainland and have to compete with cutthroat competitors utilizing the Vancouver real estate market as a speculative tool.
“As a Lower Mainland resident (born and raised in Canada), I would like my government to slam the door on ALL “foreign ownership” of Canadian land. But unfortunately that isn’t going to happen.”
…which in essence was my telling her to “Take your ball and go home!”
The_Animal: thing is many Canadians have property elsewhere, and are probably pushing prices up where they buy. I think that taxation, such as Vancouver has done, is useful as a regulative mechanism in these cases, and it’s probably fairer than prohibiting ownership outright. That said I too live in a city where the local middle class is being priced out because of wealthy foreigners. It’s made my house more expensive, but also kept me from upgrading.