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 …
Banning foreigners from owning property is going to have repercussions and to me, is dubious from a moral standpoint. There are other ways to control property speculation, such as increased taxes on second property purchases.
I have to say, it does my heart good to see an American whining about unfair taxes by a country where she does not live. It’s not as if they are unfair.
But there again, we know that through this entire FATCA/FBAR/CBT issue, US homeland hypocrisy has been off the charts.
The 15% foreign buyer tax is imposed by the BC provincial government only when a non-resident buys property in the Greater Vancouver area. The 1% unoccupied dwelling tax is an annual property tax surcharge imposed by the city of Vancouver. So technically, neither can actually even be called a “Canadian” tax. Both taxes can be easily avoided simply by buying outside the Vancouver area. She could sell her condo, pocket a hefty gain even after the taxes, and buy something even nicer outside the target area (and probably pay much less in annual property tax as well).
Its hard to feel much sympathy for this so-called “unfair treatment”. Maybe she thinks that as an American (you know, God’s gift to the planet) she shouldn’t have to pay tax to any level of “Canadian” government. I wonder what she thinks about paying GST and PST on everything she buys in BC? Maybe she should move to Canada and start complaining about having to file an annual tax return to a country where she no longer lives. That I could relate to.
@maz57, re; “…Its hard to feel much sympathy for this so-called “unfair treatment”. Maybe she thinks that as an American (you know, God’s gift to the planet) she shouldn’t have to pay tax to any level of “Canadian” government….”…
Decades ago, I was present during a series of sessions of municipal property tax hearings in a large Canadian city, where entire new condo buildings were under appeal by unit purchasers and their tax agents – appealing property tax assessments on multiple units the owners had bought to speculate on, and which they did not and had never lived in and had no intention of living in. At the time, it struck me just how many of those listed owned multiple units, and also how many lived overseas. One of the objections floated by some of these offshore owners was that they felt that since they lived outside Canada and did not live (or have any intention to live) in our city, province and country, and were investors, it was their belief that they should not have to pay ANY property taxes because they claimed they did not use any of the services which property tax funded. They felt that since they were investing their offshore money through buying the condo units in Canada, they were being discouraged from investing in Canada through the municipal property taxes levied on the units – which at the time, because they had not been owner occupied, were subject to a different assessment value.
It was as if they felt they had the ‘right’ to a certain return on their investment without any obligation to the city and the province – or even the country.
It only will have “repercussions” because we are too spineless as a country to stand up for Canadians.
Fred, I doubt that Canadians have bought foreign property to the extent that the Chinese predatory speculators have done. In fact CMHC has already done a study on foreign ownership of real estate in Vancouver and has come to the conclusion that the practice of allowing foreign ownership is a major problem. I saw the start of this problem in 1993 when I first entered real estate sales and saw a majority of my colleagues in the business talking about selling to ‘foreign buyers and this wasn’t people emigrating from Hong Kong and putting down roots, they were people trying to get their money out of the country before China took them over. Then of course once the Chinese took over Hong Kong, well, they knew that Hong Kong Chinese were stashing their money somewhere else. What do you think? They followed the money trail and ended up finding out that a lot of money had been stashed overseas. It doesn’t take a rocket scientist to realize what happened. While China is busy trying to find people who embezzled RMB outside the country, their own corrupt politicians are buying up Canadian property in an attempt to stash their own wealth overseas, driving Canadians out of the Lower Mainland.
Crooked realtors are still finding ways for their predatory clients to still buy real estate. The tax hasn’t helped a bit and foreign buyers are still finding ways in. They’ve found that Vancouver is easy pickings and like vultures, they plan to pick the carcass clean. So only a ban will work but foreigners will cite the Charter of Rights and Freedoms. I feel that the Charter should only extend to Residents and Citizens of Canada. If you don’t RESIDE here, you don’t get to have a say and like Thailand, Canada should be considering strict protective measures against foreigners grabbing Canadian real estate.
There is a reason why the 15% (which seems high) is scoffed off. Most people erroneously think that it is 15% on the purchase price of the home. That could not be more wrong. It is 15% taxed based on the value of the Property Transfer Tax (which is 1% on the first $200,000 of property value, 2% on the value between $200,000 and $2,000,000 and 3% on the value of property above $2,000,000) And there are TWO caveats. One is if you are a first time home buyer (which most people entering the Vancouver real estate market are unless they start buying homes in bulk (so that allows them to skip the tax unless the property they buy is over $500,000. Two: Purchasers buying a newly built home pay no PTT on homes with a purchase price of $750,000 or less, but they pay full PTT on homes with a purchase price above $800,000. You pay partial PTT on a home with a value of more than $750,000 but less than $800,000.
When you calculate the cost of an average home in the Metro Vancouver area which is around $1.4M. you pay $26,000 in PTT.; they only pay an extra $3900 in Foreign Buyer’s Tax. WHY do you think they’re laughing it off. There have been a few token complaints, but it’s not a price that is dissuading foreign buyers from buying up land. These foreign buyers who buy up land probably will spend more money on a shopping trip than they do in paying down the Foreign Buyer’s Tax. So I call BULLSHIT on all the whining and complaining.
They should have jacked the Foreign Buyer’s tax to over 28% of the Property Value. A tax of $392,000 on non-Residents of Canada buying property certainly would have dissuaded predatory buyers and encouraged immigration rather than off-shore buying.
And at least my kids and other Canadians would be able to buy homes for themselves while having a full-time job instead of mortgaging themselves to this life and beyond.
Fred (B); You say “many Canadians” Well, you’re talking to one that doesn’t own a property (in Canada or in a foreign country – I pay RENT to keep a roof over my head in Canada) and I’m seething at the thought that my kids won’t have an opportunity to own a home in the country they live in, in the city that they were born in, even if they have a good paying job because the house prices are being driven up to the point where it’s not even feasible to pay off a mortgage. When you have to have an income of over $105,000 just to start off in a home buying situation, there is something wrong. I doubt that you know the real estate market as well as you think you do and that your ASSumption of Canadians owning property is probably much greater than the actual amount of people who do own foreign property. And those who do own foreign property are more than likely the very few 1% who have enough money to buy multiple investment properties and speculate in the vein of the much justifiably vilified Chinese investors.
I don’t look for justifications, I look for government to do the right thing, stop vacillating and slam the door shut on foreign speculators and give the real estate market a chance to correct itself before we sell Canada completely to foreigners and we ALL become tenants on the land that we once called home. Land ownership should be restricted to those who have applied for residence in Canada, not to foreign vultures who intend to play real estate speculation like the stock market.
Now…I am going to decimate the CMHC report. They came to three conclusions:
[b]Roughly 90 per cent of purpose-built rental apartment units in Canada are owned by individual investors and private corporations.[/b]
[i]Chinese investors will buy property through numbered corporations, if they had bothered to look at the incorporation business data from http://www.ic.gc.ca, they will find that a lot of those numbered companies will lead to Chinese owners. And they say that 90% of “purpose-built” homes and condos are owned by individual investors and private corporations? Smells like a load of cowshit, doesn’t it? [/i]
[b]Units owned by individual investors tend to have lower rents than units owned by other ownership types, but the difference is smallest in the most expensive markets.[/b]
[i]Units owned by individual investors have lower rents because they don’t rent them out. They leave them vacant.[/i]
[b]The share of foreign ownership of purpose-built rental apartments is small. Nationally, it stands at 2.4 per cent.[/b]
[i]If you look at the number it is deceptively small, until you find out that these foreign owners are buying through proxy and through shadow corporate entities (numbered corporations). If CMHC bothered doing research instead of taking the numbers at face value, they might find a completely different story.[/i]
And when CMHC couldn’t find data, they resorted to speculation and assumption that the problem was less widespread than it is. It’s a matter for the reader to read between the lines. Trace a proxy owner of an “investment property” and 100%, you will find foreign money exchanging hands. So the problem hasn’t gone, it’s gone “underground”.
Seriously? They thought THEIR empty condos should be property tax-free while an empty condo owned by a Canadian, living in Canada, would most definitey NOT be property tax-free. I shake my head at the audacity. I presume they were slapped down for that.
Hey Animal, chill. Note that I was supporting a tax on runaway foreign investments.
Simple truth is many Canadians own property abroad.
Those who have a $100000 condo in FL are not the 1% you revile, either. Just sun loving middle class compatriots of yours.
Yeah, you know why they want ’em down there for 240 days. cough-cough-tax ramifications-cough #FATCA.
Just saw this tweet:
I didn’t realize that Ms. McCallum’s article appeared in the WSJ. Wonder what the comments are like there — sympathetic homelanders sharing her outrage or maybe even some who think she should not have a condo in Canada when there’s so much on offer in the USA.
The statistics may be misleading if the question truly refers to “savings” accounts. At near-zero interest rates, people may not have them but have money in checking accounts, money market accounts, stocks, home equity etc.
@Embee, it appeared that some of them thought that Canada and Canadians should be happy/grateful that they were bringing their offshore money here in the form of investment (speculation) in Canada (condo units), but that wasn’t an effective/recognized argument in a property tax assessment appeal, so would have had no effect. Any resulting change in assessment would have been on the basis of presenting compelling comparables and other details, and for those with agents; negotiations/discussions between agents and assessors, subject to a final decision/agreement by the ARB Member hearing the appeals.
“it appeared that some of them thought that Canada and Canadians should be happy/grateful that they were bringing their offshore money here in the form of investment (speculation) in Canada (condo units)”
If I felt up to registering or buying a subscription to comment on the WSJ’s comments page…I’d tell them, as a Canadian.
“GET STUFFED, EH! Ya Yankee Snapperhead. Fuck off, eh.”