Foreign buyers tax in the Okanagan

[Blaker]

I have a lot of respect for the President of Okanagan Mainline Real Estate Board Tanis Read, but I do take some issue with her speaking the for organization with regards to the foreign buyers tax as there are different opinions within the industry.

As a Realtor I stand to lose some business as the tax will affect some of my clients decisions on whether to move here from around the world. But this tax (or other measures that could have been taken) are about maintaining (or trying to) affordability for our young people. Foreign investment may or may not be a major factor in housing prices here but what has happened in Vancouver COULD happen here. Personally I like the the government is being proactive rather than reactive. The government shouldn’t be concerned if the tax will “affect the budgets for our clients who are looking to move to Canada from Europe.”

I’m far from an NDP supporter and do think the speculation tax being burdened on Canadians from other provinces who purchase here should be revisited however.

[AlienSoldier]

You do realize that to make prices “affordable” for people you need to define what age they should be able to buy a house and the price they should be able to afford it at. That also means reducing the price of the current market, AKA ruining people’s current nest and retirement plan, putting new owners who bought over the last few years under water and generally reducing incomes for people like realtors.

Let the market decide, Kelowna is a growing City not a small town anymore, that started to change when the airport grew, the university came to town.

You want to change and give young people a chance? Teach financial education in high school. Then if they take the risk it’s there choice.

[alanjh595]

All non-BC buyers will just have to wait until the next election and the NDP gets ousted, the liberals will return and cancel that tax.
Even the NDP admits that these taxes are just an experiment with an unknown outcome.

[CapitalB]

That also means reducing the price of the current market

Prices can only go up for so long before they become unsustainable. If the government doesn't initiate controlled decrease they bloat into a bubble which eventually will turn into an uncontrolled decrease. Thats almost universally bad for everyone that participates in that economy.

[Veovis]

As much as it would be a task, why not make the tax applicable based on intent, or actual use.

If you are buying to hold or rent, it's speculative, if you move here and live in it, then it isn't and no tax.

Foreign purchase and live in with suite, tax based on pro-rated % of sq feet.

ALL of this and more should have been calculated to the decimal point before being included in a budget. Figure it out first then implement, not the other way around, same issue with the small business tax, make tax first, figure out what it is later. Heck they had most of a year on the other budget to create and calculate these things.

This seems to however resonate with the bulk of their supporters who "buy new things first, figure out how to pay for it later"

[jpj]

One important thing to note is that the foreign buyers tax is intended to apply to anyone who doesn't pay income tax in BC. This would include the numerous Alberta residents (and residents from other provinces) that own vacation homes in the Okanagan.

Our family is from Edmonton and we purchased a modest home in a nice residential neighborhood in West Kelowna about 6 years ago. We purchased the home because we had been spending our summer holidays in Kelowna for many years and all of our immediate family lives in the Okanagan. We felt it would be nice to have a "home base" in the Okanagan so that our 3 kids could have some quality face time with relatives that they otherwise rarely see.

We did not purchase our home to speculate on the real estate market. Having gone to Kelowna for many years, I know that the market has had a number of ups and downs, and we didn't take "what might happen" into consideration when we purchased our home. We spend as much time in West Kelowna as we can (ie. most of the summer, Christmas and spring break) and plan on retiring in the Okanagan.

The new "speculation tax" they have proposed would apply to our home in West Kelowna. Under the current proposal, it will be equal to 0.5% of the assessed value of our property in 2018 and 2% of the assessed value per year thereafter. The total taxes we will pay just for owing a home in West Kelowna will double this year and will increase to $18,000 per year after this year (in total taxes). That's $18,000 in taxes on a home with a current assessed value of $700,000!

Most people like me will sell their homes in the Okanagan. This will achieve the BC government's objective of lowering prices. As prices start to fall, others will decide to cash out as well (and so on and so on). As noted by others in this forum, it will have a ripple effect for all residents in the Okanagan. People who recently purchased homes with high-ratio mortgages will find themselves underwater. Large developments that have recently been approved (like the Westcorp project on the old Willow site) may not proceed, and projects that are currently getting started could very well shut down. I think that all of this will have a huge impact on the Kelowna economy.

For obvious reasons, I think the BC government's proposal is remarkably unfair (and completely ridiculous). I think they decided something needed to be done without even thinking about the consequences. The real problem (in my view) is residents from other countries buying real estate in Canada and people buying real estate in Canada to launder money. Why has this been allowed for so many years? If they banned foreign parties from purchasing real estate (like New Zealand recently did), I think this would return the real estate markets across Canada to normal levels.

There are also a number of significant "fairness" issues that I think their proposal raises. If the BC government can tax the hell out of fellow Canadians that own vacation properties in BC (simply because they own them there), why wouldn't other Provinces tax people from BC on income they earn while working out-of-province? I'm not suggesting that this be done (we are a country after all!!), but why wouldn't other Provinces consider following BC's lead?

[common_sense_guy]

I've said it before and I'll say it again. Non-canadians should not be allowed to buy Canadian property. That would also keep prices reasonable for the Canadians who want a house

[RVThereYet]

As much as it would be a task, why not make the tax applicable based on intent, or actual use.

If you are buying to hold or rent, it's speculative, if you move here and live in it, then it isn't and no tax.

Foreign purchase and live in with suite, tax based on pro-rated % of sq feet.

ALL of this and more should have been calculated to the decimal point before being included in a budget. Figure it out first then implement, not the other way around, same issue with the small business tax, make tax first, figure out what it is later. Heck they had most of a year on the other budget to create and calculate these things.

This seems to however resonate with the bulk of their supporters who "buy new things first, figure out how to pay for it later"

Yup, and our esteemed finance minister admits to it:

As reported by the Vancouver Sun recently:

“NDP Finance Minister Carole James acknowledged her government hasn’t fully modeled the effect of the new tax measures on B.C. real estate prices or calculated the cost of increased auditing and enforcement**. But the government wants housing prices to drop, she said.”

** In other words ... "We haven't a *bleep* clue what we're doing, but we're doing it anyways" It's like "Shoot first, ask questions later"...

[gman313]

Government would be way better off to offer 0.0 - 0.5% mortgage's to citizens earning under X per annum.

[Bsuds]

They really should have assigned a committee to look into it first.

[Veovis]

They really should have assigned a committee to look into it first.

WE DID...CAROL F-N JAMES AND HER ENTIRE MINISTERIAL DEPARTMENT!!!!!!!

lol

That was literally her job

[Prestige Mike]

I'm glad the government is being proactive here. Something has to be done about the housing prices. British Columbian's debt to income ratio is exceedingly high, and this is largely driven by real estate prices.

I was reading an article that showed Canada is particularly vulnerable to the unchecked flow of foreign capital because we are a relatively small country of 36 million. If millions of foreign investors want to park their speculative money in Canada then that can have a huge impact on the price of houses (which impacts EVERYONE through mortgages and rent).

Most of the foreign money is pouring into Vancouver, but that is obviously having a big impact on Kelowna, as Canadians are forced east of Vancouver to find affordable housing. Also, It doesn't seem implausible that foreign money was going to start pouring into Kelowna if the foreign buyers tax was only placed on Vancouver.

[RVThereYet]

What I'd like to know is where all this "foreign tax" money is going after it is collected??? What about our health tax money we've been paying every month for decades (BC MSP - which they didn't eliminate as promised but rather just shifted the burden to business - slick move that was), or the carbon taxes every time we fill up out vehicles? Literally Billions and Billions of tax dollars coming in yet we have ICBC bleeding to death with rates continually going up at all levels of government yet services continue to be cut. I know I'm generalizing, but *bleep* me, something has to give!

[Blaker]

I've said it before and I'll say it again. Non-canadians should not be allowed to buy Canadian property. That would also keep prices reasonable for the Canadians who want a house

To be honest, even as a Realtor who has sold to foreign investors I have always agreed with this sentiment. A foreigner can't just take a job no questions asked...why can they take something so much more permanent

[LANDM]

I assume that you also feel that we, as Canadians, should not be able to purchase a second home or recreational property in other countries? US (Hawaii, California, Arizona etc), Mexico or other areas where loads of Canadians currently own property?