Vancouver slaps $10K a year tax on empty homes. $10K a day for lying about it

[Tradewind]

That's poor investment. These foreigners are looking to make as much as possible. This tax has the potential to make other cities look more favourable than Vancouver.

But you need to also remember what they're saving back in China in terms of personal income taxes etc. It's about more than just what they're earning when they flip the property.

[Tyrianth]

Perhaps you could tell us more about your magical bubble where investing in property is a binary choice with only a single factor to decide upon?

So you're not going to answer the question?

The fact of the matter is that this tax is a deterrent to foreign investors. A city that may have more investing potential will get looked at before Vancouver.

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But you need to also remember what they're saving back in China in terms of personal income taxes etc. It's about more than just what they're earning when they flip the property.

I'm not forgetting that, but Vancouver isn't the only city to invest in. This tax makes other cities more appealing, especially for new investments. Vancouver doesn't care about the housing markets in other cities.

[Eats Compost]

So you're not going to answer the question?

The fact of the matter is that this tax is a deterrent to foreign investors. A city that may have more investing potential will get looked at before Vancouver.

It would if that were the only factor impacting their decision. That is not even remotely the case.

Gotta stress this main point: a city with a 9% ROI on property is going to see crazy amounts of property investment, because that's a bloody great margin. Just because an investor can point to somewhere on a word map that might have a slightly higher ROI doesn't mean that the other still-lucrative sites will dry up, and you can easily observe that as a fact by looking at how widespread foreign property investment is across many countries and regions.

[Tradewind]

I'm not forgetting that, but Vancouver isn't the only city to invest in. This tax merely makes other cities more appealing. Vancouver doesn't care about the housing markets in other cities.

I don't necessarily disagree on anything in here

Other than it kind of highlights how pointless this new tax in Vancouver is lol. If all it's going to accomplish is shifting the burden

Rennadrel's idea is probably the most salient. That's exactly what they do in China.

[callipygoustp]

Other than it kind of highlights how pointless this new tax in Vancouver is lol. If all it's going to accomplish is shifting the burden

That's the key point here : that $10k tax is far from a detriment.

[Tyrianth]

It would if that were the only factor impacting their decision. That is not even remotely the case.

Gotta stress this main point: a city with a 9% ROI on property is going to see crazy amounts of property investment, because that's a bloody great margin. Just because an investor can point to somewhere on a word map that might have a slightly higher ROI doesn't mean that the other still-lucrative sites will dry up, and you can easily observe that as a fact by looking at how widespread foreign property investment is across many countries and regions.

Of course it's still going to have investors, I never denied that. They don't want to halt foreign investment completely. But foreign investors looking to invest in Canada are going to go for the best investment they can find. This tax has the potential to make Vancouver less appealing than other cities.

[Eats Compost]

Of course it's still going to have investors, I never denied that. They don't want to halt foreign investment completely. But foreign investors looking to invest in Canada are going to go for the best investment they can find. This tax has the potential to make Vancouver less appealing than other cities.

I can't stress enough that 9% ROI is stupid, crazy good, on a global level. Even if you could detect a marginal shift down for Vancouver and a marginal shift up for other cities, its highly unlikely that Vancouver would cease to be an extremely popular investment opportunity based on those numbers. I simply don't accept the suggestion that it'd take any significant hit based on those numbers.

[Celista]

I somewhat understand the rationale but that seems overly intrusive. People should be allowed to have vacation/second homes and not be forced to rent them out.

[Baelic]

I somewhat understand the rationale but that seems overly intrusive. People should be allowed to have vacation/second homes and not be forced to rent them out.

Vancouver isn't really that great of a vacation destination anyway.

[Celista]

Vancouver isn't really that great of a vacation destination anyway.

BC and Vancouver are beautiful! I agree it's not as scenic as a cabin farther out from the city, but I can see why someone would want to have a second home there.

In any case it sounds like a problem for the upper middle class/upper class. They can probably afford the 10k fine, although it still doesn't seem fair or justified to me. I couldn't see such a law passing successfully in the United States.

[Tyrianth]

I can't stress enough that 9% ROI is stupid, crazy good, on a global level. Even if you could detect a marginal shift down for Vancouver and a marginal shift up for other cities, its highly unlikely that Vancouver would cease to be an extremely popular investment opportunity based on those numbers. I simply don't accept the suggestion that it'd take any significant hit based on those numbers.

So you're telling me when Chinese investors are look into investing into Canada, they won't take the lower ROI into consideration when deciding where to invest? And there is no possibility that that any of the investors would consider the lower ROI as a "con" in regards to investing into Vancouver?

[Triggered Fridgekin]

$1 for every kilometer they are away from the property and multiply it by how many days of the year they aren't occupying said property.

We'll call it the double donut tax.

[Ave07]

They need to do this in Miami as all the new apartments that are being built are always empty.

[NED funded]

It's an issue because of shit like this:

http://www.rew.ca/properties/R212229...e=vancouver-bc
http://www.rew.ca/properties/R212195...e=vancouver-bc
http://www.rew.ca/properties/R212191...e=vancouver-bc

Meanwhile for similar price in Calgary, you could live in this fuckin craziness...

http://www.royallepage.ca/en/propert...9/mlsc4065428/

The Chinese speculation into the Vancouver and Toronto housing market has driven values up by ridiculous fuckin' amounts out there. It was bad enough just by virtue of it being Vancouver and not exactly a ton of usable land to build homes on, but the speculation has vaulted values so high it's damn near impossible for any old joe schmoe and family to buy a home.

Anything to cool the market out there is more than needed. But at this point, it might be too late, so many people are going to get it up the ass on their property values.

Don't get me wrong, but is there evidence that foreign ownership is causing this massive increase in prices? I've looked into it (I could not find data in StatsCan, though I could be wrong) and all I can find is this report from the cmhc (is that trustworthy information?) which they report that for condos there has been an increase in foreign ownership from 2.4% to 3.3% for the Toronto CMA and 2.3% to 3.5% in Vancouver.

https://www.cmhc-schl.gc.ca/odpub/es...=1463522686880

[Crissi]

Really should just start mandating that citizens get first priority, and foreigners only considered if there's not enough applicants.

Which yeah, would be intrusive to a free market, but when a free market benefits foreigners at the expense of citizens, that's not a good thing.

[Silversorrow]

It's not a 10k a year tax, it's a 1% tax on the value of the home. So a 1 home valued at 1 million dollars would have a 10k a yer tax, 500k home would be 5k a year, 2 million dollar home would be 20k a year tax and so on.

[callipygoustp]

They need to do this in Miami as all the new apartments that are being built are always empty.

Similar issue in San Francisco as well.

[Feral Camel]

Amen to that, but I would stress that Chinese investment only makes up a small part of what's going on here. Property investment itself is what's out of control in Sydney/Melbourne - it's so damn lucrative to invest in property that it drives the prices up and locks out first home buyers. Yet there's very little political willl to fix that, because they'll get lobbied to hell and back by the influential constituencies that have invested in said property. It's a huge conflict of interest between people who have invested in property, and people who need property to be at least somewhat affordable to enter the market at all.

Even as a property investor* I agree things need to change. I think Labor had the right idea with the changes to negative gearing, it just didn't go far enough. It would of been suicide for them politically to be any harsher. The baby boomers are the biggest part of the problem but I don't blame them either, they are so set in their ways about bricks and mortar financial security and why wouldn't they be, Its had great progressive continues growth for years.

I do feel sorry for the younger generation (under 25). Its going to be pretty tough to break into the market.

*While I'm technically a property investor I kind of became it by default due to an average purchase and moved back in with my parents to try and get a head of the apartment bubble bursting (My property has already lost 25% value).

[Celista]

Really should just start mandating that citizens get first priority, and foreigners only considered if there's not enough applicants.

Which yeah, would be intrusive to a free market, but when a free market benefits foreigners at the expense of citizens, that's not a good thing.

We're having that problem here right now in Portland. 3% vacancy rate, and a lot of real estate is now owned by overseas investors.

Real estate is a finite resource. Most of us can't afford to up and move to a new, cheaper country...personally I do not think that overseas investors should be allowed to own residential property (and, possibly not commercial property) as it simply drives up the cost of real estate in whatever country they are investing in. Inflated real estate prices are a burden to a citizenry. It should be our right to be able to afford land that is at least large enough for a family home, especially as homes seem to be getting less rather than more affordable since the subprime mortgage crisis.

In the United States, owning a home is a part of the American Dream. Real estate inflation due to overseas investment means that many Millennials may never be able to afford to purchase property.

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It's not a 10k a year tax, it's a 1% tax on the value of the home. So a 1 home valued at 1 million dollars would have a 10k a yer tax, 500k home would be 5k a year, 2 million dollar home would be 20k a year tax and so on.

Isn't the average home in Vancouver now valued around 900k?

Edit: Wow I was WAAAAY off. $1.4 mil. http://www.huffingtonpost.ca/2016/09..._11837936.html

[Baelic]

Don't get me wrong, but is there evidence that foreign ownership is causing this massive increase in prices? I've looked into it (I could not find data in StatsCan, though I could be wrong) and all I can find is this report from the cmhc (is that trustworthy information?) which they report that for condos there has been an increase in foreign ownership from 2.4% to 3.3% for the Toronto CMA and 2.3% to 3.5% in Vancouver.

https://www.cmhc-schl.gc.ca/odpub/es...=1463522686880

The problem isn't foreign ownership of condos, but detached homes. Which is displacing and cramming local families into Condos... which then displaces low-wage workers.