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

[Rennadrel]

They just need to ban fucking foreign investment on properties in Canada. And the laws that were changed affected only Vancouver, now suburbs like Richmond and Abbotsford are going to get screwed because the idiots didn't make it provincial or even a federal law. Also, it's easy for fucking Chinese people to buy properties since they aren't required to have collateral or a down payment. They can get the minimum rate for a mortgage which with our low interests rates probably only costs them a couple hundred bucks a month. With no one using the location, hydro is probably nothing as well. We just need to change the laws and make it federal, if you want to own property in Canada, you have to be a Canadian citizen and hold residence here for more than 6 months out of the year just like immigrants are required to by law. Citizenship can be revoked if you are using it to game the system, so why can't we do the same for housing?

And if these Chinese pricks aren't using the units in the condos, damn well break the locks and use the units to house all the homeless people from lower East Hastings and provide care for them so Vancouver can fix it's absurd drug problem.

[Grym]

London probably can use something like this too.

[Super Kami Dende]

Come on now, they need people to pay all these taxes to help support all the extra mouths you guys have been taking in.

[IIamaKing]

most people renting only make money by building equity not by getting actual profit month to month.

These house were not bought to turn a profit though, thats not the goal of the property. The goal is a shelter if some other place goes to shit, apparently. Renting would just be a way to escape this tax.

[Tyrianth]

Think you quoted the wrong person.

Not at all, you said a 1% tax isn't much of a deterrent. But that 1% eats into the value of their investment which will be taken into consideration when they invest. They would have 3 options:

1. Just eat the extra tax.
2. Rent out the building, avoid the tax, and hopefully earn enough rental income to offset wear and tear
3. Not invest at all.

3 is unlikely to happen, but the city is aiming for option 2. But even if this does nothing to sway more investors to option 2, it's still going to provide a decent revenue stream which can be used to help reduce housing prices.

Unless I misunderstood your post.

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These house were not bought to turn a profit though, thats not the goal of the property. The goal is a shelter if some other place goes to shit, apparently. Renting would just be a way to escape this tax.

That's completely false. These houses are to turn a profit. They are investment purchases.

[Tradewind]

That's completely false. These houses are to turn a profit. They are investment purchases.

Some are, some are also nothing more than a foreign shelter. They can purchase property in Canada, move their families to them, then send cash overseas and avoid taxes. Properties themselves work like a bank, convert 2 million dollars earned abroad into a 2 million dollar property in a foreign country. Then when it comes time to sell it, the resident does so and avoids all kinds of taxes, such as capital gains, as it was according to our own tax code their primary residence. There's way more to it than I am at all capable of understanding lol, but the jist of it is that these properties are massive savings to these foreign buyers.

The property taxes alone aren't enough of a deterrent to stop this practice. Only way for it to end is to make it less appealing in the long term to these foreign buyers .

[callipygoustp]

Not at all, you said a 1% tax isn't much of a deterrent. But that 1% eats into the value of their investment which will be taken into consideration when they invest. They would have 3 options:

1. Just eat the extra tax.
2. Rent out the building, avoid the tax, and hopefully earn enough rental income to offset wear and tear
3. Not invest at all.

3 is unlikely to happen, but the city is aiming for option 2. But even if this does nothing to sway more investors to option 2, it's still going to provide a decent revenue stream which can be used to help reduce housing prices.

Unless I misunderstood your post.

Nope, you understood my post. The above is a clearer post (to me) of what you were getting at. I would argue that, for some owners, as long as they are not losing money they will not care. Is housing in the area appreciating at at least 1% a year?

I suspect that as long as the owners aren't losing a significant chunk of money every year the owners will not sweat $10k and keep their property exactly like they have been thus far.

[Tyrianth]

Properties themselves work like a bank, convert 2 million dollars earned abroad into a 2 million dollar property in a foreign country. Then when it comes time to sell it, the resident does so and avoids all kinds of taxes, such as capital gains, as it was according to our own tax code their primary residence. There's way more to it than I am at all capable of understanding lol, but the jist of it is that these properties are massive savings to these foreign buyers.

That's what an investment property is. They spend $2 million cash to buy a foreign asset that almost guaranteed to raise in value. Sell it for more than they paid and avoid the taxes like you said.

I don't think this tax is meant to stop the practice all together. Simply encourage the investors to rent out the property. The either pay the tax (which is fine, more money for the city to spend on more housing developments) or they save the 1% tax and potentially earn money off the rental income.

[Tradewind]

Nope, you understood my post. The above is a clearer post (to me) of what you were getting at. I would argue that, for some owners, as long as they are not losing money they will not care. Is housing in the area appreciating at at least 1% a year?

I suspect that as long as the owners aren't losing a significant chunk of money every year the owners will not sweat $10k and keep their property exactly like they have been thus far.

They serve themselves too by all purchasing in similar areas, this drives up values based on the property assessment guidelines in this country. You pick 3 properties within a certain region, buy them 1 at a time, incrementally upping their values each time, often thru overbidding. When the next property for sale goes on the market and gets assessed, the values of recently purchased properties dictate so much of the new assessment values. Ergo, it all goes up eventually, and when they sell, they can just sell it to another foreign investor doing the exact same shit and the cycle continues.

Meanwhile locals are priced out completely.

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That's what an investment property is. They spend $2 million cash to buy a foreign asset that almost guaranteed to raise in value. Sell it for more than they paid and avoid the taxes like you said.

I don't think this tax is meant to stop the practice all together. Simply encourage the investors to rent out the property. The either pay the tax (which is fine, more money for the city to spend on more housing developments) or they save the 1% tax and potentially earn money off the rental income.

Sorry I must have thought you meant investment property as in a rental.

[Tyrianth]

Nope, you understood my post. The above is a clearer post (to me) of what you were getting at. I would argue that, for some owners, as long as they are not losing money they will not care. Is housing in the area appreciating at at least 1% a year?

I suspect that as long as the owners aren't losing a significant chunk of money every year the owners will not sweat $10k and keep their property exactly like they have been thus far.

I read in another post on reddit (not sure if it's right or not though) that the property is inflating at 100k a year. Which means the $10k would be 10% of the gains and that's not really inconsequential. That 10k is also variable, it's actually 1% of the value of the home which could be far more than $1 million and would increase every year.

But as I said, it's a win/win scenario with this legislation, either it opens up more rental options in the city or it's more tax revenue going to the city that isn't the burden of the citizens to pay.

All I have to say is props to the city for actually trying to curb the problem. Toronto is just as bad and I haven't heard of any plans to try and solve it.

[Feral Camel]

Hugh fan of this idea but I'm also not a fan of non residents owning property.

We're having a similar situation happen in Melbourne and Sydney with Chinese investors. The prices have gone far out of the reach of the average couple. Even with our property bubble about to burst (mainly due to an influx of apartments) this sounds like a great idea.

[IIamaKing]

That's completely false. These houses are to turn a profit. They are investment purchases.

Well, I did not do a shit load of reading, only saw the OP, which was taking about chinamen buying houses in Canada in case China went to shit.

Nothing in the OP at all really says all these houses are for investment purposes exclusively.

[Eats Compost]

This is a good law. Houses that are owned but not occupied by anyone tend to put all kinds of unnecessary pressures on rental & property prices, and there wouldn't be many people who could afford to keep a house empty like that without being able to afford the tax.

[callipygoustp]

I read in another post on reddit (not sure if it's right or not though) that the property is inflating at 100k a year. Which means the $10k would be 10% of the gains and that's not really inconsequential.

But as I said, it's a win/win scenario with this legislation, either it opens up more rental options in the city or it's more tax revenue going to the city that isn't the burden of the citizens to pay.

Expecting a 9% return on your money(assuming a $1m property)? I don't know about you, in my experience, that's a pretty god dam good return on my money.

Combine that with the various things that Tradewind brought up, that $10k tax is nothing.

[Tyrianth]

Expecting a 9% return on your money(assuming a $1m property)? I don't know about you, in my experience, that's a pretty god dam good return on my money.

Combine that with the various things that Tradewind brought up, that $10k tax is nothing.

Tradewind didn't really bring anything up to counter what I said, only confirmed that the purchases are for investment purposes, and a 10% loss in your investment is not inconsequential.

The 10k will also go up every year as it's based on the value of the home.

[Tradewind]

Well, I did not do a shit load of reading, only saw the OP, which was taking about chinamen buying houses in Canada in case China went to shit.

Nothing in the OP at all really says all these houses are for investment purposes exclusively.

Sit back and relax

This has been a problem for like a decade lol. It's only just reaching the tipping point where people have started to take notice within the last year or so.

[Eats Compost]

Hugh fan of this idea but I'm also not a fan of non residents owning property.

We're having a similar situation happen in Melbourne and Sydney with Chinese investors. The prices have gone far out of the reach of the average couple. Even with our property bubble about to burst (mainly due to an influx of apartments) this should like a great idea.

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.

And whenever the discussion about it DOES pop up, the interested parties always whip out the "but I'm a hardworking dad/mum without super, my property investments are my livelihood" thing, as if people are out to attack hard-working families. Makes me salty like nothing else - Bob the 1-in-10,000 zero-superannuation blue-collar bloke isn't a good argument for supporting property prices that's really going to freeze a whole generation out of home ownership.

[Tradewind]

Tradewind didn't really bring anything up to counter what I said, only confirmed that the purchases are for investment purposes, and a 10% loss in your investment is not inconsequential.

The 10k will also go up every year as it's based on the value of the home.

Wasn't trying to argue dude lol, I was just having a train of thought issue on "investment property" cuz that almost immediately signals "rental property" to me, but that's my problem. What I was trying to illustrate really is that the property taxes and anything else on top thus far, isn't yet enough of a deterrent considering they're still avoiding capital gains, foreign holdings taxes in China and using our residency laws to circumvent even more income taxes back in China. We are in effect their version of the Cayman Islands.

Even just by using their funds to buy property here in Canada they are saving hundreds of thousands of dollars in income taxes back in China.

[Tyrianth]

Wasn't trying to argue dude lol, I was just having a train of thought issue on "investment property" cuz that almost immediately signals "rental property" to me, but that's my problem. What I was trying to illustrate really is that the property taxes and anything else on top thus far, isn't yet enough of a deterrent considering they're still avoiding capital gains, foreign holdings taxes in China and using our residency laws to circumvent even more income taxes back in China. We are in effect their version of the Cayman Islands.

Even just by using their funds to buy property here in Canada they are saving hundreds of thousands of dollars in income taxes back in China.

No I know, I was commenting on callipygoustp's

Combine that with the various things that Tradewind brought up, that $10k tax is nothing.

[callipygoustp]

Tradewind didn't really bring anything up to counter what I said, only confirmed that the purchases are for investment purposes, and a 10% loss in your investment is not inconsequential.

The 10k will also go up every year as it's based on the value of the home.

Where do you see a 10% loss in what I we were talking about? You said property value is going up about $100k a year. On a $1million dollar home that's a 10% increase in value. Subtract the $10k tax that leaves you with $90k profit which is a 9% net gain.

The other items Tradewind brought up further emphasized why the $10k tax is not a deterrent. Investment property can mean many things to many people. Tradewind provided some extra examples.