It seems that all the political parties have different opinions regarding foreign buyers but they all agree on the need to impose some type of tax on them to keep our real estate affordable for the average Canadian. As you know by now Trudeau has won the election but that does not mean that this foreign tax will be implemented across the nation. It really seems it was just a talking point for them to have something to say.
One party wants a 1% levy on all foreign bought properties while others are asking for the 15% tax that is already in place in British Columbia. The politicians think that this tax will deter foreign buyers and keep housing affordable for the average Canadian. I think not. If someone is looking to park their money in real estate we are very attractive compared to most other markets around the world. We are safe, stable and our returns keep on coming.
September’s market was a whopping 15.5% increase from September of last year and that alone can pay back the foreign buyer tax so we will be attractive for a long time coming. A tax is not the answer to a rising market and a first time buyer incentive is not helping the market either, but these are the talking points of politicians to get Canadians interested in what they are spewing about. Neither of these talking points will help the market settle and why are we so worried about it anyways?
The real estate market is a reflection of how well the country is doing overall so why do we want to suppress it? Let the free market work itself out and it will settle if we stop trying to mess with it.
A foreign tax does not stop those looking to invest in our country and where exactly does that tax go anyways? Into lowering housing prices — nope. Into providing homes for the homeless — nope. Incentives for first time buyers — doubt it. A tax is a tax and it will not help the problem so why not embrace the fact that our real estate is strong on the world market and set it up to benefit all Canadians by using the tax to help the homeless. For every seven house bought one could be built for lower income families. Let the world buy vacation properties, investment properties, etc that will not drive up the price of properties but rather bolster the economy and then use this tax dollars to directly help first time buyers, homeless etc. One mansion 15% tax can probably house ten homeless people if done right.
Stop looking for ways to stop the market and instead look for ways to help the market help itself. Other countries profit off their vacation homes, vacation condos, investment properties etc. Why don’t we do the same and sell our properties instead of our natural resources to those around the world. Profit is a good thing! V
Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at email@example.com.