Yesterday, City of Vancouver major Gregor Robertson announced that the city wants to implement a new business tax on vacant homes. Here is a direct video link. He added that the city is giving the province up until Aug. 1 to provide a written response or council will take the next steps towards implementing the tax.
This is a small step in the right direction, and way overdue in the money laundering, tax avoiding, speculative tinder that has become the property market in Vancouver and, to a lesser but still significant degree, many other Canadian markets.
Some other obvious steps needed to re-assert healthy and sustainable market forces as well as collect much needed tax revenues are outlined by BC realty lawyer Kenneth Pazder in Cooling off the BC real estate market from the top down. Read the whole article for Pazder’s first hand account of what he is witnessing in transactions today. The evidence is rampant and clear to all who are not blinded by their own conflicts of interest. And here are Pazder’s two top recommendations for immediate response to the most obvious and egregious practices destroying value for Canadian home buyers. We cannot afford this madness to continue:
1. Make foreign buyers confirm the source of their funds.
Right now any foreign buyers can wire any amount of money into their lawyers’ or notaries’ trust accounts from any bank in the world to buy a property in BC with no questions asked.
Realtors and mortgage brokers are required to fill in a bunch of useless FINTRAC forms and obtain client identification documents, but NO ONE is asking where the money came from in the first place!…
2. Increase taxes significantly on those who purchase property in Canada but do not live here or pay taxes here.
It is commonplace for foreigner investors to park some of their money in Canada (as they do not trust their own governments). They typically put the title of a property into the names of their wives or children (it is always interesting to look at the occupation listed on the titles to high end real estate like “worker,” “student” or “home maker”). The wife and kids live in the property as their principal residence and pay no taxes as they have no income.
The father, who is a non-resident, continues to make money in a foreign state at a much lower tax rate. Canada taxes income on the basis of RESIDENCY, so the father pays NO CANADIAN TAX. The family enjoys the benefits of the Canadian health care system, school system etc. while paying nothing other than property taxes.
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