British Columbia Moves To Introduce new “Speculation Tax” – Will Ontario Follow?
There is big real estate news out of British Columbia. The long-term heat of the Greater Vancouver real estate has made British Columbia a trend setter in broad government measures. The previous British Columbia Provincial Government introduced Canada’s first foreign buyer tax in the run up to the 2017 Provincial Election. Long standing concerns about the affordability and supply of Vancouver real estate and the impact of predominantly East Asian foreign buyers on the market spurred the then Liberal government to act. Tembo has extensively outlined and documented the foreign buyer tax, set at 15%, and applying only to the Greater Vancouver Area.
A new “speculation tax” is in
The 2017 Provincial saw the incumbent Liberal government narrowly defeated by a resurgent NDP backed by a strong Green Party in a coalition government. The new NDP government has just introduced an annual tax on investors who own empty properties and pay no income taxes in the province. The “speculation tax” of 0.5% of a property’s assessed value in 2018 and will rise to 2% in subsequent years. This will result in a $40,000.00 annual tax on $2 million-dollar homes, as an example. Experts believe the tax will have a minimum impact on speculation and as Tembo has explained, foreign buyers will find and utilize numerous loopholes to evade foreign buyer taxes and this speculation tax. The BC government has made housing affordability and the construction of affordable housing a major priority.
Ontario may follow suit
Ontario quickly emulated the British Columbia foreign buyer tax and has already implemented it. Housing is a major political and social issue in Ontario and it is highly likely that the Liberal Government of Kathleen Wynne will introduce a “speculation tax” on empty high value foreign owned homes as well. The political value of appearing decisive and strong in dealing with housing will be appreciated by a government that will have a tough fight ahead of it to win a fifth consecutive term after 15 years in power. Tembo believes that there is a strong possibility of a speculation tax in Ontario. The impact of the tax on affordability, prices, and supply will remain to be seen.