Finance Minister Mike De Jong says the provincial government will likely take steps to eliminate loopholes that allow real estate investors to not pay property transfer taxes.
“People have to pay the taxes they owe, and we expect that, and when they are found not have done so, then they should pay a hefty penalty,” said De Jong today.
“Canadians, the vast majority of whom pay their taxes that they owe, want to make sure everyone else is doing the same.”
An ongoing series by The Globe and Mail has put renewed attention on how much of Vancouver’s burgeoning real estate market is fueled by foreign investment. Data, often made public in divorce cases, shows many examples of foreign buyers purchasing property in Vancouver, and registering it to the spouse or child.
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When the property is then sold, capital gains taxes can then be avoided because the seller uses the home as their primary residence.
“No tax in Canada, no tax in China, and we do nothing.”
Foreign buyers can also avoid a property transfer tax of up to $40,000 on some homes by placing it and several others in a company, where shares and bought and sold, but the name of the company stays the same.
But De Jong cautioned that any crackdown would be limited in scope.
“When you hear that someone is not accurately reporting their income, that’s illegal. That’s cheating,” he said.
“There are other transactions where parents are providing financing for the purchase of a home for a child. Well that happens all time. I’m not sure we want to create rules that preclude parents from providing financial assistance to a son or daughter or young family to assist them in purchasing a home that is issued in their name.”
The federal government has promised to spend $500,000 to collect data on foreign investment in Canada’s housing market.
Kurland says more action is needed.
“Ottawa can choose not to fix this. The cost is a half a billion dollars every five years to our treasury. Why?”
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