Foreign home buyers in the Canadian city of Vancouver will face an additional 15% property transfer tax beginning next week, the provincial government of British Columbia said Monday.
The new tax legislation comes amid growing concerns about skyrocketing prices in housing markets in Vancouver and Toronto, and the role that foreign buyers may be playing. Some real estate officials say Chinese buyers, in particular, have helped fuel price increases for high-end Vancouver homes.
The benchmark price for a detached Vancouver home increased 38.7% to nearly 1.6 million Canadian dollars ($1.2 million) in June from a year earlier, according to the Real Estate Board of Greater Vancouver. Based on homes of that value, a foreign buyer would have to pay an extra C$240,000 under the new tax law.
The new tax, which is to take effect on Aug. 2, will apply to foreign corporations and individuals buying residential properties in Vancouver. It is in addition to the province’s general property transfer tax, the B.C. government said in a statement on Monday. The general transfer tax equates to 1% on the first C$200,000 of a home’s value and 2% on the remaining value up to C$2 million.
The province will also allow the City of Vancouver to impose an annual vacancy tax on some residential properties that are left uninhabited.
Canada’s federal government said earlier this year that it would help fund an effort to collect data on the role of foreign buyers in the country’s housing markets, which officials have acknowledged isn’t well understood. Separately, Ottawa has taken steps in recent years to limit risky borrowing, including a move to increase the minimum down payment required for more expensive homes.
The province of British Columbia released preliminary data earlier this month suggesting that foreigners were involved in 5% of real-estate transactions in metro Vancouver, accounting for 6.5% of the overall value. The data was collected over a period of 19 days in June.