Offshore real estate speculators need to be taxed more say Canadians, according to in-house research by the Privy Council Office..Blacklock’s Reporter says the first tax of its kind comes into effect January 1..“Reaction to the idea of a foreign buyers’ tax was positive and some felt the tax should be extended,” said a report..Findings were based on confidential focus groups nationwide..Non-resident foreigners will be taxed 1% annually on equity of “under-used housing” defined as residential property left vacant at least six months of the year..Scofflaws face $5,000 fines and a 5% surcharge. The levy is worth $175 million a year, according to the Parliamentary Budget Office..Canadians questioned by federal pollsters blamed high housing prices in part on “an influx of foreign investors who are purchasing homes and effectively taking them off the market and leaving them unoccupied,” said the report..“Participants commented this had the effect of tightening supply within the Canadian real estate market and increasing housing prices.”.More foreign-owned property should be taxed, said the report..“The consensus was that both foreign-owned summer homes and properties purchased primarily for use in Airbnb should be subject to the foreign buyers’ tax,” wrote researchers with the Strategic Counsel..The polling firm conducted focus groups as part of a $1.6 million series of surveys for the Privy Council..“In general, participants reacted favourably to this plan, believing it would increase availability and affordability by reducing the number of non-residents purchasing homes in Canada,” said the report..“An additional benefit was seen to be an improvement in the rental market as well, e.g. lower rents.”.Prime Minister Justin Trudeau last August 24 said a re-elected Liberal cabinet would legislate an outright ban on new foreign purchases of Canadian real estate for at least two years..“We’ll crackdown on the predatory speculators that stack the deck against you,” said Trudeau..“No more blind bidding. No more foreign wealth being parked in homes that people should be living in..“The deck seems stacked against people and has for an awfully long time. We are going to use the tools we need to prevent predatory speculative practices.”.The Liberal Party in a document, A Home For Everyone, said it would “ban new foreign ownership of Canadian houses for the next two years to ensure Canadians have access to purchasing homes.”.An unspecified “flipping tax” would also be levied on property title changes within 12 months of an original purchase..No legislation has been introduced to date..Cabinet last June 9 opposed a Conservative motion advocating a similar “temporary freeze on home purchases by non-resident foreign buyers who are squeezing Canadians out of the housing market.”
