In the short term at least, it appears that the B.C. government’s new 15-per-cent tax on foreign home buyers is dampening the market in a hurry. Real estate deals are reportedly collapsing due to not being able to meet the deadline to be exempted from the new levy.
Thousands of deals – up to 4,000 by some estimates – are in “no-man’s-land” because they were not closed by Aug. 2, the date the new tax came into effect.
Local realtors claim foreign buyers are backing out of the deals all over the Lower Mainland and in the Fraser Valley because they are unwilling to fork out an extra 15 per cent as the purchase cost.
“It is unfortunate that, in the wake of the most complex and volatile market we’ve seen, our government has chosen a path that, at this time, will bring significant distress to consumers both local and abroad rather than nuanced solutions,” Charles Wiebe, president of the Fraser Valley Real Estate Board, told local media.
Last week, thousands of Metro Vancouver buyers and sellers rushed to meet the midnight deadline to be exempt from the real estate tax.
Many reacted in “disbelief” at the sudden change in price on pre-struck deals. “It’s so fast. Just everyone is shocked,” said Jin Luo, a realtor with Remax.
Observers say there will be challenges to the new tax, seen by many as unfair.
Some say it violates the North American Free Trade Agreement (NAFTA) which prohibits governments from imposing policies that punish foreigners. Top lawyers say the tax is ripe for a constitutional challenge.
