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B.C new property tax impacts on real estate market

Since August 2nd, 2016 foreigners who buy residential property in the Metro Vancouver area have to pay an additional 15% property transfer tax. It is  part of a B.C. government plan to cool down real estate market in Vancouver. Some experts believe that it will shift the foreign buyer to other parts of B.C like Victoria or even to Toronto or Ottawa. Toronto real estate market is the second hot market in Canada, the average home price for some areas like Richmond Hill is above 1 million dollar.

Since August 2nd, 2016 foreigners who buy residential property in the Metro Vancouver area have to pay an additional 15% property transfer tax. It is  part of a B.C. government plan to cool down real estate market in Vancouver.

Some experts believe that it will shift the foreign buyer to other parts of B.C like Victoria or even to Toronto or Ottawa. Toronto real estate market is the second hot market in Canada, the average home price for some areas like Richmond Hill is above 1 million dollar.

For many Chinese buyers Canada is an ideal place to have long term investment because Canada is seen as safe, stable, tolerant and sophisticated. Canada attracts buyers in with its good education system, stable and diverse economy, strong rule of law, recognized ownership of real estate, and lack of restrictions on foreign ownership. According to the latest statistics collected by the province, foreign nationals invested more than $1 billion in B.C. property between June 10 and July 14, more than 86 per cent of it in the Lower Mainland.

This new legislation may face very serious dispute as well. The North American Free Trade Agreement (NAFTA) and other Canadian trade agreements prohibit governments from imposing discriminatory policies that punish foreigners while exempting locals. The recent Canada-China Bilateral Investment Treaty would allow the government of China to challenge B.C.’s tax. The U.S. government could also challenge this extra tax based on NAFTA agreement which affects American investors.

Housing affordability is a big concern for BC government, residents of great Vancouver and other provinces. There is neither silver bullet to resolve the problem nor can be tackled by single action.

At the end of the day any noticeable impacts of new B.C tax on real estate market will only be visible over time.

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