Foreign Buyer’s Tax: What is it?
The Foreign Buyer’s Tax is another option proposed by Canada’s Finance Minister Charles Sousa for curbing the aggressive price rise in the housing segment. The tax would be imposed on foreign nationals buying real estate in certain cities of Canada such as Toronto and Vancouver, where the average price of homes sold is skyrocketing.
The provincial Liberal government doubled the land transfer tax rebate for first-time home buyers to four thousand dollars and raised the same tax on homes selling for more than two million. A Foreign tax is one of the options sought by Sousa who also shows concern about people’s ability to buy homes and the level of appreciation in the short term. He is mulling over the long term effects of the tax on the Canadian housing market.
How will Edmonton’s housing market be affected?
Edmonton’s housing market won’t be free of the move’s effects. The housing market in Edmonton has already seen a drop in sales of single-family housing units by 1.7 percent, and another 2.2 percent drop is expected in 2017. It is also predicted that the sales of duplex and row houses will drop by another 1 percent. So does this mean that the tax would help the market to bounce back?
It cannot be clearly said that the imposition of Foreign Buyer’s Tax would have positive or negative effects on Edmonton’s housing market. But there is a lot of speculation amongst homebuyers in Edmonton where the tax received mixed opinions. Less than five percent of Edmonton’s housing market is dominated by foreigners who come to the city because of the lower cost of living and reasonable prices. The tax could curb a number of wealthy foreign investors who contribute significantly towards the housing market.
However, the tax will do little if the supply of houses is less, which has been the case in Canada in the last few years. It could also cause people to shift to rentals from individual housing units because the tax revenue would go to the government housing initiatives that focus on providing more rental housing. Although the tax may cool down the housing market by lowering prices, its effects on the vacancy rate are still unknown.