While the BC Liberals are partially watering down their controversial 15 per cent tax on foreign buyers of Metro Vancouver, the BC NDP – if elected in May – would take a much tougher line by applying a retroactive tax to all existing overseas owners of local real estate, Western Investor editor Frank O’Brien told the Real Estate Therapist radio show March 25.
“If you think that foreign buyers got a rough ride under the Liberals, just brace yourself for what’s coming down the pike if the BC NDP win the election on May 9,” O’Brien said on the latest edition of the Roundhouse Radio show (link to interview here, clip starts 15 minutes).
“I’ve spoken to NDP housing critic David Eby, I’ve gone through their materials and I have to say it could get rough out there, not only for foreign investors but for all those involved with foreign investment – that is, selling them real estate.”
“The NDP have a proposed plank called the Housing Affordability Fund and Speculator Fee Act. The idea is a little scary,” said O’Brien. “Mr. Eby told me, ‘The problem with the foreign buyer tax is that it doesn’t affect anyone who got into the market before the tax was introduced.’”
O’Brien added, “The idea of a retroactive tax is creepy – the fact that you can’t protect yourself against it. The government could go back years... Someone who bought Metro Vancouver properties as an investment years ago could be subject to a retroactive tax [of two per cent of the purchase price].”
He said the NDP would also close what Eby termed two “loopholes” in the current foreign-buyer regulations: the use of trusts and other corporate vehicles to disguise home ownership and the current exemption on transactions of pre-sale condo assignments, “which right now are not subject to the assignment rules or foreign buyer tax, as it is only triggered on the transfer of real property... which only applies when the building is finished, to the last person who is holding the property.”
“I talked to Christine Duhaime of Duhaime Law in Vancouver, who is considered an expert on Asian real estate… she says that a retroactive tax has never been brought in for any length of time because they are so unpopular. But that doesn't mean that it won't be. And I think it would send a very strong message to the international community that maybe they should not be investing in BC.”
O’Brien added that Duhaime told him the Liberals’ current foreign buyer tax also does not apply to a foreign national who sets up a company in BC, as long as no more than 25 per cent of the shares are owned offshore, nor does it apply to a trust.
