Some foreign buyers in Vancouver, who paid additional 15% property transfer taxes last year, might soon see a refund.
In response to the cooling real estate market, the provincial government of British Columbia, Canada, is considering a tax refund for some buyers in Metro Vancouver, as part of its effort to attract high-skilled foreign workers.
“Now that the additional tax has effectively cut back the excessive demand we were seeing last year, we are in a position to make the adjustments necessary to help ensure we can keep attracting highly skilled workers,” according to a news release by the Ministry of Finance on Wednesday.
The 15% property transfer tax relief is mainly designed for buyers who become permanent residents soon after purchasing a home and for those who live in the province on work permits.
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This follows an unexpected announcement from Premier Christy Clark over the weekend. During the Lunar New Year parade in Vancouver’s Chinatown last Sunday, Ms. Clark told the crowd that foreigners with work permits would be exempted from the province’s 15% foreign buyers’ tax.
Last August, British Columbia began imposing an additional 15% property transfer tax on foreign buyers in Vancouver to rein in soaring housing prices.
The benchmark price for all residential properties in Metro Vancouver reached C$897,600 (US$674,664) in December 2016, a 17.8% increase year-over-year, according to the Real Estate Board of Greater Vancouver.
However, the second half of last year saw signs of cooling. The composite benchmark price declined 2.2% over the last six months. Benchmark prices for Vancouver West and West Vancouver, two of the most expensive neighborhoods, ended the year at C$1,193,800 (US$897,297) and C$2,468,300 (US$1,855,250), respectively. The prices represented 14.3% and 13.2% increases, respectively, compared with 2015. But over the second half of 2016, home prices in these two neighborhoods declined 4.5% and 8.1%, respectively.
Additionally, according to the most recent government data up to November, the number of monthly property transactions involving foreign nationals declined to 4.1%, compared with 13.2% in July, one month prior to the 15% foreign buyers’ tax implementation.
Also, only eight luxury homes—those valued at C$3 million and above—were purchased by foreign nationals in November, dropping 91% from July, according to government data, a strong signal that demand from wealthy foreign investors was decreasing.
To make housing more affordable to locals, the city of Vancouver also imposed an empty home tax starting this year.
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