PROUDLY CANADIAN
Ontario following BC lead to tax foreign homebuyers
For foreign real estate buyers a 15-percent non-residential speculation tax could affect their real estate investment decisions in Toronto, Ontario whereas new Canadian home buyers could view it as an opportunity. For new home buyers wishing to enter the market or existing homeowners looking to upgrade they could see it as a potential buyer’s opening. At present, despite the factor of competitive mortgage rates of interest, they are nullified by the high and in many cases, prohibitive cost of housing.
The influx of foreign money has helped create a situation which has left many Canadians with extended families, and first-time buyers, literally out in the cold! The negotiated interest rates on their mortgages are seen to be worthless when the value they are offered by over-priced homes is considered. This is added to by what they see as high taxation. Accordingly, the tax placed on foreign buyers must be viewed by them as a potential opening of buying opportunity.
Foreign taxation and potential repercussions
Reportedly, the new tax would be focused not on those foreign nationals seeking homes for their families, but on opportunists seeking a quick and easy profit by way of safe Canadian real estate! However, following implementation by British Columbia of the new foreign buyer’s property transfer tax, it is reported that realtors have experienced the collapse of some real estate transactions. This raises the question as whether it’s now an appropriate time for Canadian buyers to take advantage of negotiated interest rates and a new mortgage.
It is confirmed that Canadians and permanent residents of the country are not subject to the extra fees, with the region of British Columbia outside Vancouver also exempt.
The purpose of this taxation is related to affordability, and assisting the Canadian population in either buying or renting a home. However, experts have expressed some skepticism regarding the potential impact of the tax on rocketing property prices! In this respect, it has emerged that the concerned levels of government reportedly do not possess adequate property market-related data.
There is natural repercussion from any taxation, as well as winners and losers and in this instance; an arguable winner is the city of Toronto. This is supported by many foreign buyers, especially those from Asia, who could now transfer their investment objectives and their money to Toronto, which is regarded as a profitable market with stability. There is a proviso to this projection, namely that the larger investors will take advantage of favourable interest rates for mortgages and satisfy their ambitions of buying in Vancouver. However, because of financial limitations, the middle-class buyers might redirect their attention.
Offering lower real estate prices and still with the advantage of competitive mortgage rates, home-buying opportunities in Toronto are the future for many home-seeking Canadians!