Case against the Foreign Buyers Taxes and Speculation Taxes

[Migrant_Coconut]

A reminder that Whistler has locals too. Might be a good idea to have "duty-free" zoning where foreign buyers are free to come and go as they please.

[Sheba]

Vancouver to hike empty homes tax to 5% in 2023

Owners of vacant residential properties in Vancouver will face a stiffer penalty next year.

Vancouver city council voted unanimously Wednesday to approve increasing the city’s Empty Homes Tax from three per cent to five per cent for the 2023 reference year.

The tax hike was proposed by Mayor Kennedy Stewart, who also spearheaded increasing the tax to three per cent last year.

The motion approved Wednesday will also see the city more than double the number of audits conducted under the program to 20,000 in 2023.

City staff were also directed to investigate what effects doubling it again to 10 per cent could have, and to assess changes to current exemptions to improve fairness so that people with legitimate reasons for vacancy are not penalized.

Staff were also tasked with probing how the tax could be used to crack down on short-term rental properties and how to counteract tax avoidance, as well as

The mayors office says preliminary data from the 2021 empty homes tax showed a decline in the number of vacant properties in the city and a doubling of revenue for affordable housing initiatives.

Vancouver’s empty homes tax first took effect in 2017 at one per cent of a home’s assessed value, and was tripled to three per cent in the 2021 tax year — a key campaign pledge in Stewart’s 2018 election campaign.

The city’s 2020 Empty Homes Tax Annual Report found the number of vacant properties in Vancouver fell by 26 per cent between 2017 and 2020.

[Sheba]

B.C. expands speculation and vacancy tax

B.C. is expanding its speculation and vacancy tax to target more communities in the province.

Starting January 2023, the tax will apply to properties in Squamish and Lions Bay. Duncan, North Cowichan, Lake Cowichan, and Ladysmith will also be added to the list.

...

Squamish Mayor Karen Elliott supports the move, saying housing costs are affecting everyone in her community.

“Our citizens want to see that we are addressing both the supply side, as well as advocating for demand-side policies that help make housing more attainable,” she said.

The tax currently only applies to communities in Metro Vancouver, Abbotsford, Mission, Chilliwack, Kelowna, West Kelowna, Nanaimo, Lantzville, and the Capital Regional District (which includes Victoria and Saanich).

Since the changes come into effect in January 2023, homeowners in the communities that are being added for the speculation tax will have to declare and claim an exemption for the first time in January 2024.

...

[whatnext]

BC's new home flipping tax comes into effect next week:

B.C.’s home-flipping tax comes into effect Jan. 1, 2025
By Charlie Carey
Posted December 27, 2024 6:52 am.

If you’ve owned a home in B.C. for less than two years and are now looking to sell it, your profit from the sale may be subject to a new provincial tax beginning Jan. 1.

The Residential Property (Short-Term Holding) Profit Tax Act — also referred to as the home-flipping tax, will take effect in B.C. at the turn of the New Year.

This means if you bought a property as early as May 2023, you may be subject to the fee...

....The government has explained that, under these proposed rules, homes sold within the first year of being purchased will face a tax rate of 20 per cent of the profit, declining to zero per cent over the second year.

Approximately seven per cent of homes sold in B.C. between 2020 and 2022 were resold within two years, the government noted in February....

https://vancouver.citynews.ca/2024/12/27/bc-home-flipping-tax-starts-jan-1-2025/

[VantageHD]

Only bureaucrats are dumb enough to think that a tax will lower the price of housing. Housing is so expensive in BC/Canada because of government, not from a lack of it. There needs to be a serious discussion about removing red tape and taxes/fees. Crap like this IS the problem.

[Spr0ckets]

Originally Posted by VantageHD

Only bureaucrats are dumb enough to think that a tax will lower the price of housing. Housing is so expensive in BC/Canada because of government, not from a lack of it. There needs to be a serious discussion about removing red tape and taxes/fees. Crap like this IS the problem.

That's not going to lower housing prices either.
Believing that is just a blinkered as believing govt. intervention is the solution.

Lack of regulation and oversight has never in history of industries or economics resulted in lower prices for consumers in any industries and in anything whatsoever.

[VantageHD]

You obviously know nothing about the industry if you think red tape and more government tax isn't causing the affordability crisis. Governments make almost 4 times more then what a builder makes on single-family homes. This is insane!

Lack of regulation and oversight has never in history of industries or economics resulted in lower prices for consumers in any industries and in anything whatsoever.

This quote is laughable. I guess our government should just tax us more eh? I mean it has no affect on consumers right?

[whatnext]

Originally Posted by VantageHD

You obviously know nothing about the industry if you think red tape and more government tax isn't causing the affordability crisis. Governments make almost 4 times more then what a builder makes on single-family homes. This is insane!

Lack of regulation and oversight has never in history of industries or economics resulted in lower prices for consumers in any industries and in anything whatsoever.

This quote is laughable. I guess our government should just tax us more eh? I mean it has no affect on consumers right?

There’s no question local government regulations and fees add to unaffordability. Funny the NDP have done nothing about that…

However that doesn’t mean house flipping doesn’t also contribute to unaffordability. Flippers exist solely exist to drive up housing costs. They take a house and often to do a minimum of cosmetic upgrades SOLELY to sell it for more than they paid for it. A family looking for an affordable house could have bought it and done those same upgrades on their own over the course of ownership.

[chowhou]

Originally Posted by VantageHD

Lack of regulation and oversight has never in history of industries or economics resulted in lower prices for consumers in any industries and in anything whatsoever.

This quote is laughable. I guess our government should just tax us more eh? I mean it has no affect on consumers right?

In the 1970s, North Korea and China looked extremely similar economically. Then in the 1980s one decided to deregulate. Anyone who thinks more regulation = more better is stuck in a world of ideology.

It's hard to get through to these types because in an extremely closed system of one development, reducing regulations probably isn't going to reduce the cost. You have to take into account the fact that if all developments are subject to fewer regulations more developments are likely to chase the profits resulting in supply chasing an equilibrium price.

I'm sure some genius is going to come out of the woodwork now and say something dumb about trickle down economics or labour supply.

Originally Posted by whatnext

There’s no question local government regulations and fees add to unaffordability. Funny the NDP have done nothing about that…

However that doesn’t mean house flipping doesn’t also contribute to unaffordability. Flippers exist solely exist to drive up housing costs. They take a house and often to do a minimum of cosmetic upgrades SOLELY to sell it for more than they paid for it. A family looking for an affordable house could have bought it and done those same upgrades on their own over the course of ownership.

Why is it okay for a family to do renovations on a house but not someone else? Shouldn't we ban all cosmetic upgrades to houses because they reduce affordability?

[whatnext]

Originally Posted by chowhou

...Why is it okay for a family to do renovations on a house but not someone else? Shouldn't we ban all cosmetic upgrades to houses because they reduce affordability?

Because the family is using it as housing. A flipper is using it only as a means of making a quick buck. As I said, if a flipper doesn't drive up the cost of the property they bought above and beyond the actual value of any reno's, they're doing it wrong.

[VantageHD]

Originally Posted by whatnext

There’s no question local government regulations and fees add to unaffordability. Funny the NDP have done nothing about that…

However that doesn’t mean house flipping doesn’t also contribute to unaffordability. Flippers exist solely exist to drive up housing costs. They take a house and often to do a minimum of cosmetic upgrades SOLELY to sell it for more than they paid for it. A family looking for an affordable house could have bought it and done those same upgrades on their own over the course of ownership.

This so called 'problem' represents 3% of the market, and it's debatable that the number for actual flippers is even lower. It's like trying to put out an inferno with a garden hose. This is what the government does, distracts with useless policies that sound good, but do nothing to fix the problem. The government will point blame in every direction except inward, and this problem is never going away till it does. I'm honestly blown away by the mentality to demonize small business owners over a bloated government. There's a reason housing continues to cost more, and the problem is never going away as long as we keep living in la-la-land and acting like another tax will fix the problem.

I would bet a lot of money that this tax does absolutely nothing to change the affordability of single-family homes in this province. Curious if you actually believe this tax will do that?

[whatnext]

Originally Posted by VantageHD

This so called 'problem' represents 3% of the market, and it's debatable that the number for actual flippers is even lower. It's like trying to put out an inferno with a garden hose. This is what the government does, distracts with useless policies that sound good, but do nothing to fix the problem. The government will point blame in every direction except inward, and this problem is never going away till it does. I'm honestly blown away by the mentality to demonize small business owners over a bloated government. There's a reason housing continues to cost more, and the problem is never going away as long as we keep living in la-la-land and acting like another tax will fix the problem.

I would bet a lot of money that this tax does absolutely nothing to change the affordability of single-family homes in this province. Curious if you actually believe this tax will do that?

I agree, it is just one very small section of the affordability problem. It probably won't have as much effect as the other tax in the title of the thread. You can see how BC housing prices began to stabilize after the intro of the provincial FBT (only to be driven up again by ridiculously low Covid interest rates).

It would be nice if senior levels of government actually developed well-thought out, overarching housing policy rather than trotting out little bits of electioneering promises to deal with such a critical issue, but here we are.

[KincLosddy]

Originally Posted by VantageHD

This so called 'problem' represents 3% of the market, and it's debatable that the number for actual flippers is even lower. It's like trying to put out an inferno with a garden hose. This is what the government does, distracts with useless policies that sound good, but do nothing to fix the problem. The government will point blame in every direction except inward, and this problem is never going away till it does. I'm honestly blown away by the mentality to demonize small business owners over a bloated government. There's a reason housing continues to cost more, and the problem is never going away as long as we keep living in la-la-land and acting like another tax will fix the problem.

I would bet a lot of money that this tax does absolutely nothing to change the affordability of single-family homes in this province. Curious if you actually believe this tax will do that?

People blame the government for too much regulation. It is a supposed distortion of the free market. Unfortunately in low-or-no regulation capitalist free markets you get monopolies and manipulation by businesses and actors who carry a larger portion of the funds until the entire market becomes diseased and deformed by the wealthiest while the rest fall behind. Our housing market is a prime example of this. This is why governments around the world maintain regulations on economies to ensure that the health of the market is not endangered by bubbles or toxic distortion by bad-faith actors.

Do you or anyone else actually believe that companies building housing will gladly build fast enough and strategically enough to lower general housing prices and cut their profit margins? On what planet were you born? Which for-profit sector competes to intentionally devalue their commodified product? Not one development company in this country will do anything by choice that doesn’t increase their profits. Without government intervention this cycle will repeat until either all the property in this country is corporate controlled or the entire system implodes, taking our economy and our jobs with it.

The point of the speculation tax isn’t to fix the entire housing crisis but to cover one more little problem. This is a crisis of many causes and it will take many different smaller solutions to start to even things out.

Vienna had a housing problem. Vienna invested in government built social housing. That was regulation and that was intervention and that was a prime example of a housing market that needed intervention to bring back affordability.

If you put the weight of responsibility to make housing affordable on private companies THAT MAKE THEIR PROFITS FROM EXPENSIVE HOUSING, you will never solve the housing crisis. You will watch it worsen to either become completely monopolized on all sides or have it collapse entirely. Thinking otherwise is absolute delusion, plain and simple.

[chowhou]

Originally Posted by KincLosddy

Which for-profit sector competes to intentionally devalue their commodified product?

I don't really want to respond to all of that, it's enough to zero in on this sentence.

Every single for-profit sector competes to devalue their commodified product. That's literally the fundamental principal of supply and demand. However, the housing market in Vancouver is intentionally supply managed which distorts that, making people like you think that developers just always work to drive the price up.



This should not be controversial.

[Changing City]

Originally Posted by chowhou

I don't really want to respond to all of that, it's enough to zero in on this sentence.

Every single for-profit sector competes to devalue their commodified product. That's literally the fundamental principal of supply and demand. However, the housing market in Vancouver is intentionally supply managed which distorts that, making people like you think that developers just always work to drive the price up.



This should not be controversial.

The Minneapolis housing market is also 'supply managed'. Projects with 20 or more units are required to provide a proportion below market rent units, which isn't true in Vancouver, where only some rental projects have below market units, in exchange for greater density. The City Council there have also put $320m into affordable housing since 2016.

The more obvious reason that rents in Minneapolis fell between 2017 and 2023, is that developers continued to add new units into the market, but the population of the city was almost exactly the same in 2023 as in 2017, at around 425,000. That's very different in Vancouver.

The data for home prices in Minneapolis shows a very different trajectory from the data you showed for rents.

[Spr0ckets]

Originally Posted by VantageHD

You obviously know nothing about the industry if you think red tape and more government tax isn't causing the affordability crisis. Governments make almost 4 times more then what a builder makes on single-family homes. This is insane!

Lack of regulation and oversight has never in history of industries or economics resulted in lower prices for consumers in any industries and in anything whatsoever.

This quote is laughable. I guess our government should just tax us more eh? I mean it has no affect on consumers right?

I'm glad you got a laugh out of it seeing as you couldn't respond to the actual point I made, and then decided to build up a strawman of something I never said (I never at any point intimated that,... "..... government should just tax us more". That's YOUR question with YOUR words, buddy - NOT mine, so feel free to respond to it as you wish and then come to with whatever nonsensical conclusion you feel like coming to from a question your formed out of a (wrong) conclusion you inferred from what I was saying - without actually addressing when I actually said.), so you could then get a laugh at how ridiculous it is a conclusion you arrived at.

I too would laugh, if my strawman was just as impressive.

I stand by my original point - especially seeing as you neither responded to it nor refuted it.

You don't know what industry I am in nor what I know about it or this industry (of if they're one in the same).
The affordability crisis isn't being caused by (JUST) "red tape", government regulations, or even taxes.

And it's blinkered opinions and views like this and from people who think like this that leads to people ignoring and neglecting the actual causes of the affordability crisis to chase some red herring things they personally care about but which won't solve a single problem.

As a case in point, you're advocating for the removal or lowering of taxes.
One of the acknowledged causes.... or symptoms, of certainly the housing crisis that we're experiencing now is that the cities don't seem to have the infrastructure capacity and housing to support the population increases we have, and in order to make some level of a dent into that we, as a start, have to improve and enhance the infrastructure in our cities and communities to be able to handle more people but also build more housing.

Where do people like you think the money to improve this sort of infrastructure comes from, and what do you think happens to it (the infrastructure) when you get rid of it?

Who's going to pay for all those infrastructure improvements necessary to improve the housing situation?
The private sector and the (profit-driven) development industry? With less government regulation and oversight?
Really?

Who's naive now?

[chowhou]

Originally Posted by Changing City

The Minneapolis housing market is also 'supply managed'. Projects with 20 or more units are required to provide a proportion below market rent units, which isn't true in Vancouver, where only some rental projects have below market units, in exchange for greater density. The City Council there have also put $320m into affordable housing since 2016.

The more obvious reason that rents in Minneapolis fell between 2017 and 2023, is that developers continued to add new units into the market, but the population of the city was almost exactly the same in 2023 as in 2017, at around 425,000. That's very different in Vancouver.

The data for home prices in Minneapolis shows a very different trajectory from the data you showed for rents.

It seems you're ready to accept supply and demand now, huh? Welcome to the world outside Marxian economics. Here's a little macroeconomics 102 lesson for ya. Supply and demand finding an equilibrium price doesn't factor in first derivatives. If supply increases faster than demand, prices will reflect that regardless of whether demand is stagnant or increasing. If demand doesn't increase, supply doesn't have to increase to maintain the same price, but if demand does increase, supply only has to maintain that trajectory. However, if supply increases faster than demand does; That will reflect a price drop. I'll admit, this isn't the simplest stuff since we wait until first year university to teach it.

On the other hand it's so, so very interesting that you decide to cite non-inflation adjusted numbers to attempt to counter my inflation adjusted numbers. Very interesting indeed. I advise you to do more research next time. It's not very smart to say that housing prices increased when inflation was 8%. I urge you to look at inflation adjusted housing costs in Minneapolis, especially around the inflection point of Minneapolis beginning its YIMBY policies.

Originally Posted by Spr0ckets

As a case in point, you're advocating for the removal or lowering of taxes.
One of the acknowledged causes.... or symptoms, of certainly the housing crisis that we're experiencing now is that the cities don't seem to have the infrastructure capacity and housing to support the population increases we have, and in order to make some level of a dent into that we, as a start, have to improve and enhance the infrastructure in our cities and communities to be able to handle more people but also build more housing.

What infrastructure exactly do you think is missing from the West Side with its empty schools, incoming Skytrain line, planned sewage treatment plant, beaches and parks out the asshole, new St. Paul's taking pressure off VGH, and site C coming online? Where do we need to catch up, exactly? Is the cell coverage not good enough for you?

God damn I feel like every single time a crappy NIMBY talking point gets shot down two new ones emerge. Seems the new big one is "There's not enough infrastructure!! We better tax the living hell out of new homeowners to support the infrastructure needs!! (Oops did we discourage development, silly me!)"

How strange that we didn't use to pay for schools and highways and parks and community centres with development fees but all of a sudden it's not fair...

[whatnext]

Some numbers from Howard Chai at Storeys:

BC Gov Expects 4,000 Properties To Be Subject To New Flipping Tax Now In Effect
​The Government of British Columbia's new home flipping tax came into effect on January 1, 2025.
Howard Chai
January 02, 2025

New year, new tax? As of Wednesday, January 1, the Government of British Columbia's new home flipping tax is now in effect, which the Province says is "intended to discourage short-term holding of property for profit."

The home flipping tax rate begins at 20% of the "net taxable income" earned from a property sold within 365 days of acquiring it and then decreases on a pro rata basis until 730 days, after which the tax no longer applies....

....The new flipping tax also comes into effect a week after a high-profile flipping case was brought to light when the Canada Revenue Agency announced that it was levying a fine of $2,153,394 on a Richmond man named Balkar Bhullar for flipping 14 properties between 2011 and 2014 and evading taxes by not reporting the income.

https://storeys.com/bc-home-flipping-tax-2025/

[djmk]

4000 properties subject to tax does not mean 4000 properties will be taxed. If you truly need to sell for life reasons, you can escape this tax even if you are subject to it.

In my experience, home flippers which do a quick reno for a quick sale stopped a long time ago. There is little money to be made with huge risks now.

However, there are massive amounts of people in this city that own presales and want to dump them. And CRA has been hanging around land titles office catching these people for a long time now.

nonetheless, 2 years is not a long time. If you are close to the cut off period, you can delay the closing dates.

[KincLosddy]

Originally Posted by chowhou

Every single for-profit sector competes to devalue their commodified product. That's literally the fundamental principal of supply and demand..

I don’t know where you got your ‘fundamental principal’ definition of supply and demand but that ain’t it. This is demonstrably provable with a basic search and not something that is solely the arena of the post-secondary educated.
Supply and demand is the amount of product or service potentially or actually supplied to a market versus the demand and any adjustment related to meet it. Demand dictates supply dictates demand.

For-profit business isn’t hamming about in supply and demand environments devaluing their products or services unless under specific circumstances. Supply and demand dictates that you raise or lower the value of your commodities or services to match the carrying capacity of the end consumer (that is the capacity and/or willingness of the consumer to buy said product or service) If a product or service is being offered in a rarified way it is not unusual for businesses to lower production and/or increase cost to maintain profits or increase demand with the same goal.

The only times where companies devalue their products or services is in a competitive environment or in the spirit of increasing sales by decreasing prices.

Originally Posted by chowhou

However, the housing market in Vancouver is intentionally supply managed which distorts that, making people like you think that developers just always work to drive the price up.

Of course the housing market is supply managed. Every market is, in some way, supply managed. Housing across the world is often hampered in some way by regulatory process. Some of these regulations are in good faith, others in bad. Regulations can distort progress, yes, but in many circumstances they can also influence progress in ways that improve, not worsen distortions like the ones driving our housing crisis.

In an ideal world, yes, we could trust businesses to act in some form of altruism where they don’t take advantage of free markets to make as much money as possible and slowly rig the system to their eternal benefit but we apparently do not live in the world you think we do. If we could trust the companies to build homes and get us out of this market if they had free reign then in the same vain we wouldn’t be facing a colluded gasoline market, a colluded and expensive national cartel of telecom companies, or an ever-rising national grocery price issue (which includes huge profits for all of these companies.)

One thing I find interesting is your attitude about our government in BC pointing blame and doing nothing to fix our problems while also showing how Minneapolis has improved its housing situation. How did Minneapolis do this? One big thing they did was the same style upzoning blanket regulations that our government in BC has recently enacted across the province. All you have done is prove the point that government changes in regulation can and will lead to improvements of these issues and that the regulations our current government is enforcing can and do work.

The necessities of living, when commodfied, can be warped by monopolies and bad faith actors. Pretending otherwise hurts us all. Government regulation can disrupt the forces that create these issues if done wisely of course. All blaming the government for everything and demanding deregulation does is make the rich richer, the poor poorer, and the system of economics and finance more rigged in the favour of those with at the expense of those without.

Stating anything that isn't your view of economics as "Marxian" and big government and making snide comments about basic economics and education... it's not really conducive to a discussion in good faith. We can all have an adult conversation if we act like adults.