UBC Professor Tom Davidoff says implementation of the 15 percent tax is a significant and surprising move by the B.C. government.
The big question is, will it work?
Possibly, but Davidoff says there are loopholes to get foreign capital into Vancouver’s real estate market.
Such as buying a home through a family member who is a permanent resident or citizen.
“….So I do think we’re going to see fewer buyers who are so-called “foreign” buyers…The question is whether that foreign money is going to find its way into the Vancouver housing market anyway, through related parties.”
He hopes the City of Vancouver sets up its vacancy tax properly so as to compliment this move at the provincial level.
LISTEN to the full interview with UBC Professor Tom Davidoff:
Pushing buyers to other markets
Davidoff also says the move could push foreign money into other desirable housing markets like Victoria.
“I think throwing up a hurdle to money coming into Vancouver is likely to push some of that money elsewhere like Victoria, which is not subject to the tax, the United States, every place became more attractive because you are putting up a bit of a hurdle to foreign money.”
He adds the tax doesn’t apply to investor immigrants, secondary homes, and locals buying investment properties, but he thinks it’s a meaningful step.
Foreign buyer approach vs. income tax based approach
“The goal here is ‘let’s make Vancouver affordable to people who live and work here.”
Davidoff says the way to identify whether or not people live and work here is determining whether or not they’ve paid income tax.
He says the province has gone with nationality, which doesn’t address Canadian citizens or investor immigrants, or astronaut families who don’t necessarily work here.
In his view measuring income tax is a better measure than nationality, with less loopholes.