Five things: Comparing Ontario's and B.C.'s 15 per cent non-resident real estate tax
Ontario on Thursday moved to dampen red-hot home prices that have gone up more than 30 per cent in the Toronto area with a 15 per cent "non-resident speculation tax."
Chatter is focused on what Toronto may have drawn on from the way B.C. implemented its 15 per cent "additional property transfer tax" in Metro Vancouver for foreign buyers last July, plus a few things that Vancouver might take from Toronto's plan some nine months later.
Here are five points to ponder:
1. What kind of impact will Ontario's actions have as there are signs that what had been a slumped market in post-tax Vancouver is starting to show modest signs of returning again. "I would say a lot of people want to write it off, but it has been slowing demand and changing expectations. That's good," says Joshua Gordon, assistant professor at Simon Fraser University, who has been outspoken about the impact of foreign money on real estate markets in Vancouver and Toronto. In other cities, similar taxes or duties often bring temporary relief to an overheated market.
2. The tax in Ontario, part of a 16-point plan including other measures, covers a much wider geographic area than what B.C. put in place. The Ontario tax will be applied on all property purchased in the southern region known Greater Golden Horseshoe, which starts around Niagara Falls and includes Hamilton, Toronto and Oshawa. In B.C., some markets outside, but relatively close to Metro Vancouver where the tax was applied, saw a surge in sales activity and prices as buyers poured interest and money elsewhere — but nearby.
3. In Ontario, there is a wider set of exemptions and its 15 per cent tax will not apply to refugees and immigrant nominees. Also, a rebate will be available for those who get citizenship within four years of buying a home. International students enrolled full-time for at least two years and those who have worked in Ontario from the date of buying their homes will also get rebates. B.C. later changed some of its exemptions to include international students with work permits, but its tax initially drew fire for punishing this group and soon-to-be new immigrants.
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