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Canadian Government Closes Capital Gains Tax Loophole for Foreign Real Estate Buyers
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(Posted on Oct 4, 2016 at 07:32PM by Michelle Bogle)

On October 3, 2016, the federal governmentâ€™s Minister of Finance Bill Morneau announced that non-residents will no longer be able to avoid capital gains taxes on residential home sales by declaring them as their principal residences.
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This is just one initiative designed to cool the housing markets in cities, such as Vancouver and Toronto, and to also slow the flow of foreign wealth into the Canadian real estate market.
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In addition to this change, Morneau also announced new rules surrounding mortgage insurance eligibility criteria. Effective October 17, 2016, all new buyers requiring an insured mortgage will be subject to a mortgage rate stress test, which is intended to ensure that homeowners will be able to afford their mortgages even if interest rates go up.
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It was also announced that mortgages that are insured with portfolio insurance, as well as low-ratio insured mortgages, have to meet the same criteria as for high-ratio mortgages to qualify. Buyers will need to have a minimum credit score of 600 and mortgages will need to have a maximum amortization period of 25 years.
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Hereâ€™s Minister of Finance Bill Morneau with more on the new regulations for housing and mortgages:

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In a nutshell, all of these measures combined should help to reduce the risk of a housing market correction in Vancouver and Toronto, as well as a broader abatement in Canadian household spending stemming from elevated debts.
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New regulations, such as these, as well as the 15% foreign buyer tax, are also fuelling much speculation that investors will start shifting their focus to commercial assets, more specifically office, retail and industrial properties, as these assets are reaching all-time high numbers.
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Our skilled team of commercial investment advisorsÂ are keeping a close eye on B.C.â€™s provincial government and the real estate sector across the Lower Mainland. To learn more, please contact our Vancouver office to speak with a broker.

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Foreign Investment

Vancouver Rental Apartment Buildings Included in 15% Foreign Tax
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(Posted on Aug 4, 2016 at 07:37PM by Michelle Bogle)

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The B.C. Finance Ministry has confirmed that multi-family rental buildings within Metro Vancouver will be subject to the new 15% foreign buyer tax on residential purchases, even though this type of transaction is designated as a commercial real estate asset by the Real Estate Board of Greater Vancouver.Â

The tax, which came into effect on August 2, 2016, is specifically aimed at foreign investment in Vancouverâ€™s inflated residential real estate market, which, as we all know, has been surging to sky-high levels as of late. In fact, according to Finance Minster Mike de Jong, non-Canadians have spent more than $250 million a week on B.C. residential real estate from June 20 to July 14, with 86% of it concentrated in the Lower Mainland.

Sales volume on multi-family rental buildings in Metro Vancouver is also on the rise. It recently increased by a staggering 142% to $1.1 billion in the first six months of this year, compared to the same period in 2015. Even older style apartment buildings are selling for over asking and in competition with per-unit prices hovering at the $750,000 mark.Â

However, according to regional commercial real estate advisors, many of the buyers for these types of assets continue to be local investors or permanent residents. It does not appear that the 15% foreign buyer tax will dampen this already red-hot market.

Want to learn more? At Marcus & Millichap Vancouver, our team of advisors have a watchful eye on the foreign investment activity in our market. For more information or insight, please contact our office to speak with a broker.

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Foreign Investment

B.C. to Tax Foreign Buyers of Metro Vancouver Homes
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(Posted on Jul 27, 2016 at 01:00PM by Michelle Bogle)

Earlier this week, the B.C. government took a major step forward in an effort to reduce building pressure in Vancouver's overheated real estate market by introducing legislation that would add a 15% property transfer tax for foreign residential real estate buyers. This new tax is slated to take effect on August 2, 2016, and will only apply to home purchases in Metro Vancouver.

According to Provincial Finance Minister Mike de Jong, the new tax and legislation will address low vacancy rates in the city, as well as astronomical real estate prices in southern B.C.Â

It will also generate millions of dollars for the province. For example, if a foreign national purchases a $2 million dollar home, they can expect to pay an additional $300,000 in property transfer tax. That is well above the current 1-3% tax rate that all B.C. residents pay when purchasing a home.

Hereâ€™s B.C. Premier, Christy Clark, with more:

There is no word if a similar tax will be applied to foreign investments within Vancouverâ€™s commercial real estate market; however, our team of advisors is keeping a watchful eye on the news.

To learn more about real estate taxation in the province of B.C., please contact our office for details.

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