National Post (National Edition)
MAY PUSH INVESTMENT INTO OTHER CANADIAN MARKETS.
preliminary data from B.C.’s ministry of finance and Moody’s own research “suggest it is not immaterial,” the ratings agency report said.
“Therefore, we believe this tax will likely slow down the steep house-price appreciation evidenced over the last decade in the Vancouver real estate market,” Moody’s said.
The additional land transfer tax, announced Monday and to go into effect Aug. 2, will be on top of existing property transfer taxes. It will apply to the full value of a residential real estate transaction where the purchaser is not a Canadian citizen or permanent resident.
Mercer said a foreign buyer will pay $168,000 in land transfer taxes on a $1-million home in Vancouver after Aug. 2, compared to the $18,000 cost for a Canadian citizen or permanent resident.
The report notes other jurisdictions including Hong Kong and Australia recently imposed similar taxes.
“We believe the absence of such a tax accelerated the pace of foreign investment in Vancouver and this levels the playing field with those jurisdictions,” the analysts wrote.
However, they cautioned that the new tax “may push investment into other Canadian markets, such as Toronto,” which would have the effect of “precipitating price increases” in those cities.