U.S. politician vows foreign buyer tit for tat
1% PROPERTY TAX
• A U.S. congressman has written to Canada’s ambassador in Washington warning that if Americans aren’t exempted from a proposed tax on foreign-owned real estate, he will fight to impose a similar tax on Canadians who buy property down south.
Last month’s federal budget proposes a national one per cent tax on the value of properties owned by foreigners who leave their properties vacant. The measure would come into force on Jan. 1, 2022 and mirror similar taxes in B.C. and Ontario designed to discourage speculators from buying houses and leaving them empty.
In her budget speech, Finance Minister Chrystia Freeland said the government doesn’t want Canadian houses to be a place for wealthy foreigners to park their cash.
“Houses should not be passive investment vehicles for offshore money. They should be homes for Canadian families,” she said.
Freeland said too many Canadians are struggling to get into the housing market and the government has to curb foreign speculators who intend to leave the homes unoccupied.
U.S. Representative Brian Higgins, a New York Democrat, wrote an open letter to Ambassador Kirsten Hillman on Monday saying the new tax needs to exempt Americans.
“The imposition of this proposal as contemplated could result in a significant financial burden on many of my middle-class constituents who own homes in Canada and weaken the bond between our two countries at a time when we should be looking for ways to strengthen it,” he wrote.
Higgins, who represents an area of western New York, said he understands the concerns that Canada has about foreign speculators, but he believes the policy could be casting too wide a net and hurt cross-border relations. He has also been pushing in recent weeks for a plan to reopen the Canada-u.s. border to non-essential travel.
“This policy as proposed may be overly broad resulting in a presumably unintended consequence outside the major metro areas, most certainly in the binational Niagara region, without categorical exemptions for American property owners,” he wrote.
The National Post was unable to reach Higgins on Thursday, but in the letter he details that if the tax targets Americans he will have no choice but to seek a similar levy on Canadians who own property down south.
“The United States of course enjoys the same rights within its own borders. Our country welcomes ‘snowbirds’ and other Canadian guests who own property here for both personal and investment purposes,” he said.
He said having the border closed for over a year has eroded the relationship between the two countries. and he doesn’t want a tax to do more damage.
“The imposition of this property tax without dispensation for American citizens would make efforts to repair these ties exponentially more difficult in my community in western New York.”
According to research from the U.S. National Association of Realtors, Canadians are the second-largest international buyers of U.S. real estate, behind only China, and Canadians only dropped from first place in recent years.
In 2020, just over 18,000 Canadians bought $9.5 billion worth of U.S. real estate, though those figures include commercial transactions as well as homes.
A 2019 report from Statistics Canada, found that while most foreign ownership in Ontario happens in Toronto, small cities near the U.S. border such as Kingston, Windsor and St. Catharines actually have higher percentages of foreign-owned homes.
A Department of Finance official said the government is looking to talk to many interested groups about the details of the tax.
“In the coming months, the government will launch consultations to see how it can best implement the proposed tax on the unproductive use of Canadian housing by non-resident, non-canadian owners,” reads the statement.
The statement said the consultations will look to issues like exemptions and how the tax might work in smaller resort or tourism communities.