The Canadian province of British Columbia announced Monday it will impose a 15 per cent tax on foreigners who buy residential property in Vancouver, a city with a housing shortage and soaring real estate prices.
The tax — which will go into effect August 2 — is the latest in a series of measures designed to rein in the area’s overheated housing market, owed in part to an influx of foreign buyers.
“Owning a home should be accessible to middle-class families, and those who are in a position to rent should be able to find a suitable home,” British Columbia Premier Christy Clark said.
“These changes are about helping to make sure that British Columbians can continue to live, work and raise their families in our vibrant communities.”
The additional property transfer tax rate of 15 per cent will apply to both buyers who are foreign nationals and foreign-controlled corporations that register their residential purchases in Vancouver.
A home valued at $2 million ($1.2 million USD), for example, would be taxed an additional $300,000 ($227,000 USD). For mixed-use property, the tax would apply to the residential component.
According to data collected by the province, foreign nationals spent $1 billion on property in British Columbia between June 10 and July 14, 86 percent of it in the Vancouver area.
Prime Minister Justin Trudeau said in June that an influx of capital from Asia is partially to blame for soaring housing prices in Vancouver and Toronto.
A Simon Fraser University study noted that homes in Vancouver valued at more than $1 million rose from 19 percent of the market in 2006 to 91 percent this year.