Markets & EconomyRegulations

What the 15-percent foreign buyer tax has done for Canadian (and American) real estate

Experts say that although decreasing demand can help slow price growth, addressing inventory shortages should also be part of the solution
  • In August, British Columbia implemented a 15-percent sales tax on foreign buyers of real estate; the move immediately dampened the high-end market, but demand for mid-tier and lower-tier homes remained high.
  • Now, Toronto is also implementing a 15-percent foreign buyer tax, and a petition is circulating in Seattle to do the same.

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In August 2016, anyone from a country other than Canada who was closing on a house in Vancouver (or elsewhere in British Columbia) was slapped with significant sticker shock when the government unveiled a 15-percent tax on real estate sales to foreign buyers. Like foreign investors in any area, many of those sales were for high-end properties, and according to Elton Ash, the regional director of Re/Max of Western Canada -- who's based in Vancouver -- "the effect was that the market died immediately. It just fell off the ends of the earth. We went from a multiple-offer situation to zero within a weekend." Now, Ontario has announced a similar measure, which will affect Toronto, a city said to have absorbed some of the Vancouver overflow since August (and the resulting skyrocketing prices, too). Will Toronto see similar effects to Vancouver's -- and what does this mean for real estate agents in the United States, where price growth is also frustrating buyers? Vancouver's tax...