Markets & EconomyRegulations

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

  • 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...