Soon foreign nationals working and paying taxes in British Columbia will be exempt from the province’s 15-per-cent foreign home buyer’s tax. Announced by Premier Christy Clark earlier this week, the finer details of the exemption are currently being finalized and should be implemented in the very near future.
The foreign home buyer’s tax, introduced last year, applies to foreign nationals, corporations, and trusts buying property in Metro Vancouver. It aims to lessen the strain on rental supply and housing affordability often attributed to foreign investment.
The effect of the tax was immediate, reducing the percentage of property sales in the region involving foreign nationals from double digits to near zero. In recent months, those numbers have made slight increases but remain well below pre-tax levels.
Since the tax was introduced, business leaders have been warning its broad scope extended far beyond the real estate market, making it more difficult to attract skilled professionals. By tacking 15-per-cent onto the purchase price of a home (that’s an extra $300,000 on a $2 million home), the tax made Metro Vancouver less attractive not just for foreign investors, but also to foreign workers in all areas of the economy.
Among economists, there has been widespread approval for similar exemption proposals.
If tied to work permits as expected, economists say the exemption should help address this unintended consequence of the foreign home buyer’s tax and encourage more skilled professionals to choose Metro Vancouver.