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Just one day after the BC government announced the 15% property transfer tax, this happened:
Top Vancouver realtor rapped for trying to avoid new 15% property transfer tax
A well-known realtor sent out a mass email to his clients detailing exactly how to avoid the 15% property tax. Immediately, the Real Estate Council of B.C started investigating him, and Premier Christy Clark assured the public auditing will be done to prevent such tax avoidances.
I would laugh if I didn’t find this so pathetically sad. But what can I say? Desperate times calls for desperate measures.
Sure, the realtors can TRY to dance out of this with sketchy tactics like corporate holdings and signing deeds to family members, but at the end of the day, if they get audited by the CRA, they WILL get FUCKED. Like I said before. Rule #1. Don’t fuck with the CRA. Rule #2. See Rule #1.
Knowing that the 15% tax rule is coming down the pipe on Aug 2, new buyers are hesitant and existing home owners are eyeing the exits.
So how did Canadians react to this 15% tax? Here are some of the highlights:
- The 15% tax will just push property prices higher. Sellers are just going to include the tax as part of the price and everyone will make even more money.
- 15%? That’s chump change to Chinese billionaires.
- This won’t work. Foreign buyers will just purchase a house somewhere else. Jr.Trudeau needs to ban all foreign property purchases across Canada.
- The government shouldn’t be messing with the free market.
- This is just a tax grab by greedy governments. WAHHHH. WAHHH!!!
Now to address these comments calmly, one by one:
- ARE YOU FREAKING KIDDING ME? THIS IS NOT HOW MATH…OR ANYTHING WORKS!! And these are people who own houses?! No wonder the housing market is doomed. If Canada ever passes an “idiot tax”, we’ll be raking it in.
- 15% on $2,000,000 is $300,000. That’s a pretty hefty chunk of change. And if you’re a flipper, do this just 3 times, and you’ve wiped out half your equity. All of a sudden, other investments start to look pretty attractive.
- Ontario is watching this tax closely. So while the Vancouver tax could drive buyers to the Toronto housing market, will they risk it knowing the same tax could come to Toronto? And why the HELL would the government ever ban foreign ownership? This would immediately peg them as racists and cause them to lose out on tax money.
- Anger in BC is boiling over. When Canadians are being priced out of their own housing market, and accusations are thrown around of offshore buyers using Vancouver like a casino, there’s no way the government can sit back, do nothing, and hope to get re-elected.
- Sure, it is. But that’s not necessarily a bad thing. Either cool the market and use that money to build affordable housing, or keep letting idiots borrow their brains out and cause an uncontrollable housing crash. You choose.
While some are skeptical about whether the 15% foreign ownership tax will have an effect, we have seen the same type of taxation cause a 13% drop in Hong Kong housing prices .
So time will tell. Home owners are already panicking, as foreign buyers scramble to close deals by Aug 2. And if the market really is being propped up by foreign money, this will cause shock waves through Vancouver. If, however, most of these buyers are Canadians borrowing their brains out, the foreign tax shouldn’t have as much of an impact.
Lucky for me and other renters out there, we can watch on the sidelines, without worrying about one asset wiping out our life savings. And if you’re FI, you don’t even have to care which way the market goes. You win either way. So let the fun times begin!
Remember how I said, in my last housing article, property taxes are a form of wealth tax? Well, this is exactly what I was talking about.
If this causes a stampede for the exits, this really will bring about the housing crash.
Had this been a wealth tax, investors could quickly liquidate their portfolio and move their money offshore.
But if you have a house, you’re stuck trying to sell it while everyone else is putting their homes on the market. You’d be forced to take a loss, get hit with massive closing costs, and then more land transfer tax on your next house.
It’s never fun when the government makes up rules you have no control over. As a home owner, that’s bound to happen. Without diversification, you’re locked to one asset, which is at the mercy of property taxes, maintenance, and land transfer taxes.
Once we became FI, we understood the true meaning of happiness. It’s not about money or things. It’s about the freedom. The freedom to choose.
And that has made all the difference. By not tying your life savings into 1 asset, you remove yourself from being tied to government regulations and taxes you have no control over.
That’s why we choose to be renters. That’s why we choose to invest and diversify our assets instead of buying an overpriced house.
Now we can sit back, pop some popcorn, and enjoy the show.
What are your thoughts about the 15% property transfer tax? Do you think this is the end of the scorching Vancouver housing market?Liked this article? Join the Millennial Revolution and help us spread by Sharing or Liking!