With experts forecasting a cooling real estate market for the beginning of 2019, some executors may be tempted to hang on to real property that falls within an
What effect will the new 20% tax on foreign owned real estate in Canada have on the Canadian and US real estate market? Why is Canada hostile to foreigners owning homes?
Hopefully I can explain this from the US side of this experience…
In many markets where real estate is cheap but becoming more expensive, huge blocks of houses are being bought by foreign entities serving as fronts for Chinese and Middle-East interests. In many cases, these entities are either speculating on the market, hoping to hold and sell in a few months for a profit after jacking up the price of real estate in that area, or they have them rented out and poorly managed. This does two things: First, it makes it harder for people to actually buy a home they plan to live in, rather than just a piece of investment property. Second, it makes it less affordable for people to rent a home and reduces the quality of available housing, both in terms of the housing itself and in the property managers doing right by their tenants.
This law is not trying to prevent immigrants from buying homes. If you’re a permanent resident, the tax doesn’t apply to you. What it’s doing is discouraging foreign investors and speculators from buying houses. I hope you can see the difference in terminology. And frankly, I think this is a necessary move to try to make housing somewhat more affordable in areas like Toronto and Vancouver.