Cheating Chinese Jack UP House Prices while paying no Taxes

[Argus]

A story in today's Globe will confirm what many have long suspected, that the ridiculous housing price increases in Vancouver, and almost certainly in Toronto, are due to Chinese investors, few of whom live in the houses, and many of whom cheat and lie about their income to avoid taxes.

Harper promised, the other day, to start looking into who is buying these houses and what impact that's having on the Canadian housing market. I think he should also promise more money to CRA for vigorous investigations and prosecutions of foreigners cheating on taxes.

http://www.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/foreign-investors-avoid-taxes-by-buying-real-estate-in-canada/article26683767/

[cybercoma]

I thought this was common knowledge for at least a couple years?

[Wilber]

I thought this was common knowledge for at least a couple years?

Lot's of things are common knowledge yet manage to get ignored. Maybe this one is changing.

[waldo]

Harper promised, the other day, to start looking into who is buying these houses and what impact that's having on the Canadian housing market.

yes, that was a most timely election campaign promise... for something that, as MLW cybercoma asserts, has been 'common knowledge for years'.

[Argus]

yes, that was a most timely election campaign promise... for something that, as MLW cybercoma asserts, has been 'common knowledge for years'.

It has been common knowledge for years that Chinese are behind the housing price rises but without any actual evidence since no one keeps track of whether the buyers are foreign or not. Nor has the Globe's suggested mass cheating on taxes been a part of the equation, as far as I'm aware.

[kimmy]

I think he should also promise more money to CRA for vigorous investigations and prosecutions of foreigners cheating on taxes.

I suspect that this promise would be quickly forgotten after securing reelection.

-k

[Argus]

I suspect that this promise would be quickly forgotten after securing reelection.

-k

Why? Why wouldn't any government want to enforce tax laws which bring in money? Especially when most of the people being prosecuted would be foreigners?

[Bonam]

I'll believe anything will be done about this when I see it, not before. It's been going on for decades, not years. Heck, I knew plenty of people in school and university who lived in homes in Vancouver owned by parents back in China and HK.

Reality is no politician is gonna touch this with a 10 foot pole, because if they ever really did anything about it, Vancouver's home prices would collapse to where they should be given incomes in the city, about a 50-75% drop, and boomer homeowners are the main voting demographic in the area and have a vested interest in high house prices and give not one fig about affordability for young people.

[Argus]

I'll believe anything will be done about this when I see it, not before. It's been going on for decades, not years. Heck, I knew plenty of people in school and university who lived in homes in Vancouver owned by parents back in China and HK.

Reality is no politician is gonna touch this with a 10 foot pole, because if they ever really did anything about it, Vancouver's home prices would collapse to where they should be given incomes in the city, about a 50-75% drop, and boomer homeowners are the main voting demographic in the area and have a vested interest in high house prices and give not one fig about affordability for young people.

Nonsense. I'm not suggesting they should ban foreign ownership. But they should certainly have to pay the same taxes as everyone else does.

[Bonam]

Nonsense. I'm not suggesting they should ban foreign ownership. But they should certainly have to pay the same taxes as everyone else does.

Oh I agree with you, but I would guess any policy change which deflates the Vancouver housing market (or any housing market anywhere) will be vehemently opposed by those in charge. The homeowner generation benefits from high home prices, and they are the ones with the money and the votes. I agree with kimmy, whoever wins the election, this issue will quickly be forgotten.

[Argus]

Oh I agree with you, but I would guess any policy change which deflates the Vancouver housing market (or any housing market anywhere) will be vehemently opposed by those in charge. The homeowner generation benefits from high home prices, and they are the ones with the money and the votes. I agree with kimmy, whoever wins the election, this issue will quickly be forgotten.

You either deflate it slowly, as Flanagan did a few times by changing the requirements for home loans, or you ignore it until it blows and house prices drop like anvils.

[cybercoma]

Vancouver's home prices would collapse to where they should be given incomes in the city, about a 50-75% drop, and boomer homeowners are the main voting demographic in the area and have a vested interest in high house prices and give not one fig about affordability for young people.

And there it is. Everyone else suffers while the ownership class has their investments protected.

[Bonam]

You either deflate it slowly, as Flanagan did a few times by changing the requirements for home loans, or you ignore it until it blows and house prices drop like anvils.

Last I checked. politicians are not known for their ability and willingness to make hard decisions for the long term at the cost of votes in the short term.

[Bonam]

And there it is. Everyone else suffers while the ownership class has their investments protected.

Of course. That is, after all, the entire point of almost all spending by all Western governments. Whether it's propping up the housing market, or health care, or retirement benefits (the latter two of which make up the majority of the budgets of most Western governments), the whole point is transferring wealth from the young to the old, who comprise the vast majority of the "ownership class" as you put it.

[cybercoma]

The whole point is to keep class inequalities alive and well. Our institutions maintain class divisions and conflict and this is a perfect example of that.

[Bonam]

The whole point is to keep class inequalities alive and well. Our institutions maintain class divisions and conflict and this is a perfect example of that.

Naw, it's all about pandering to the boomer generation, that's all there is to it. They've got the money and the votes.

[cybercoma]

It's not pandering to boomers who are living in poverty. That's for sure.

[Big Guy]

Nice to see the focus switching from Muslims to the Chinese. I wonder what these two groups have in common? Could it be that they look different? Those black folks better look out, they may be next in line.

[Vancouver King]

Home ownership in Vancouver is frequently a live-in retirement investment, often the only retirement vehicle for seniors. A crackdown in the expensive end of the market might discourage free-loading Asian buyers, however, it will unduly impact the value of local retirement assets.

[ToadBrother]

You either deflate it slowly, as Flanagan did a few times by changing the requirements for home loans, or you ignore it until it blows and house prices drop like anvils.

I've been hearing predictions of a Vancouver real estate crash for twenty years now. Even during the worst period after the Asian Flu in the late 90s, prices leveled off for a couple of years before rising again. While I'm sure you can find all sorts of explanations, at the end of the day Vancouver has been a hot market for a long time, and I doubt there will ever be a real crash, just periods of leveling off.

[ToadBrother]

It's not pandering to boomers who are living in poverty. That's for sure.

If you're a boomer in Vancouver, sell your million dollar home and buy one at a quarter the price on Vancouver Island.

[Bonam]

I've been hearing predictions of a Vancouver real estate crash for twenty years now. Even during the worst period after the Asian Flu in the late 90s, prices leveled off for a couple of years before rising again. While I'm sure you can find all sorts of explanations, at the end of the day Vancouver has been a hot market for a long time, and I doubt there will ever be a real crash, just periods of leveling off.

Well, there's over a billion people in China, and they all want to buy a house in Vancouver (it is seen not only as a way to keep your wealth and family safe and protected, but also as a sign of social prestige), so there's plenty of demand to keep the bubble inflating for a long long time. China's economic growth may be slowing but it's still a heck of a lot faster than Canada's, so there won't be any shortage of new millionaires there.

[Bonam]

Home ownership in Vancouver is frequently a live-in retirement investment, often the only retirement vehicle for seniors. A crackdown in the expensive end of the market might discourage free-loading Asian buyers, however, it will unduly impact the value of local retirement assets.

What about the undue impact of the current absurd prices on young people who might want to live in the city? Oh, never mind, I forgot, no one gives a damn. Glad I moved to a city with the exact same climate, location, culture, but 1/3 the home price to income ratio (and far lower taxes, too)!

Edited October 7, 2015 by Bonam

[ToadBrother]

What about the undue impact of the current absurd prices on young people who might want to live in the city? Oh, never mind, I forgot, no one gives a damn. Glad I moved to a city with the exact same climate, location, culture, but 1/3 the home price to income ratio (and far lower taxes, too)!

Then buy a home outside Vancouver, and press the Province to fund more mass transit.

At the end of the day, detached homes in major metropolitan centers is likely going to die.

[scribblet]

Why? Why wouldn't any government want to enforce tax laws which bring in money? Especially when most of the people being prosecuted would be foreigners?

That's what I thought too, although it wouldn't in the interests of any gov't to bring house prices crashing down.

One thing they can do is enforce a capital gains tax on houses owned by 'foreigners' which are deemed to be second homes as it's more than likely they own a first home in their homeland. Not sure how owning a first home could be confirmed but it might put the brakes on buying homes as an investment.