Cheating Chinese Jack UP House Prices while paying no Taxes

[ToadBrother]

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.

I think it's a perfect example of supply and demand.

[cybercoma]

I think it's a perfect example of supply and demand.

The poor don't have the luxury of demanding foreign real estate or even domestic real estate.

[ToadBrother]

The poor don't have the luxury of demanding foreign real estate or even domestic real estate.

The poor were never going to own a home in Vancouver no matter what the real estate market was doing.

[Vancouver King]

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)!

Gov'ts need affordable housing action to house those unable to afford home purchases or rents here.

The world is scrambling to live/invest here, rather than Seattle, for many reasons - not the least is no over-arching, pervasive gun culture to contend with as in the USA, far superior medical and education systems in BC and a natural mountain/water setting many cuts above the Seattle experience.

Edited October 7, 2015 by Vancouver King

[Bonam]

Then buy a home outside Vancouver,

Already done. In another country, too.

and press the Province to fund more mass transit.

Why? You think I'd want to spend 2 hours every day sitting in trains/buses? If a city decides that the only reasonably priced housing is an hour away from where professional jobs are located, the professionals will leave. People value their time more than ever, and commuting is on no one's list of the best way to spend their time.

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

When it comes to Vancouver, ridiculous pricing applies to all homes, not just detached ones. Townhouses and condos are also absurdly priced.

In the end, the joke will be on Vancouver, when no one is left besides retired homeowners:

http://business.financialpost.com/personal-finance/mortgages-real-estate/as-vancouver-home-prices-surge-out-of-reach-businesses-worry-how-to-retain-staff

http://www.macleans.ca/news/canada/can-families-still-afford-vancouver/

[Bonam]

Gov'ts need affordable housing action to house those unable to afford home purchases or rents here.

Sorry, but the last place young professionals want to live is "affordable housing" projects.

[Argus]

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

Because downtown is filled with expensive condo buildings which are half empty and gathering dust? Because they're being used as investments by Chinese people who don't live here - and who won't pay the taxes since they lie about their purpose and income?

[Argus]

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.

It's exceedingly easy to prove that the individual whose name the house is in did not and could not have paid for it. It's even easier to prove when no one is living in the house.

[ToadBrother]

Because downtown is filled with expensive condo buildings which are half empty and gathering dust? Because they're being used as investments by Chinese people who don't live here - and who won't pay the taxes since they lie about their purpose and income?

I have no problem going after property owners for evasion. But frankly I think the problem is overstated, and even if you filled every inch of condo and apartment space in downtown Vancouver up, it would do virtually nothing to stop the steady price increase. This has been going on for decades now, and the reality is that Vancouver is one of the hottest real estate markets in North America, and is likely to stay that way for a long long time.

I live on Vancouver Island, where housing prices average about a third of Vancouver's, and in some communities more like a quarter or less. The real solution, to my mind, would be to put the money into developing fast passenger fairy service between Mid-Island (Nanaimo) and downtown Vancouver. At a sixty minute one way commute, you could turn Nanaimo, Parksville, Qualicum Beach and Ladysmith into a suburb of Vancouver.

[Bonam]

The world is scrambling to live/invest here, rather than Seattle, for many reasons - not the least is no over-arching, pervasive gun culture to contend with as in the USA, far superior medical and education systems in BC and a natural mountain/water setting many cuts above the Seattle experience.

Actually, investment in Seattle is far higher than in Vancouver. And while young professionals are fleeing Vancouver's housing prices, they are also flocking to Seattle in droves as more of the world's biggest companies open new offices here offering job opportunities that actually let you live in the city. America's "gun culture" is exaggerated in the media for foreign consumption, and the medical system in the US is only a problem if you're poor... not an issue for those that actually contribute to the economy. As for the mountain/water setting... it's not too shabby:

[scribblet]

It's exceedingly easy to prove that the individual whose name the house is in did not and could not have paid for it. It's even easier to prove when no one is living in the house.

I didn't mean that they could not have paid for it. If a Canadian buys a second home then there is a capital gains tax involved, if a 'foreigner' buys a home in Canada for an investment they should have to pay capital gains when sold - if they allready own a home elsewhere.

[Bonam]

At a sixty minute one way commute, you could turn Nanaimo, Parksville, Qualicum Beach and Ladysmith into a suburb of Vancouver.

Sorry but no one wants a sixty minute one way commute. That's 2 hours a day, 250+ days a year... or close to a total of ~3 years of your life sitting in traffic/transit. No thank you.

[ToadBrother]

Sorry but no one wants a sixty minute one way commute. That's 2 hours a day, 250+ days a year... or close to a total of ~3 years of your life sitting in traffic/transit. No thank you.

I've driven in rush hour between Surrey and Vancouver. I'd rather be sitting on a boat for two hours than an hour and a half or more in traffic.

[dre]

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?

The WHY is simple. They want to keep the realestate market afloat because its propping up the rest of the economy especially the services sector.

Also its a huge oversimplification to state that "the chinese are behind inflated realestate prices". Our own government and banks are a way bigger factor... Interest rates have been kept at rock bottom for nearly ten years, and the CMHC has doubled the ammount of "near zero down" mortgages it backs.

[Vancouver King]

Because downtown is filled with expensive condo buildings which are half empty and gathering dust? Because they're being used as investments by Chinese people who don't live here - and who won't pay the taxes since they lie about their purpose and income?

In most cases, downtown condos owned by off shore interests are rented out - not, as you say, collecting dust. Why would an owner not desire a revenue property that can be rented in minutes?

In fact, since Harper gutted a national affordable housing strategy, renting investment condos is the only answer to local demand for affordable housing.

[BC_chick]

I've driven in rush hour between Surrey and Vancouver. I'd rather be sitting on a boat for two hours than an hour and a half or more in traffic.

I think the bigger urban planning was to create a commercial hub for each district so that people don't commute so much. I would not even consider taking a job with a one hour commute.

[dre]

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.

No thats not all there is to it. The realestate market is a huge component of the services sector, and it includes everything from contruction and the supply of materials, to banking and financial services. The government is propping up the market because if they didnt there would a huge recession on their watch.

[blueblood]

The WHY is simple. They want to keep the realestate market afloat because its propping up the rest of the economy especially the services sector.

Also its a huge oversimplification to state that "the chinese are behind inflated realestate prices". Our own government and banks are a way bigger factor... Interest rates have been kept at rock bottom for nearly ten years, and the CMHC has doubled the ammount of "near zero down" mortgages it backs.

This. The tax revenue on houses that are valued as they are is one reason for local govts to be happy about that.

Low interest rates allow fools to spend more money on stuff they cant afford in the first place, temporarily boosts the economy, but when it comes time to collect the bottom falls out, a la the usa housing crisis.

[ToadBrother]

No thats not all there is to it. The realestate market is a huge component of the services sector, and it includes everything from contruction and the supply of materials, to banking and financial services. The government is propping up the market because if they didnt there would a huge recession on their watch.

The Vancouver real estate market was hot when interest rates were a lot higher than they have been in the last ten years. It certainly hasn't helped housing prices, but the fact is that Vancouver has been trending upwards at least since the early 1990s.

[dre]

The Vancouver real estate market was hot when interest rates were a lot higher than they have been in the last ten years. It certainly hasn't helped housing prices, but the fact is that Vancouver has been trending upwards at least since the early 1990s.

Not really. Real Prices were more or less flat between 1975 and 2000. That steep hill you see on the graph after 2001 is the housing bubble. It starts right as the overnight interest rates is slashed from 6 to 2 percent to try to mitigate the damage done to the economy by .COM slowdown.

[msj]

Look at it this way: if I, a Canadian of many generations, were to give my niece $450,000 as a gift then she would receive that money without tax consequences.

She could then go out and buy a house and live in it all she wants while she attends university. Then graduate and sell it and move to Thailand.

It would be her principal residence so no capital gains tax. She would be leaving Canada with cash so no emigration tax (since cash is cash there is no capital gains on it).

No different from some "foreigner" who buys a house for his kids.

Yes, there are other issues likely involved in the case mentioned in the article (the guy likely is a resident for Canadian tax purposes and should be reporting his worldwide income on a Canadian tax return, should probably be filing T1134 and T1135 forms to report foreign investments and foreign investment income on his CDN tax return etc...).

But for many others it is simply buying a house for their kid to live in while she goes to university.

How the kid(s) and parent deal with the proceeds of sale is none of the state's business - the government must look to the legal form.

Sure, they can try to use GAAR (general anti-avoidance rules) but good luck with that.

On the real estate side, this is much ado about nothing.

On applying the tax rules to people who are really residents for tax purposes?

Yes, that is big - tax evasion by not reporting foreign income on one's CDN tax return and penalties for not filing T1134/T1135 forms on time can be costly and the government should be doing a better job on this (and they are not - I know because I turn away foreign clients because they refuse to report/file their taxes properly).

[The_Squid]

Harper broke too many promises to ever be trusted again. He won't do anything about this issue... money talks with the CPC.

[SpankyMcFarland]

The old metrics linking house prices to local income are breaking down for elite cities like NY, Vancouver and London as foreigners dominate the high end of the market. Of course, nobody benefiting from the real estate market, including local government, wants to ask too many questions about where the money comes from but some of it must be very dodgy. It's a Faustian bargain.

http://www.vancouversun.com/business/Rich+Chinese+facing+backlash+Vancouver+North+America+costliest+city/11419005/story.html?__lsa=8667-876c

Edited October 7, 2015 by SpankyMcFarland

[Argus]

Harper broke too many promises to ever be trusted again. He won't do anything about this issue... money talks with the CPC.

Really? How does money talk? I mean, given donations are banned beyond a thousand bucks, and illegal from corporations or businesses?

[a10khan]

I do not have a problem with foreign ownership so long as it is regulated with tax imposition similar to what Canadians pay. Also, only a certain % of the real estate market should be opened up for foreign investors. My bigger question, how do these investors get mortgages with mediocre revenue streams?