Last Updated on October 24, 2023 by Neil Sharma
The proposed Canada-wide foreign buyer tax could have implications for resort towns like Whistler, British Columbia, claims a Vancouver-based developer.
“I like using Whistler as an example—it wouldn’t exist without foreign investment, particularly U.S. dollars, which allowed the whole village to thrive,” Jason Turcotte, VP of development at Cressey Development Group, told CREW. “If we had tax measures in place then, it wouldn’t even exist, and now we bring blanket tax measures in nationwide and they will, no doubt, catch places like Whistler.”
Noting that B.C. has the and Vancouver has the Empty Homes Tax, which overlap in the city, Turcotte says Vancouverites are taxed to the hilt. Moreover, he says developers have to pay the latter tax on unsold units in a condo development that’s reached occupancy, and that they invariably pass the cost on to consumers.
“You might finish a building in May and get an occupancy permit, but 40 units out of 300 aren’t sold. Chances are it will take you some time to sell the inventory,” he said. “If you sell them during the year, there’s no tax, but if it rolls into the next year and sits empty for six or more months, you pay the Empty Homes Tax, which is absolutely absurd. We’ll end up trying to pass that tax on to consumers, and it affects the cost of housing.”
He added that selling those unsold units is easier said than done, and noted that, rightly or wrongly, some developers like holding onto unsold inventory to ride the market.
“The pandemic has also made selling condos in real urban markets tougher.”
Eric Andreasen, senior VP of marketing and sales at Adera Development, another Vancouver-based firm, says that while the non-resident tax is intended to curtail foreign speculation, multiple taxes are piling on top of each other and dissuading Canadians from buying properties outside of the cities and provinces in which they primarily reside, and that can hurt renters in urban centres where vacancy rates have been low in recent years.
“Any one tax won’t have an extreme impact, but there’s a cumulative effect,” he said. “I think the [empty homes tax] will have a detrimental effect and make people think twice about making an investment with the intention of renting it out.”
Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.
