As the home prices continue to rise today, there is a new report stating that a tax of a foreign buyer along will be enough to lower the prices of real estate properties. However, many are questioning such claim.
There have been a lot of changes in the home market for the last years. In fact, it took six years in the past to afford a home in the Toronto area, but not it is more than fifteen years. As the prices of real estate properties soar, many first-time buyers are reconsidering home ownership dreams.
Now, the question is, will a foreign buyer tax really cool our market? However, some experts stated that it is not going to be enough. Foreign buyers are also required to have a property surtax each year that’s offset by the income tax that you pay. Individuals who own a property that is based on a foreign source of wealth or income are being hit by the surtax and everyone else is spared. This will discourage foreign ownership, which would bring prices down even better than the tax of foreign buyers.
According to the assistant professor at the Simon Fraser University School of Public Policy, Josh Gordon, foreign buyers are the primary driver behind the recent increases of market price in Toronto and Vancouver.
He also said that indeed, low interest rates play an important role in high price, however other cities did not see almost the price-to-income rations increases as Vancouver and Toronto.
There has been a lot of debates and argument regarding whether or not a foreign tax buyer will cool our market. It is one of the most frustrating aspect of the argument, as both the provincial and the federal governments haven’t gathered good data regarding the issue. What they really need is real information and data before making an action.