Newspaper article The Canadian Press

B.C. Wrestles with Real Estate Taxes to Cool Rising Housing Prices

Newspaper article The Canadian Press

B.C. Wrestles with Real Estate Taxes to Cool Rising Housing Prices

Article excerpt

B.C. wrestles with ways to cool housing market

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VICTORIA - Real estate economists want British Columbia's government to tax foreign property owners and speculators despite Finance Ministry forecasts that the province could lose $1 billion in sales and up to 4,000 construction jobs.

Premier Christy Clark has said housing relief for first-time home buyers is a concern as the government prepares to deliver its budget next month, but she has shot down previous requests for speculation and luxury taxes on foreign investors to cool rising prices.

Thomas Davidoff, a housing economist at the Sauder School of Business, said Monday real estate experts from B.C. universities and business schools have proposed a 1.5-per-cent tax on vacant residential properties to create more rental properties and increase affordability.

The Housing Affordability Fund plan comes as rental-vacancy rates in Vancouver slipped below one per cent last year and the average selling price for a single-family home on the city's west side is above $2.5 million.

"Housing affordability is unquestionably an issue," said Davidoff. "The premier has said it's front and centre and she's asked for a policy that doesn't whack housing demand."

He said the affordability fund could generate up to $90 million in surcharges from vacant homeowners in Vancouver. Homeowners who rent or live in their homes and pay income tax will be able to write off the surcharge, Davidoff said.

"If you are an investor you don't have to pay the tax. All you have to do is turn your vacant unit into a rental unit, and voila, you get to claim the rental income as a credit against this surcharge. That's a pretty strong incentive for people who want to invest here to turn vacant units into rental units."

Last June, the government rejected calls from Vancouver Mayor Gregor Robertson to levy speculation and luxury taxes on foreign owners and speculators as a way to keep prices from rising. But Clark turned down the plan, saying using taxes to drive down prices could hurt current homeowners by reducing their equity. …

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