British Columbia, flooded with Chinese money, to track condo buyers

“The days of avoiding taxes through condo flipping are over,” BC minister says

National /
Nov.November 06, 2018 12:00 PM

Vancouver, British Columbia (Credit: SVG Silh and Tourism Vancouver)

The Canadian province of British Columbia is taking another step to crack down on tax evasion through real estate, this time creating a registry to track ownership of new condominium units under construction.

British Columbia’s move follows an earlier 20 percent tax on foreign home buyers, which largely targets the flood of mainland Chinese who have sent home prices soaring double digits in the last four years, and have drawn accusations of tax illegalities.

Under the new registry law, developers will have to collect and report on purchase agreements for pre-sale condo units starting next year, including when the contracts get flipped and transferred to new owners, Bloomberg reported. The rules also require developers to make a “reasonable effort” to report on previous deals.

Developers in the province will typically use pre-sale purchase agreements to market new projects, giving buyers the right to obtain a unit when it is finished. It has been common recently to sell these rights from one buyer to the next at rising prices without taxes on the gains since the deals were impossible to track.

The information in the new database will be shared with the Canada Revenue Agency.

“The days of avoiding taxes through condo flipping are over,” Finance Minister Carole James said in a statement.

In May, the Canada Revenue Agency found that $169 million in unpaid taxes in British Columbia in 2016 were related to real estate transactions — not paying a goods and services tax upon obtaining the deed — as well as income tax.

In Vancouver, Chinese buyers were so active in the real estate market that prices climbed 30 percent a month in 2016. After province officials increased the tax on foreign buyers to 20 percent, the Chinese buyers moved to Toronto, which responded by introducing its own 15 percent tax on foreign buyers. The Chinese real estate website Juwai.com estimated that Chinese investors were responsible for $100 billion worth of property purchases outside China in 2016.

As The Real Deal reported in 2016, several factors, including the lack of a political will to raise taxes, anti-discrimination laws, and the relatively small impact of foreign investment, have prevented any significant talk of a foreign-buyer tax from gaining steam in New York City. [Bloomberg] – Eddie Small


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)
Real estate stocks push up this week as U.S.-China trade tensions ease
Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Blackstone Group's Stephen Schwarzman, KKR's Henry Kravis and Apollo's Leon Black (Getty, Facebook, iStock)
Blackstone, Apollo, KKR take market hit on Evergrande tumult
Blackstone, Apollo, KKR take market hit on Evergrande tumult
Turnbridge Equities founder Andrew Joblon, KKR co-founder Henry Kravis and the distribution center (Getty, Turnbridge)
Turnbridge, Dune land $381M loan for Hunts Point site
Turnbridge, Dune land $381M loan for Hunts Point site
Vanbarton Group’s Gary M. Tischler and Richard Coles with Marble Collegiate Church at 1 West 29th Street (Getty)
Vanbarton Group, church sued by foreign investors in fallout from HFZ debacle
Vanbarton Group, church sued by foreign investors in fallout from HFZ debacle
The agency is challenging $21 billion in deductions over a three-year period (Getty)
IRS probes promoters of tax-deductible property easements
IRS probes promoters of tax-deductible property easements
Prime Minister of Canada Justin Trudeau (Getty, iStock)
Canadian PM Trudeau pledges two-year ban on foreign home buyers
Canadian PM Trudeau pledges two-year ban on foreign home buyers
Northwind Group managing partner Ran Eliasaf and 165 Lexington Avenue (Northwind Group, Brooklyn North Capital)
Brooklyn North Capital, RiverBrook score $49M loan for Kips Bay condo
Brooklyn North Capital, RiverBrook score $49M loan for Kips Bay condo
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...