Canadian real estate taxes

Staff Columnist

“Vancouver, where I have a condo, is trying to soak outsiders.”(Canada’s Tax on Being American,) ((By Yvonne Morris McCallum, Tuesday, September 12,2017)

We, here on Longboat Key are fortunate to have many foreign visitors, and many foreign residents, mostly Canadians.  I am fortunate to come from a family containing many Canadians.  My Step-Father was the first to discover Longboat Key, and to purchase a home here in the ‘70s.  I found this WSJ article most interesting.  Just a few years ago I sold the family home in Country Club Shores.  We divided the proceeds of that sale among both American and Canadian Family members.  The process was a bit different to that described here.  But here goes.

McCallum: “My husband and I were living in California when, in 2002, we used retirement funds to buy a picturesque condominium in Vancouver, British Columbia.  Over the next 15 years, we paid our property taxes, tried to be good neighbors, and supported the local economy.  Then last year the welcome mat was pulled from under our feet.

For decades the U.S. and Canada have been tangling  over trade issues, like rules on dairy products and softwood lumber.  But Canada’s latest creative attack is on the retirement savings of Americans like me.  President Trump may have a point when he says that ‘people don’t realize Canada’s been very rough on the United States.’

“In August 2016, Vancouver introduced a 15% tax on real estate purchases by foreigners.  Within eight months, the levy had scooped up 102 million Canadian dollars.  The tax was implemented so abruptly – going into effect six days after it was passed – that buyers in escrow either had to lose their down payments or cough up an additional 15% of the purchase price.

A few months later , Vancouver introduced an annual ‘empty home tax’ equal to 1% of the property’s assessed value.  Since the levy is inapplicable if your Vancouver home is your principal residence, it’s obviously aimed at foreigners like us.  At our condo’s current valuation, the tax will cost us almost US$33,000 a year.

According to the Vancouver Sun, the City will ensure compliance by relying on ‘snitch-and-audit enforcement. Neighbors will be ‘leaned on’ to help uncover homes claimed as principal residences that actually aren’t. When the public objected to the tax, the Vancouver City Council’s response was simple: pay up, rent out your property, or sell.

Renting our place out for at least six months a year would circumvent the tax.  Except that our condo rules require a minimum lease of six months.  This is impractical given that we want to be there during the summer and allow friends and family to stay periodically throughout the year. Even worse, if we did decide to rent, we’d be liable for ‘deemed disposition’ taxation and would have to file a Canadian return, even though we’re Americans.”

More from McCallum:  “Nationality-based taxes are among the worst kinds of protectionism.  The North American Free Trade Agreement expressly covers real estate owned by Americans in Canada.  For that matter, Nafta covers real estate owned by Canadians in the U.S., of which there is plenty.

When America’s neighbors buy U.S. property, they aren’t targeted for extra taxation.  Canadians are quick to criticize Americans for  stunt as Vancouver, the squawking of the ‘snow birds’ from up north would be deafening.”

“With Prime Minister Justin Trudeau at the helm, Canadians are reveling in international adoration, which stokes their national self identity of kindness, politeness and fairness, supposedly in contrast to their brutish southern neighbors.  Perhaps it’s time Canada practiced what it preaches.”

This final paragraph’s words above are Ms. McCallum’s, not mine. I have not noted those traits in my Canadian relatives, friends, and neighbors.

As to that sale of LBK property with proceeds distributed partially to Canadians the only tax issue I noticed was  the withholding tax held by the Title Firm to insure the ultimate payment of U.S capital gains tax, if any.  Then the Canadian sellers simply filed a U.S. tax return, claiming the withholding, and receiving a refund of any overpayment.  I don’t recall any complaints by my Canadian relatives.  Maybe I’m too easy!


Longboat Key News

2 Responses for “Canadian real estate taxes”

  1. who's on first says:

    I always found Peter’s commentaries insightful and educational – so I guess Im shallow and full of drivel.
    I know a couple or two from Canada, even one who lives part time in Longboat Key and has a nice home in B.C. Now, if the British Columbia government is trying to fleece American’s only, it’s certainly not emblematic of polite behavior – but maybe BC is now under the control of its Chinese immigrants who’ve firmly entrenched themselves since the British empire turned over Hong Kong to the communists.

  2. Barry Rookes says:

    I find that your article is inaccurate and offensive to Canadian outside the province of British Columbia. It’s not surprising that a shallow conversation and divisive rhetoric drivels from your pen. To cover a bipartisan story would require an hour or two of research to capture the decision by the BC government and not the Canadian federal government. Take a minute and understand the subject my weary scribe.

Leave a Reply