Housing tax cools Toronto market

- Associated Press, TORONTO

Apr 22, 2017-

Foreign nationals who don’t live in Canada’s biggest city and its surrounding communities will pay an additional 15 percent tax on home purchases under legislation proposed by the government of Ontario province.

Ontario Premier Kathleen Wynne made the announcement Thursday in an effort to cool a hot housing market in Toronto. It would match the 15 percent tax on foreign home buyers that the Pacific coast city of Vancouver has implemented.

Wynne said the tax is not about targeting immigrants.

“We’re targeting those are who aren’t looking to raise a family. They are only looking for a quick profit or a safe place to park their money,” she said.

The average price of detached houses in the Greater Toronto Area rose to C$1.21 million ($900,000) last month. Wynne said there is a problem when the market jumps 33 percent in a year.

“There is a need for interventions right now in order to calm what’s going on,” she said.

The tax would be imposed on buyers in what is known as the Greater Golden Horseshoe area who are not citizens, permanent residents or Canadian corporations. If adopted, as expected, the foreign tax would be effective retroactively to April 21.

Wynne introduced other measures as well. Ontario is also expanding rent control, which currently applies only to units built before November 1991. Tenants in newer units have complained of dramatic spikes in rent. The premier said officials are taking aim at speculators and are tackling affordability.

The government doesn’t keep statistics on the number of foreign buyers. Asian investment in Toronto reportedly picked up after Vancouver introduced its foreign buyer tax last summer.

Benjamin Tal, deputy economist at CIBC World Markets, said the foreign tax is a step in the right direction but thinks it could have a minimal impact because the estimated share of foreign buyers in the greater Toronto area is notably lower than in Vancouver.

“But if Vancouver is any guide, we might see a short period in which domestic buyers will sit on the sidelines while assessing the impact of the tax. During that period we might see some slowing in sales,” Tal said.

Tim Hudak, CEO of the Ontario Real Estate Association, said the measures could help make homes more affordable for residents.

Published: 22-04-2017 08:37

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