There are ways to get around the foreign buyers tax: CTF

VANCOUVER (NEWS 1130) – The biggest loophole in the new foreign buyers’ tax may be a cultural one, that’s according to the Canadian Taxpayers Federation which feels there are several ways for people to avoid paying it.

Culturally, the CTF’s Jordan Bateman says many buyers view a home as a family asset. So, if a family or even multiple generations live together in one house, and even just one member is a citizen or permanent resident, he says it’s logical the house will be put in that person’s name.

“And even if that asset is in that person’s name, they treat it as a family asset. That’s the biggest one, just the cultural loophole where people can use a permanent resident to buy this property and escape the tax.”

“So what that means is when you have one member of the family who becomes a permanent resident or a Canadian citizen they, quite logically and culturally, will buy through that person. And even if that asset is in that person’s name they treat it as a family asset.”

And that doesn’t even take into account the Quebec Immigrant Investor Program and numbered companies — Bateman also has concerns the boosted property transfer tax will eventually expand to apply to all sales.

“The truth is very wealthy people have armies of experts, accountants, tax lawyers, real estate people and they sit there and dream up of ways to get around these things because that’s their job. And when you rush through legislation like this there are bound to be loopholes that people are going to exploit,” adds Bateman.

Premier Christy Clark is warning realtors to stop telling their clients about loopholes in the tax. “Realtors should not be doing that and they should know, they should be informing their clients that every single one of these transactions could be audited.”

And she’s promising to find those who cheat the system. “We have an audit team ready to go to make sure that every one of these transactions that was on the table and that closes before August 2nd gets a very close look. And anybody trying to find loopholes is going to discover very quickly that those loopholes don’t stand up.”

Earlier this week, the provincial government announced it would start singling out foreign buyers with a new 15 per cent property transfer tax as a way to cool demand in Metro Vancouver’s red-hot real estate market. For context, the tax will amount to $300,000 on the sale of a home of $2 million.

The tax can be increased and decreased between 10 and 20 per cent. Regional districts outside of Metro Vancouver can also be included if the tax pushes foreign buyers to other areas.