New real estate tax harming foreigners working in B.C., says American buyer
American Mac Kerman will be on the hook for $90,000 if he can't close his pending purchase by Friday
Mac Kerman picked the wrong month to buy a condo.
An animator by trade, Kerman has been living and working in Vancouver for two years. He's one of thousands of foreigners living in Vancouver — including professors, hockey players, and experts needed by local companies.
Earlier this month, Kerman signed the paperwork for the purchase of a two-bedroom condo in Mount Pleasant and put down a down payment.
Everything was falling into place for the American looking to make Vancouver his long-term home.
But a newly announced tax on foreign home-buyers is set to take effect before Kerman's sale closes — and unless he can clear it by Friday, he'll be on the hook for $90,000 more than he budgeted for.
"This was me climbing the rung — the fabled millennial finally being able to grasp at home ownership," Kerman said "And I had it in my hands. I signed that paperwork. Who could've seen this coming?"
Kerman is just one of many people facing unintended consequences of the B.C. government's new 15 per cent tax on foreign homebuyers.
The tax is meant to discourage speculative overseas purchases of B.C. real estate and cool Vancouver's red hot housing market, but Kerman said it is adversely affecting people like him who just want to live and work here.
A ripple effect
Patrick Weekes, a Vancouver realtor working with RE/MAX, said Kerman's situation is not an uncommon one.
Weekes spoke of a client of his in a similar situation, and said that many of his colleagues also have clients who are now finding themselves scrambling to close sales to avoid being priced out.
"This has really put the whole market in a bit of a tailspin and created a lot of unnecessary stress and anxiety," Weekes said.
Kerman put a $30,000 down payment on his prospective condo early in July. He doesn't have the additional $90,000 the new tax will cost him, so if he can't close the sale in time, he'll have to walk away from that down payment and wait until his permanent residency application goes through, which will likely not be until the winter.
"By then, I'll have $30,000 less of a deposit to put down on a place and prices will have gone up by who knows how much," he said.
Weekes said situations like Kerman's are having a ripple effect on the market. Buyers forced to walk away from deals, he said, are leaving sellers without the equity they were counting on to make purchases of their own.
Liberals not backing down
The government is standing its ground on the implementation of the new tax. At a press conference on Wednesday, Premier Christy Clark said exempting pre-sales from the tax risked inciting a run on Vancouver real estate.
"I want to put British Columbians first," Clark said at the conference. "I appreciate that it's a short timeline for people who have deals that are already underway, but they need to meet that timeline or the tax will apply."
But Weekes said a run on real estate could have be avoided if the government had made the tax effective immediately but not applied it to sale contracts that have already been written — and it would have saved people like Kerman some serious stress.
Kerman said he actually supports the principle of the new law, and said taxing foreign buyers a good step toward getting the Lower Mainland housing market under control.
But he said the government should have considered the ramifications of the law's rollout more thoroughly, and how it would affect immigrants and other working professionals in Vancouver in his position.
"To stick this with you after you're already across the finish line — it feels like somebody should've considered this," he said.
"They're neglecting to think about how this will affect real people caught in the middle."
With files from CBC Radio One's On the Coast.