Foreign Buyers are taking advantage of the principal residence exemption

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As a Canadian citizen we are only allowed to own 1 principal residence and receive the principal residence tax exemption (Capital Gains tax free) when selling. In this blog I’m going to give you an example of where I’m seeing wealthy oversees buyers purchasing multiple properties and designating them as principal residences in family members names to avoid the capital gains tax when they sell. In my opinion, a principal residence purchase should be tied into Revenue Canada and that each purchaser should be required to file a Canadian tax return to prove that the funds were earned by the person on title. This simple solution would at least level the playing field for all buyers and generate billions of dollars into the general tax coffers that are being avoided right now.

Again I want to make it clear what I am recommending the Federal Government should be doing…If an offshore buyer from any country wants to purchase a home in Canada and designate that home as a principal residence in order to get the capital gains tax exemption (they pay no tax on the entire capital gain), then that buyer must have filed a Canadian tax return (pay all Canadian income taxes that all Canadian residents are required to pay), that justifies the after tax income to purchase that home. If the owner on title has not filed a Canadian income tax return then they CANNOT designate that property as a principal residence and receive the principal residence exemption. The full capital gains tax must be paid at time of sale.

If you want to voice your opinion or get in touch with Owen, please email owen@owenbigland.com and visit http://www.owenbigland.com for all his Inside Edge Real Estate video blogs.

OWEN BIGLAND MACDONALD REALTY
Direct Ph: 604.889.1118

VANCOUVER BC HOMES & CONDOS
GREATER VANCOUVER BC REAL ESTATE FOR SALE
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Vancouver | Richmond BC

Comments

Tyson Fritz says:

They would add this to the income tax act but they ran out of paper.

Tyson Fritz says:

How to launder money into Canada: Set up business in Canada; Sell fake services to China or over charge.

Mohammad Akhlaghi says:

Owen thanks for the video once again … With your solution there is still a loophole that parents could pass along cash gifts (tax-free) to their children (which will show as their income) hence helping them justify owning the house

Steve Saretsky says:

Good points Owen. The classic "astronaut family" .. Property surcharge tax should be implemented ala Tom Davidoff's suggestion.

TheFotube says:

hi Owen, I have been following you for past few months and thanks for updates on our Vancouver market. I am a car salesman and one of my Chinese client who owns couple of environmental solution companies in lower mainland mentioned Chinese millionaires are getting their employees to send the money to Canada or other places. at $50,000/person they have hundreds and thousands of employees who walks them one by one to the banks and send money in their names and all their relatives. this almost sounds crazy but who knows it's probably true.

Abdullah Rubiyath (Alif) says:

Great video with excellent points!

ghaith44 says:

that couch looks amazing

TokyoRealEstateMan 電気ShibuyaCraftronics.com (Hand-Crafted Techno Gear) says:

good points maybe revenue Canada needs to change their structure

Anne O. says:

thanks, so interesting!

GG says:

As usual, you're making tons of sense.

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