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Canadian Real Estate Loopholes Allowing Foreign Investors to Avoid Paying Taxes

Posted by Aliza Xandria Arellano on Oct 08, 2015 06:10 AM EDT
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VANCOUVER, BC - MARCH 11: A view of the Vancouver city skyline as it is accessed by the Burrard Bridge (L) and the Granville Bridge (R) as seen from the Burrard Civic Marina on March 11, 2009 in Vancouver, Canada. Vancouver will be the site of the 2010 XXI Winter Olympics. (Photo : Doug Pensinger/Getty Images)

Foreign investors are using legal loopholes in Canadian real estate laws to skip paying taxes on properties they buy.

Vancouver real estate market is one of the hottest in Canada as one equity manager from Beijing proved with his purchase of a $2.3 million home. There is nothing extraordinary about this save for the fact that his salary is only $19,000 a year. According to Globe and Mail, Jing Sun wired the money to his family in Canada who are among the many foreigners investing in Canadian real estate. What makes this alarming is Sun along with other buyers is able to avoid paying taxes for his purchase.

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In the same report by Globe and Mail, many local citizens who wish to buy single-family houses are finding it hard to because of skyrocketing prices. They point the finger to foreign buyers who are driving the rates up. This problem will be discussed in a public forum organized by the Urban Development Institute, which as of press time, has announced sold out seats.

Public records show that foreigners who are purchasing property in Vancouver are not paying the right amount of tax and in many cases, none at all.  A Toronto tax lawyer, David Chodikoff said, "I actually have clients in this circumstance."

He also added that foreign investors are actually not breaking any laws but are just using some loopholes in the system they have discovered. "They love to take advantage of Canadian tax law and it is happening in other communities too."

Meanwhile, in a report by, the real estate market of Canada is currently in a state of transition with traditional drivers of market changing. The weakening Canadian dollar plus the low cost of energy is paving the way for new opportunities in warehousing, transportation, and manufacturing. The rental market is also expanding due to rising housing costs that Canadian income cannot cope with.

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