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B.C. relaxes foreign buyer tax with refunds for workers

Condos in the Gilmore area of Burnaby are seen in the distance behind houses in east Vancouver, B.C., in this file photo

Darryl Dyc/for The Globe and Mai

British Columbia has loosened its 15-per-cent tax on foreign home buyers to exempt several thousand international residents on provincial work permits, and will hand out refunds to some who already paid it.

The government announced the policy change on Friday, seven months after introducing a tax that has been criticized as unfair to new immigrants living and working in B.C. The tax was applied to home purchases in the Vancouver region involving buyers who are not citizens or permanent residents.

Premier Christy Clark, who had hinted at changes earlier this year, said the new exemptions are aimed at making the Vancouver region more attractive to tech-sector professionals, who make up more than 900 of the 6,000 people who received work permits last year through the provincial nominee program.

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Now, those who were on these visas when they bought a principal residence can apply for an exemption from the tax, which is believed to have slowed down the region's frenzied market after it was introduced last August. People in that group who have already paid the tax can apply for a refund.

Beginning this August, B.C. will also start giving rebates to foreign buyers who became permanent residents or Canadian citizens within one year of their purchase. But this group must have a principal residence and live there full-time for a year, the release stated.

Another 6,000 nominees will receive B.C. work permits this fiscal year, during which the finance ministry estimates it will lose out on $1-million to $3-million plus interest by exempting the foreign buyer tax. In the following years, these exemptions will total an estimated $10-million in annual foregone revenue, a spokesperson added.

Vancouver MLA David Eby, the NDP's critic for housing, said that, by failing to amend this tax earlier, the provincial government brought seven months of unnecessary hardship for immigrants and employers trying to recruit foreign talent already weary of the region's unaffordable housing.

"The Liberals should rightly be embarrassed that it took them so long to fix this," Mr. Eby said on Friday, the day after the legislature shut down for the upcoming election campaign.

He said the government should have also closed a loophole that allows foreign speculators to buy presale condos then flip them months later before officially taking ownership and being subject to the extra tax.

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Tom Davidoff, an economist at the University of British Columbia, praised Friday's move for helping those foreigners who live and work in B.C., even if the change is better late than never.

"A good idea is always a good idea [even if] it would have been a good idea the day they announced it," he said of the seven-month-old tax.

Even with the changes, the foreign buyer tax still faces a court challenge.

Luciana Brasil, a Vancouver lawyer, said Friday's announcement is good news for her clients in a potential class-action lawsuit that argues the tax violates the Charter of Rights and Freedoms and "perpetuates prejudice and stereotyping on the basis of national origin."

"At the end of the day, we think any recognition by the government of the over-breadth of what they did is good and it's a step in the right direction," she said. "But we maintain the view that the entirety of the tax is unlawful."

The challenge, which could be certified in October, was filed by a local Chinese woman who had to pay an additional $83,850 on a Langley townhouse she agreed to buy before the tax was announced. Despite living and working here, Ms. Brasil said, her clients are unable to get relief under the new rebate system.

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With the unaffordable price of housing looming large over the provincial election this May, the Liberal government moved last summer to rein in Metro Vancouver's market with the levy, which polls show a majority of citizens supported.

The government has repeatedly said there is no plan to extend the tax beyond the 22 communities it currently affects in the Vancouver region. Specifically, there have been calls for a similar tax in the Victoria area, which Canada's housing agency recently singled out as an area experiencing a dangerous surge in home prices.

The latest official data showed that foreign citizens edged back into Metro Vancouver's flagging real estate market months after the tax, but the percentage of buyers who are not Canadians or permanent residents is still well below the double-digit rates seen before it was introduced.

After sales nearly froze in August, foreign activity has remained highest in the two Vancouver suburbs of Burnaby and Richmond, where, in the month and a half before the tax, almost one in four properties went to international buyers.

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