The Department of Finance launched consultations on Monday to seek feedback on a proposed tax on vacant homes owned by non-residents.
The Liberal government said in the 2021 federal budget that it planned to implement Canada’s first-ever national tax on non-resident, non-Canadian-owned residential real estate that is considered to be vacant or underused.
Effective Jan. 1, 2022, the underused housing tax would ensure that foreign, non-resident owners who use Canada to passively store their wealth in housing pay their fair share, the consultation document said. The proposal is for a 1% annual tax on the underused real estate’s value, to be paid by April 30 of the following year. The revenue would be invested in affordable housing.
“Houses should not be passive investment vehicles for offshore money. They should be homes for Canadian families,” the release said.
The department is seeking the views of legal experts and tax practitioners, as well as those in the real estate and tourism sectors. Feedback received by Sept. 17 will be taken into consideration as the government designs and drafts legislation. Submissions can be sent to the Finance Department’s tax policy branch at UHT-TISU@fin.gc.ca.
Full details on the government’s proposed approach can be found in the related background paper.