Like it or not, the 15% foreign buyers tax is now in effect. It is a property transfer tax on foreign nationals, corporations, and trusts that purchase homes in Metro Vancouver. Except the government keeps changing the rules, making it very difficult to figure out who has to pay and who doesn’t. This new tax measure is aimed at keeping housing prices affordable for average Canadians.
To look at an example, the average detached home in Vancouver is around $1.83 million. If you’re a foreign buyer that means an extra $274,500 is added to your final purchase. It’s an expense that a lot of people can’t afford. Because of this tax, a lot of foreign nationals who were previously looking at Vancouver will now turn to other cities like Toronto and Calgary, and invest in their economies.
A lot of people were caught off guard by this tax and as a result had to find hundreds of thousands of extra dollars somehow. Many people had to forfeit their down payment of hundreds of thousands of dollars because they couldn’t come up with the money, losing their savings and often their dream of owning a home. Now the government has again changed the rules so if you’re a landed immigrant you don’t have to pay the 15% tax. The government is even considering refunding some of this money that was lost during the transition, but it’s still uncertain whether that will happen or not. It’s a confusing time to buy a house for locals and foreigners alike.
However, there is an innovative way that offers hope to people who are shut out of the market. For both foreigners and locals alike who feel like they can never be able to afford a home in one of the most beautiful parts in the world, rent-to-own offers hope. Rent to own is just like a regular purchasing agreement with only a few exceptions.
With Rent to Own you able to avoid a large down payment. It’s a financing option that gives you time to build equity until you can get financing from a bank. You sign a 5-year real estate purchase sales agreement with a 5-year close to buy the house at a fixed rate. You only have to put 5% down payment towards the future price of the home instead of the 20-30% most banks require.
You make regular monthly payments like a normal lease, but with rent-to-own part of your monthly payment goes towards your future purchase. On top of that you earn equity from the very start of the agreement which has increased on average in North Vancouver increased by 6%.
If you’re looking to avoid paying an extra 15 % or just want an easier way of getting into the market, then Rent To Own might be the right solution for you. Call us at 1 (877) 546-2739 or email us today.