BUFFALO, N.Y. (WBEN) - Americans who own property in Canada may have to pay an increased property tax starting next year.
A proposal included in the 2021 Canadian budget outline would impose a national property tax equal to 1% of a property's value on foreign-owned properties that have sat vacant.
Congressman Brian Higgins said the property tax could result in a "significant financial burden" on Western New Yorkers who own a home in Canada while simultaneously weakening the relationship between the two countries.
"International money is coming into Canada to buy up large buildings and large condominiums in Toronto," Higgins said. "That is a stark difference between people from Western New York who own property in Thunder Bay or Bay Beach or Crystal Beach who own property in the Province of Ontario. To now be imposing a property tax at the federal level is misguided."
The intent of the tax is to hold foreign property owners accountable for the vacant properties, though there is a worry from some that they will be penalized because they have been unable to take care of their home during the pandemic.
"Homes are to live in," the budget reads. "This measure is one tool among several to ensure that Canada's housing market is a place to grow for Canadians starting their families and building their future."
The Canadian government said they will give an opportunity to comment on the proposed tax "in the coming months", including on whether special rules should be established for "small tourism and resort communities".
Higgins on Monday wrote a letter to Kirsten Hillman, the Canadian Ambassador to the United States outlining his concerns. If the proposal passes, Higgins said there may be a US response.
"I would be forced to contemplate reciprocal measures on Canadian owners of real property in the United States, including building on the existing Foreign Investment in Real Property Tax Act framework or using tariff authorities to impose a new annual fee to achieve specific, narrow, and reciprocal response. But I sincerely hope we do not have to get to the point of escalation and retaliation."
Senate Majority Leader Chuck Schumer said it's wrong for Canada to impose the tax.
"From what I'm told, what they wanted to do is prevent speculation of people who never intended to occupy the homes," Schumer said. "They buy them and flip them and all that. Somehow, this is landing on people who have homes and use the homes but couldn't use them last year because of COVID. I hope they'll straighten this out. It seems just common sense that they should. I would urge them to do it and do it quickly. Once the border gets opened, people will start using the homes again."
