Canada is moving forward with a tax on properties owned there by foreign citizens, and American officials are opposed.
The Underused Housing Tax Act would implement a 1% tax on residential properties in Canada held by owners who are neither Canadian residents nor citizens. According to a summary drafted by Canada’s Library of Parliament, the 1% tax would be tied to either the property tax valuation or the properties most recent sale price, whichever is higher.
There are plenty of exemptions to the tax, however. Non-winterized homes, those in Census-identified communities with less than 30,000 residents, and homes occupied for more than four weeks without a break per year are exempted from the tax.
The legislation passed the Canadian House of Commons on Wednesday, and is pending consideration in the Canadian Senate. If approved there, the bill would only need to be approved through the largely ceremonial step of “royal assent’ to become law.
On Sunday, Congresswoman Elise M. Stefanik, R-Schuylerville, the Republican co-chair of the Northern Border Caucus, said this tax would be another unfair imposition on north country residents and Americans who own Canadian property, coming just months after the long-term closure of the U.S-Canada border ended.
“Some of our families haven’t been able to visit their property in Canada for two seasons because of these restrictions, and this tax would discriminate against them, a violation of the (United States-Mexico-Canada Agreement),” she said.
Congresswoman Stefanik said she will continue to advocate against the Underused Housing Tax moving forward.
Congressman Brian M. Higgins, D-Buffalo, Democratic co-chair of the Northern Border Caucus, urged U.S. Trade Representative Katherine C. Tai to press Canadian officials to rethink the tax as she meets with them.
In a letter sent Wednesday, the same day the bill passed the Canadian House of Commons, Rep. Higgins said the tax would impact many Northern New Yorkers who own property just across the border.
“The shared community and culture between the United States and Canada is a unique, mutually beneficial economic and social bond that we must prioritize and foster for the prosperity of the two countries,” he said. “A punitive tax on non-Canadians will jeopardize this relationship and harm many on both sides of the border in the process.”
In a hearing last month, Congressman Higgins expressed concern that after the very recent end of a months-long border closure due to COVID-19, property owners who had no ability to visit their Canadian properties would be unduly taxed for circumstances outside their control.
“The Canadian border was closed for some 19 months, my district borders the Canadian border,” he said. “During that whole period of time, the Canadian government proposed a 1% tax on property owners that are not Canadian citizens.”
If enacted, the tax would go into effect on Jan 1, 2023, and all non-resident property owners in Canada will be required to file an annual declaration with the Canada Revenue Agency for each property they own.