A retired Cayman Islands couple is under contract to buy a Victoria condo this fall, but when that happens they will also have to pay $120,000 in foreign buyer tax for a brand-new unit that they can’t visit because borders are closed due to the pandemic.
Jennifer and Leonard say they are stuck in a situation they never expected.
They signed a pre-sale agreement in June 2017 to buy a condo for $600,000 in the Wade development in the 1100 block of Pandora Avenue. They put down $90,000 as a deposit.
They were surprised in 2018 when B.C. announced that a foreign buyer tax of 20 per cent of the market value of a home would be applied in Greater Victoria.
That means once the sale closes and the Dilberts receive legal title to their fourth-floor unit, they will owe an additional $120,000 to the province.
“That’s a lot of money — more than we can afford, basically,” Jennifer said in an interview from the Cayman Islands on Tuesday.
Leonard said: “It is a very difficult situation to be in. We have a limited income stream.”
The Dilberts are retired civil servants receiving pensions, living in the West Bay District of Cayman Islands in the Western Caribbean.
On top of the foreign buyer tax, there is B.C.’s speculation and vacancy tax of two per cent, plus the usual costs associated with a property purchase, such as lawyers fees.
The other concern is that the ability to travel between countries has changed now and possibly long into the future. The couple has no idea when travel may be feasible again.
Born in the Cayman Islands, the Dilberts attended university in eastern Canada. In 1999, they bought a house in the North Quadra area when their daughters were teenagers.
Jennifer took work in London for a time. While there, she was made a Member of the Most Excellent Order of the British Empire for public service in the Caymans. She received the honour from the Queen at Buckingham Palace.
The Dilberts eventually sold their Saanich home and invested in the Wade development. They were attracted by its low-rise profile, environmentally friendly features, such as extensive gardens, and proximity to downtown.
Leonard writes contemporary poetry and enjoyed the artistic culture of Victoria, often reading his work at the Mocambo Cafe’s open-mike sessions. They loved attending lectures at UVic, shopping and going to restaurants downtown.
“The place is a part of us,” he said.
He said they especially love the West Coast and describes Victoria as the “best of all worlds.”
“This is not about us speculating in the market,” Leonard said. “The whole thing is heartbreaking to me.” They were most recently in Victoria in October of last year and expect the condo to be finished in a month or so.
The Dilberts’ plan was to retain their home in the Cayman Islands where their elderly parents and grandchildren live and also visit friends and spend time in Victoria.
They were most recently in the capital region in October 2019.
But now, they have their unit on the market, hoping to sell the agreement to purchase the two bedroom and den condominium prior to taking title, in order to avoid the foreign buyer’s tax. The unit is for sale at $649,000.
Jennifer suggests that people in their position could be grandfathered in some way so that they are not required to pay the foreign buyer tax.
Brett Jones, real estate agent for the Dilberts, said: “I think during COVID, the foreign buyer tax should be suspended for people to close on their property for the purpose of reselling it.”
He’s not calling for an exemption so that buyers can use a home because that would defeat the purpose of it — the government brought it in to create more affordable housing for British Columbians.
“But it is penalizing people that planned on purchasing these properties and then won’t be able to use them, tax not withstanding, and it’s not really fair to pay and not be able to use it.”
Jones suggests allowing people in this situation to get a refund on the foreign buyer tax if a property is sold within six months or one year of closing.
B.C.’s Ministry of Finance does not comment on individual circumstances but said in a statement that people can contact it to discuss options regarding the speculation and vacancy tax.
There is a provision for exemptions for circumstances such as extended absence, divorce, home renovations and hospitalization.
