WASHINGTON — The Canadian government continues to move forward with its plan to impose a 1% annual tax on the value of underutilized residential properties, threatening many Buffalo-area residents who own luxury homes. holidays in Ontario with huge new annual levies.
While Canadian officials made it clear several months ago that seasonal homes that aren’t winterized would be exempt from the tax, Canada’s plan continues to worry both Americans who own property in Canada and sympathetic politicians. from southern Ontario.
Noting that his family has owned a home in the Thunder Bay Colony of Fort Erie for a century – and that his mother spent part of her 94 years there – Eric Clauss of Buffalo said: “The tax isn’t really anything something that suits people who are committed to the community like her. We understand that this tax is a way to respond to land speculators. But if you want to go after the land speculators, don’t go after someone who’s been there for 100 years.
Meanwhile, Tony Baldinelli, the member of the Canadian House of Commons who represents Niagara Falls and Fort Erie, spoke in Parliament in Ottawa earlier this month to oppose the proposed tax, saying that it would harm Americans who own homes on the Niagara Peninsula.
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“These long-time landowners are considered valued members of our Niagara community,” Baldinelli said. “They are part of our social fabric and they support our local economies. It would be wrong to specifically target them in Niagara with a punitive levy like the Underutilized Housing Tax.”
So far, however, Prime Minister Justin Trudeau’s Canadian government continues to push the new tax – which, if approved by Parliament, is expected to be paid for the first time in April 2023 for the 2022 tax year. .
The tax is not really aimed at Americans who own properties along the Lake Erie waterfront in Canada. Instead, Canadian officials said, it caters to foreign investors who in recent years have bought condos in Toronto and Vancouver, exacerbating the shortage of affordable housing in the two cities.
The authors of the proposed tax attempted to insulate vacation properties from the new tax in several ways. In addition to adding a provision exempting non-wintered residences and residences located on unmaintained winter roads, foreign owners will not have to pay tax on a secondary residence if they occupy it for more than four weeks. per year or if these properties are located in a census agglomeration of less than 30,000 inhabitants.
But Americans who own vacation homes in the Niagara Peninsula raise several concerns about these exemptions. They wonder how the Canadian government will track which properties are winterized and which are not. They say some families use their homes on weekends for a few weeks each summer, but those visits may not add up to the four-week stay required to be tax-exempt. And they’re concerned that Fort Erie’s population at the last Canadian census was 30,710, which means the town is just a bit too crowded to qualify for the exemption the Canadian government has provided for vacation homes in small communities.
“My cabin isn’t even heated or insulated, so maybe I have a shot at it,” said JoAnn Boehm of the Town of Tonawanda, whose parents built a cedar cabin in Ridgeway, in Ontario in 1963 and spent time there almost every summer of his life. “But I have a number of friends on the waterfront who are afraid of this tax.”
Ellen and Gerald Stay, longtime Williamsville residents who now divide their time between Florida and Fort Erie, are among them. Ellen Stay said she and her husband would likely want to sell their longtime home in the Thunder Bay Settlement if the tax were put in place.
When asked how much more the couple would have to pay annually in Canadian taxes if the proposal were finalized, she replied: “We think at a minimum it will be $20,000. … It’s just too much. C is absurd.”
So far, such arguments have failed to convince the Liberal government of Canada to further amend the tax to clearly exempt vacation properties in southern Ontario. But Baldinelli, the member of the Canadian House of Commons, said in an interview that the tax proposal could still be changed either when the House of Commons takes up the proposal or when the Canadian Senate considers it.
“The only good thing is that we are still debating the legislation and it hasn’t been passed yet, which still allows us to present the issues and possibly get changes,” Baldinelli said.
Meanwhile, Representative Brian Higgins, a Democrat from Buffalo, has identified two courses of action he could take if the Canadian Parliament does indeed approve the tax. He said the tax likely violated the agreement between the United States, Mexico and Canada, the trade agreement binding the three countries, so he could file a legal challenge. Higgins said he could also propose a 1% reciprocal retaliatory tax on properties Canadians own in the United States.
Higgins, who spoke to U.S. Trade Representative Katherine Tai about the issue two weeks ago, pointed out that Canada appears to be imposing the new tax on Niagara Peninsula vacation homeowners without intending to.
“It’s not foreign nationals buying properties in Vancouver and Toronto,” he said. “This is a unique class of cottage and property owners who use their properties on a seasonal basis, who contribute to the community.”
It’s people like Jerry Clauss, the 94-year-old mother of Eric Clauss. She said when she’s at Thunder Bay Colony in Fort Erie, she tries to walk along the beach for three or four miles a day, picking up litter that others have left on the sand.
“It really is a community, and I’m kind of proud of that,” she said.
Even so, Eric Clauss said he and his siblings may one day be forced to sell if the tax is put in place. And it’s just that kind of possibility that prompts Nick Dubanow, a Fort Erie councilman, to draft a resolution suggesting that the Canadian government amend the tax proposal to more clearly exempt owners of local vacation homes, lest that this disrupts the deep ties between Buffalo and Southern Ontario.
“I really don’t think our federal government thinks about the consequences of the decisions it makes,” Dubanow said.