BUFFALO, N.Y. (WKBW) — Just as Western New Yorkers can start returning to their properties on the other side of the Peace Bridge after years of prohibitive restrictions, they're likely to be hit again with a new tax on foreign property owners.
The Underused Housing Tax is currently moving its way through Canada's Parliament. The bill has one more reading in the House of Commons before going off to the Senate and receiving royal assent.
As it's currently written, the Underused Housing Tax imposes a one percent tax on foreign property owners whose properties are not occupied at least 180 days of the year. There are some exemptions, including if the property is not suitable for year-round use as a place of residence.
The intent of the law is to cool the red-hot housing market in parts of Canada, which has beenfueled by foreign investors. But the way the bill is written creates a ripple effect for cottage owners in Fort Erie.
"We've got a lot of clients who have owned property here for 20, 40 years who are not necessarily high income clients, but over those 20, 40 years those properties have tripled, quadrupled in value, and they don't have the income to cover this kind of tax," said Mark Fehrman, a CPA with KIS Tax Services in Fort Erie.
Rep. Chris Jacobs (R-NY26) calls the bill a "slap in the face to Americans."
"The fact is, it's a poorly written law and it seems like they know full well one of the unintended consequences is that cottage owners could very well be impacted by another tax," said Jacobs.
Rep. Brian Higgins believes the tax is in violation of the United-States-Mexico-Canada-Agreement.
"It discriminates between Canadian citizens and U.S. citizens," said Higgins.
If the bill does become law, Higgins and Jacobs are taking a unified stand about potential retaliation against Canadians.
"I'm certainly going to explore it, yes, I mean I have to protect my people," said Higgins.
With many Canadians owning property in Ellicottville, any retaliatory tax could impact them.
Higgins and Jacobs are lobbying their Canadian counterparts, hoping to avoid what Higgins calls a "race to the bottom" of retaliatory taxing, and get the Underused Housing Tax amended so that foreign cottage owners are not on the hook.
