'More trouble than it's worth': Report claims B.C.'s flipping tax won't help affordability
House-flipping activity makes up a small percentage of residential real estate sales in B.C., according to a new report questioning the effectiveness of the province's proposed flipping tax.
The B.C. Real Estate Association's report estimates the flipping tax would have minimal impact on home prices, but decrease sales by 1.7 per cent.
Brendon Ogmundson, the economist behind the report, said some sellers might delay listing their property to avoid the tax, and that buyers would be faced with tightening market conditions and high prices.
"There’s an incentive now for potential sellers to delay listing," Ogmundson said. "So there is a real potential that listings in the housing market fall, and if they fall enough the supply effect overwhelms the demand effect and you end up with higher prices with the tax."
The tax, outlined in B.C.'s 2024 Budget, would affect those who buy then sell within a two-year period. If passed, the new rules will take effect on Jan. 1, 2025.
Under the legislation, properties sold within a year of purchase would face a tax rate of 20 per cent of the profit, while homes sold between one and two years from purchase would face a 10 per cent hike.
The government's proposal does include exemptions, including for life events such as divorce, death, illness and work relocation.
Ogmundson argued the only way to escape the ongoing housing crisis is by increasing supply.
“The way we allow families to get into the housing market is to have abundant supply. Measures like this are not going to do very much to allow average families to get into the market a lot easier," he said.
The report finds flipping makes up just under three per cent of sales across B.C.
Andrew Lis, economist with the Real Estate Board of Greater Vancouver, agreed the new tax will likely decrease affordability.
"The outcome of that is lower supply, so that means people wanting to come into the market will have less choices, and when you have less supply and more demand, prices tend to rise.”
Lis added the number people who are actively speculating on property is very low, and that it's difficult to determine whether or not a seller is adding value to a home or simply flipping it for a profit.
“Is this somebody who just bought a house and did nothing with it, or is this somebody who came in and added value to a home, renovated it or added a suite?" Lis said. "There is no flag in each sale that explains the reason for selling. Most people move for very normal life reasons and I think this policy is going to have the opposite effect of what it intended.”
Ogmundson said the findings show the tax has more risk and less reward: “It’s really hard to see any benefits to the housing market as a result of this tax but there are certainly a lot of costs and consequences.”
CTVNews.ca Top Stories
'The root cause': Canada outlines national action plan to fight auto theft
The federal government is launching what it calls its 'national action plan' to combat auto thefts, which will include stronger penalties for thieves, and increased information sharing between police agencies, government officials and border enforcement.
What is BORG drinking, and why is it a dangerous trend? An expert explains
If you've been to a party lately and haven't seen someone drinking a BORG, you're likely not partying with college students.
The world's best airline is paying staff a bonus of 8 months' salary
Singapore Airlines will reward its employees with a bonus worth nearly eight months of salary, a person familiar with the matter told CNN on Friday.
U.S. Supreme Court rejects appeal from former Guantanamo detainee Omar Khadr
The U.S. Supreme Court on Monday rejected an appeal by a Canadian-born former Guantanamo detainee who was seeking to wipe away his war crimes convictions, including for killing a U.S. soldier in Afghanistan.
Michael Cohen says he stole from Trump's company as defence presses key hush money trial witness
Michael Cohen testified Monday that he stole tens of thousands of dollars from his ex-boss Donald Trump’s company, an admission defence lawyers hope to use to undermine Cohen’s credibility.
'Next man up': Canucks coach, teammates bracing for Game 7 without Brock Boeser
Questions about how the team is going to handle the absence of star winger Brock Boeser from a do-or-die game seven dominated pre-game interviews with the Vancouver Canucks coach and players Monday morning.
Woman, 35, in critical condition after her truck collided with a Via Rail train near Montreal
A 35-year-old woman is in critical condition after the pick-up truck she was driving was struck by a Via Rail passenger train Monday morning in Quebec's Monteregie region.
Iran's president and foreign minister die in helicopter crash at moment of high tensions in Mideast
Iranian President Ebrahim Raisi and the country's foreign minister were found dead Monday hours after their helicopter crashed in fog, leaving the Islamic Republic without two key leaders as extraordinary tensions grip the wider Middle East.
Investors watching posts from 'Crypto King' in the wake of fraud, money laundering charges
Former investors of the self-styled “Crypto King” say they are watching his social media accounts and worried his displays of wealth are signs he’s spending their money, even now, as another large expense tied to Aiden Pleterski has triggered a previously unreported lawsuit.