'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
Indian envoy warns of 'big red line,' days after charges laid in Nijjar case
India's envoy to Canada insists relations between the two countries are positive overall, despite what he describes as 'a lot of noise.'
Stormy Daniels describes meeting Trump during occasionally graphic testimony in hush money trial
With Donald Trump sitting just feet away, Stormy Daniels testified Tuesday at the former president's hush money trial about a sexual encounter the porn actor says they had in 2006 that resulted in her being paid to keep silent during the presidential race 10 years later.
U.S. paused bomb shipment to Israel to signal concerns over Rafah invasion, official says
The U.S. paused a shipment of bombs to Israel last week over concerns that Israel was approaching a decision on launching a full-scale assault on the southern Gaza city of Rafah against the wishes of the U.S.
Former homicide detective explains how police will investigate shooting outside Drake's Bridle Path mansion
Footage from dozens of security cameras in the area of Drake’s Bridle Path mansion could be the key to identifying the suspect responsible for shooting and seriously injuring a security guard outside the rapper’s sprawling home early Tuesday morning, a former Toronto homicide detective says.
Northern Ont. woman makes 'eggstraordinary' find
A chicken farmer near Mattawa made an 'eggstraordinary' find Friday morning when she discovered one of her hens laid an egg close to three times the size of an average large chicken egg.
Susan Buckner, who played spirited cheerleader Patty Simcox in 'Grease,' dead at 72
Susan Buckner, best known for playing peppy Rydell High School cheerleader Patty Simcox in the 1978 classic movie musical 'Grease,' has died. She was 72.
Jeremy Skibicki has 'uphill battle' to prove he's not criminally responsible in Winnipeg killings: legal analysts
Accused killer Jeremy Skibicki could have a challenging time convincing a judge that he is not criminally responsible for the deaths of four Indigenous women, a legal analyst says.
Bye-bye bag fee: Calgary repeals single-use bylaw
A Calgary bylaw requiring businesses to charge a minimum bag fee and only provide single-use items when requested has officially been tossed.
Alcohol believed to be a factor in boating incident after 2 men die: N.S. RCMP
Two Nova Scotia men are dead after a boat they were travelling in sank in the Annapolis River in Granville Centre, N.S., on Monday.