'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
'Repetitive partisan conduct': Conservatives to force vote on ousting Speaker Greg Fergus
The federal Conservatives have advanced a motion that will force MPs to vote on whether to oust Greg Fergus as House of Commons Speaker, after MPs' deputy adjudicator ruled Monday that the Liberal member's allegedly errant partisan event invite required urgent attention.
What a CBSA strike could look like, according to an expert
Slowed or interrupted travel, the passing of goods and significantly restricted borders should be expected if Canadian border workers take upcoming strike action.
B.C. senior prepares to move due to devastating effects of fraud
A Courtenay, B.C., senior is downsizing and packing to move as she comes to accept she can no longer afford to stay in her home, after falling victim to a scam that robbed her of her life savings worth more than $100,000.
WATCH Alta. man rescues wild foal trapped on steep cliffside
A man's daring rescue of a newborn wild foal that was trapped after falling down a steep embankment was caught on video over the weekend.
'Decades-long fight': MPs unanimously pass 'anti-scab' legislation
A bill that would ban federal employers from using replacement workers or 'scabs' during lockouts or strikes passed the House of Commons unanimously on Monday.
Netanyahu acknowledges 'tragic mistake' after Rafah strike kills dozens of Palestinians
Israeli Prime Minister Benjamin Netanyahu acknowledged Monday that a "tragic mistake" had been made after an Israeli strike in the southern Gaza city of Rafah set fire to a tent camp housing displaced Palestinians and, according to local officials, killed at least 45 people.
Mike Tyson had medical issue on cross-country flight
Boxing legend Mike Tyson required medical attention after experiencing an 'ulcer flare up' toward the end of a cross-country flight Sunday, his representatives confirmed to the New York Post.
81-year-old arrested after police say he terrorized a California neighbourhood with a slingshot
An 81-year-old man who investigators say terrorized a Southern California neighbourhood for years with a slingshot has been arrested, police said.
Why Canada's big grocery stores are under investigation
Amid mounting outrage over high grocery prices, a retail expert says there's a solution to fostering more competition in the country.