'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
Serial sexual offender linked to unsolved 1970s homicides of four Calgary girls, women
An investigation into unsolved historical homicides from the 1970s has linked the deaths of two girls and two young women in and around Calgary to a now-deceased serial offender.
Woman with liver failure rejected for a transplant after medical review highlights alcohol use
For nearly three months, Amanda Huska has been in an Ontario hospital, part of it on life support, because of severe liver failure. Her history of alcohol use is getting in the way of her only potential treatment: a liver transplant.
$500K-worth of elvers seized at Toronto airport
Fishery and border service officers seized more than 100 kilograms of unauthorized elvers at the Toronto Pearson International Airport on Wednesday.
Toronto eliminated from PWHL playoffs
Toronto has been eliminated from the PWHL playoffs.
Information commissioner faces $700K funding shortfall, says system is 'overwhelmed'
Canada's information commissioner says her office is facing a $700,000 funding shortfall that could impact its ability to investigate complaints about government transparency and accountability.
B.C. man 'attacked suddenly' by adult grizzly near Alberta boundary: RCMP
A B.C. man is recovering from multiple injuries after he was "attacked suddenly" by an adult grizzly bear near Elkford Thursday afternoon.
Backlash over NFL player Harrison Butker's commencement speech has reached a new level
The NFL is distancing itself from controversial comments by Kansas City Chiefs kicker Harrison Butker during a recent commencement address.
Dabney Coleman, actor who specialized in curmudgeons, dies at 92
Dabney Coleman, the mustachioed character actor who specialized in smarmy villains like the chauvinist boss in '9 to 5' and the nasty TV director in 'Tootsie,' has died. He was 92.
Craig Berube named as next head coach of Toronto Maple Leafs
The Toronto Maple Leafs have named Craig Berube as their new head coach.