The days of turning a home into a quick profit in B.C. could be numbered.
Next week, when the calendars turn to 2025, the provincial government will begin imposing a 20-per-cent tax on all profits if a home is sold within a year of purchasing it. That number will fall to 10 per cent at 18 months and nothing after two years.
On Friday, B.C. Minister of Housing Ravi Kahlon told CTV News that the flipping tax is one of many actions the government is taking to help people find homes they can afford. The money raised from the tax will also be used to support housing programs and build new homes.
“We’re sending a clear message that speculation doesn’t pay,” said Kahlon.
The province has faced criticism over the flipping tax since it announced the legislation earlier in the year.
EXP Realty realtor Ryan Dash believes the tax will have an adverse effect on the market. He worries it will further restrict home sales because homeowners will wait two years to avoid taxation.
“The actual policy itself seems to penalize the general public. It forces them now to either buy new or buy something that’s old that cannot be renovated,” said Dash.
“On top of that, the policy attacks the carpenters of the world and the plumbers of the world, or the people who have worked years to save up for an investment property.”
Dash isn’t convinced that the tax will increase affordability, although it might boost the number of rental properties.
In November, Statistics Canada released data showing 2.8 per cent of homes that sold between 2019 and 2021 were flipped. StatsCan explained this would reflect homes re-selling within a year. For homes re-sold within two years, the rate rose to 5.4 per cent.
The BC Real Estate Association (BCREA) is concerned that taxes could do more harm than good.
The group believes that rather than penalizing developers, incentives should be created to help build housing supply and elevate pressure on the market.
“It has to be a multitude of well-intentioned … policy that has the right outcome. And we’re not seeing that from a taxation perspective,” said Trevor Koot, the CEO of BCREA.
“We’re seeing it from an incentive, incentivizing perspective to create housing, not to penalize those around the existing housing stock. “
The association is calling on the provincial government to engage with stakeholders before making housing decisions in 2025. They hope to work together to help solve the affordability crisis.
Kalon says, aside from flipping tax, other actions to address affordability in B.C. include driving the construction of more row homes, duplexes and townhomes by fixing zoning rules and utilizing unused and underused government- and non-profit-owned land to build more middle-class homes faster.
He explained that the First Time Homebuyers program, increasing the Newly Built Home Exemption threshold and encouraging more rental construction by exempting new purpose-built rental buildings from the property transfer tax are all additional actions being taken to improve the housing supply.
“We’re delivering 90,000 more homes now, with hundreds of thousands more on the way over the next 10 years,” said Kahlon.
