Real estate association doubts B.C.’s flipping tax is worth the trouble
VANCOUVER (CP) — Policy watchers are split on the value of British Columbia’s upcoming provincial flipping tax targeting those looking to make a quick buck in the real estate market.
Brendon Ogmundson, chief economist of the British Columbia Real Estate Association, says the tax could end up reducing the overall number of homes on the market while only applying to a small number of properties.
Ogmundson also said the new law may not generate the kind of overall revenue the government is predicting – in part because it runs the risk of discouraging people from putting their homes on the market, resulting in lost property transfer taxes.
“I think that the cost of this policy, and the unintended consequences of it on the supply side of things, are more trouble than they’re worth in terms of the effect on affordability, which is very minimal,” he said.
Paul Kershaw, a policy professor at the University of British Columbia and founder of the think tank Generation Squeeze, said while the tax may only impact a small number of properties, it sends an important message that the province is “recalibrating” around the principle of having a home first and an investment second.
“We still need to turn our attention to the here and now, looking back at how much wealth has already been accumulated, and just putting in a flipping tax is not going to address that,” he said.
As of Jan. 1, 2025, homes in B.C. sold within the first year after being purchased will face a tax rate of 20 per cent of the profit, while that tax rate drops gradually to zero after two years.
Ogmundson said about 10 per cent of real estate transactions in Metro Vancouver take place within two years of a purchase, and many of those would qualify under a long list of exemptions including divorce or job relocation.
He said would-be sellers who don’t qualify for an exemption but are near the end of the two-year window may be tempted to wait it out.