B.C. premier admits home-flipping tax is no silver bullet

B.C.'s premier says a proposed housing flipping tax that would slap a 20 per cent tax on properties sold within a year of purchase is not a cure-all to the province's housing woes, but is designed to help free up more homes to people who want to live in them.

"Anything the government can do to shorten the list of competitors for that home is going to be welcome," said Premier David Eby.

"The flipping tax is not a silver bullet. If it was a silver bullet, it would have been fired a long time ago. It's just one piece of the overall strategy to deal with housing."

Eby, along with Housing Minister Ravi Kahlon, touted the proposed tax in Vancouver on Monday morning, four days after the intention of putting it in place was made public during the 2024 budget announcement.

The measure, which is scheduled to come into effect onJan. 1, 2025,would see the 20 per cent rate slide to zero over the course of the second year after purchase.

The tax has attracted criticism from some experts, advocates and politicians who have described it as a mostly symbolic gesture that will not free up a significant amount of housing for people struggling to find it.

"I don't expect this tax to make a great deal of difference either way," said Tom Davidoff, director for UBC's Centre for Urban Economics and Real Estate.

Davidoff highlighted a residential property flipping rule the federal government instituted in 2023that ensures profits from the disposition of flipped property are taxed as business incomebut, he says, hasn't helped bring down the cost of housing.

Davidoff also said B.C.'s proposed flipping tax, whether effective or not, could be passed with impunity by the NDP government and communicated as part of a suite of measures to try to make housing more affordable in the province.

"Empty homes, you know, nobody's there to vote," said Davidoff. "So, [they're] an attractive target for taxation."

On Monday, Eby and Kahlon weren't able to say exactly how many homes were currently being flipped in B.C, but said the tax was expected to make more than $40 million a year in revenue, which is significant.

"What that says is it's pretty considerable," said Kahlon. "And our hope, over the coming years, is that that number actually drops because we want to see more of these homes available for people in our communities and more of that land available for our home builders."

The tax is slated to come with several exemptions for people having to sell within a twoyear timeline because of life circumstances. Exemptions will also beprovided "for those who add to the housing supply or engage in construction and real estate development," according tobudget documents.

Cooling market

Real estate agents told CBC News that the province's housing market is cooling presently and there is less flipping going on compared to previous years, when prices were increasing at an astonishing rate.

The chief economist of the British Columbia Real Estate Association says the incoming tax might not generate as much revenue as the government expects and might only affect a small number of properties.

Brendon Ogmundson saidabout 10 per cent of real estate transactions in Metro Vancouver take place within two years of a purchase, and many of those sales would be exempt from the new tax for reasons such as divorce or job relocation.

Opposition MLAs such as B.C.United's Peter Milobar agreed that the cooling marketmeans theflipping tax would come with few gains.

"Thinking that a flipping tax is now going to be the saviouris just not accurate," he said.

WATCH | Is a flipping tax coming too late for B.C.'s housing market?

B.C. flipping tax 'better late than never': housing analyst

7 months ago

Duration 1:43

Paul Kershaw, population professor at the University of British Columbia, tells BC Today host Michelle Eliot the tax announced by the B.C. government as part of its 2024/2025 budget, and which will apply to homes sold two years or less after purchase is "better late than never," while Tony Gioventu of the Condominium Homeowners Association of B.C. says the practice of flipping has fuelled house price increases.

Milobar also told CBC News that yet more taxes around housing could ultimately stifle its intended effect.

"We do have concerns about the layering of all these taxes on housing and how you're supposed to be making housing more affordable, if you're taxing the heck out of it," said Milobar.

Alex Hemingway, a senior economist with the Canadian Centre of Policy Alternatives, said the flipping tax could ultimately reduce housing transactions and lower revenues for the province from the property transfer tax, which is projected to earn more than $2.05 billion in 2025-26 and increase in future years, according to the budget.

The Real Estate Board of Greater Vancouver said in January the composite benchmark home price in December for the area it covers was $1,168,700, a five per cent increase from December 2022, but down 1.4 per cent from November 2023.