Wednesday, April 17, 2024
ADVT 
National

Real estate association economist doubts B.C.'s flipping tax is worth the trouble

Darpan News Desk The Canadian Press, 26 Feb, 2024 06:13 PM
  • Real estate association economist doubts B.C.'s flipping tax is worth the trouble

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.

"It's a very real risk that because of the way this policy is written, how it discourages potential listings, that you could end up with prices higher than they would have been otherwise," he said.

Kershaw said B.C.'s housing situation is caused by more than issues with supply and people have normalized the idea that housing prices will continue to rise.

While crediting Premier David Eby with having "better housing policy than any premier we've had before," Kershaw said it's not accurate for the premier to blame all of the province's housing woes on abuse from investors.

"What we need to be saying is, hard truth: We've created a lot of housing unaffordability in this province over the last many years, but we've also created a lot of housing wealth," he said.

"And is there a potential win-win there, where we can try and ask people like me, who've been benefiting from rising home values, to now be expected to contribute to a bigger part of the solution." 

The budget estimates the tax will generate $43 million in its first full fiscal year, but the B.C. Real Estate Association predicts the province could lose out on $20 million in property transfer taxes as people put off their sales. 

Ogmundson said there will also likely be additional costs related to administering the various exemptions. 

Eby told a news conference Monday that the flipping tax, announced in last week's budget, is "not a silver bullet" and is only one of a series of actions the government is taking related to housing.

He said anything the government can do to reduce the number of people competing for housing in the market is welcome. 

"It's not going work for everybody, but it's going to work for some people, and it's going to restrict speculators and investors from competing with families for a place to live," he said.

"We actually want the revenue from this tax to be zero. We just don't want people to be flipping homes in this way."

The premier announced the idea of a flipping tax last year and Finance Minister Katrine Conroy released details of the pledge in last week's budget speech. 

 

MORE National ARTICLES

Woman who stopped to check on police spike belt damage killed by fleeing truck

Woman who stopped to check on police spike belt damage killed by fleeing truck
Officers have found a stolen car used to flee a deadly hit-and-run following a high-speed police chase on the weekend, and they continue to search for a suspect. The Honda Civic was recovered early this morning outside Edmonton.  

Woman who stopped to check on police spike belt damage killed by fleeing truck

Unprovoked stabbing in Vancouver

Unprovoked stabbing in Vancouver
A 32-year-old man is accused of stabbing another man in a wheelchair in what Vancouver police say was an unprovoked attack. Police say the 34-year-old victim had been outside a shelter in the Downtown Eastside over the weekend when he was stabbed multiple times in the neck, sustaining non-life-threatening injuries. 

Unprovoked stabbing in Vancouver

B.C. workers on minimum wage will see an increase of 65 cents per hour June 1

B.C. workers on minimum wage will see an increase of 65 cents per hour June 1
Minimum-wage workers in British Columbia will get a pay hike of 65 cents an hour to $17.40 starting June 1, a move the government says will help lift more people out of poverty.  The Ministry of Labour says in a statement the 3.9-per-cent increase is consistent with the province's average inflation rate last year.   

B.C. workers on minimum wage will see an increase of 65 cents per hour June 1

Child poverty rate rises in B.C.

Child poverty rate rises in B.C.
The report makes more than two dozen recommendations, nine of them focused on raising family incomes through paying family-supporting wages or improving income supports. It says B.C.'s child poverty rate of 14.3 per cent was lower than the national average of 15.6 per cent, but the rate on 67 First Nations reserves is about double the national rate, while for single-parent families it's even higher at 40 per cent. 

Child poverty rate rises in B.C.

2 stabbed at Guildford Town Centre Mall

2 stabbed at Guildford Town Centre Mall
Upon arrival, officers located a 40 year female and a 35 year old male, both suffering from stab wounds. Both individuals were transported to a local area hospital where the female is listed in critical condition, while the male is currently stable.

2 stabbed at Guildford Town Centre Mall

Michael Johal arrested in the death of Abbotsford man Gagandeep Sandhu

Michael Johal arrested in the death of Abbotsford man Gagandeep Sandhu
A Delta man has now been charged with conspiracy to commit murder in relation to a 2023 Burnaby homicide. On September 16th of last year the Burnaby RCMP responded to a report of shots fired in the 3400-block of North Road, Burnaby. First responding officers arrived on scene and found a deceased man, later identified as 29-year old Gagandeep Sandhu of Abbotsford, in an underground parkade.

Michael Johal arrested in the death of Abbotsford man Gagandeep Sandhu

PrevNext