B.C.’s NDP government has introduced legislation that would tax home flips starting next year.
But some critics are already questioning whether it will make much of a difference.
This tax targets people who buy a home and sell it within two years.
The tax, originally announced in February’s budget, would impose a 20% tax on profits from homes sold within a year of purchase. If you sell after 18 months, your tax rate drops to 10%. Also, there is no penalty if the owner sells after his second year.
“We don’t believe families should have to compete with speculators when making important decisions like this,” British Columbia Finance Minister Catherine Conroy said Wednesday. “In other words, we are making profiteers think twice about their treacherous actions.”
B.C.’s condominium homeowners association welcomes the tax, saying speculators are causing problems for long-term condo homeowners.
“Simply put, speculators are often focused on profit, and it’s not necessarily in the interests of the company,” said Heidi Marshall of the association. “As a result, they often vote against necessary repairs and maintenance or strata fee increases.”
But some argue that the policy won’t do much for affordability, given that the government is only predicting 4,000 flips in the first year the tax takes effect.
“This is a very small percentage of the market, especially now that things are slowing down a little bit,” Brendon Ogmundson, chief economist at the BC Real Estate Association, said Wednesday. “So I don’t think we’re going to see a big impact. There’s not a lot of reversal activity at the moment.”
Opposition parties also share concerns about the effectiveness of this tax.
“When people hear the title of these types of taxes, what they expect is what the bottom line is going to be,” said BC United finance commentator Peter Milover. Told. “In this case, we probably won’t be supplying more housing units to the market. It won’t do much for affordability.”
But the government insists this is just one part of a larger house affordability strategy.
Asked about the criticism, Housing Minister Ravi Kahlon responded: “An average of 7% of transactions over the past two years were so-called speculation and are subject to the inversion tax. This is serious.” “No single (individual) measure can address housing prices as a whole.”
Taxes are exempt in cases of divorce, death, illness, transfer, etc.
