B.C.’s main opposition party supports the principle of a flipping tax, but wonders whether B.C.’s new flipping tax will make a difference.
“I think it’s primarily a political announcement as opposed to an announcement that’s going to be effective in lowering the cost of housing,” Karin Kirkpatrick, BC United’s shadow minister for housing, childcare, autism and accessibility, said Monday afternoon in the legislature.
Kirkpatrick said BC United (formerly the BC Liberals) has been calling for ways to curb speculation since 2018.
“So we are glad to see something, but the devil is in the details on this.”
She expressed among other concerns that the administration of the tax might be difficult and create extra costs, without having a tangible effect.
“(We) already have a federal flipping tax that is meant to modify some of this behaviour,” she said.
Kirkpatrick made those comments after Premier David Eby and Housing Minister Ravi Kahlon held an announcement in Vancouver.
“We need to give folks a leg up in the real estate market if they are looking for a place to live for themselves and their family and that’s exactly what the flipping tax does,” Eby said. “If you are buying a property to sell it within two years, you will pay extra tax. That’s makes the economics more challenging for flippers and it gives families an advantage over those who are buying homes for the exclusive purpose of selling it again down the road.”
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Projections peg estimated revenues from the tax at around $43 million for the first full year of its existence, with the money going toward affordable housing projects, but Eby said raising money is not the tax’s main goal.
“We want the revenue from this to be zero, (because) we don’t want people to be flipping homes,” he said. “So if you own a home right now that you are planning on flipping, this is your final warning.
“This tax is coming in. Make that home available for someone, who is actually going to live in it. Make it available for a family, make it available for an individual who is looking for their first place to live.”
The tax — first formally presented in last week’s provincial budget — applies to profits from the sale of residential properties held for less than two years. The rate will be 20 per cent for properties sold within one year of purchase, then decline on a graduated scale before hitting zero after two years.
The tax will kick in on Jan. 1, 2025 with legislation to be tabled this spring, It includes exemptions for life events such as separation or divorce. The addition of another housing unit (like turning a duplex to a triplex, or adding a secondary suite) to the property will also trigger an exemption.
Eby acknowledged that the flipping tax isn’t the “full solution to the housing crisis”, framing it as yet another response to the complex problem of housing.
“It’s important to note that every single one of those efforts has been opposed in some way or another by the opposition parties and we are not afraid to say this is an important distinction between us and the other guys for British Columbians,” he said, prior to describing the tax in more detail.
The flipping tax has the support of the Union of British Columbia Municipalities.
Art Kaehn, UBCM’s vice-president, said the tax will help dampen the speculative aspect of housing demand.