What will the new BC home flipping tax mean for homeseekers?

An analysis of the news from top real estate agent, Ty Corsie.

Date26.02.2024
Words byTy Corsie
What will the new BC home flipping tax mean for homeseekers? hero image
INTRODUCTION
The BC government plans to introduce a tax of up to 20 percent on profits from the sale of a property that has been owned for less than two years. So what impact could this have on homeseekers or recent buyers? We asked Ty Corsie, an award-winning agent from Royal Lepage Wolstencroft, for his take on the news.

1. What is the government trying to achieve with this?

The government is adding another tax to try to target home flipping and short term speculators. The truth is for me in the past five years, I have only sold one home out of nearly 500 that was purchased by a speculator. They actually are a lot more rare than you think. I think this is a poor idea which will affect the everyday homebuyer needing to make a move over the short term for a variety of reasons and be penalized.

2. What does this mean for investors?

Investors will be taxed up to 20% on their income from the sale of a residential property held by the owner for less than two years. The tax rate will decline on a sliding scale over the second year. This will take a massive number of investors out of the market. The shift east to Calgary for investments, in my mind, will continue to skyrocket because there's so much less restriction on taxes and tenancies. This will even take builders out of the market as they know their market just took a huge hit.

3. What happens if you buy a home fully intending to stay but circumstances change - a break up, a job offer in a new city, etc?

There will be exemptions to the Home Flipping Tax for sellers who experienced death, divorce/separation, disability/illness, relocation for work, involuntary job loss, change in household membership, personal safety or insolvency. It will be interesting to see how many government workers will have to be hired to monitor and oversee all these exemptions.

4. What does this mean for the pre-sale market?

Investors are already restricted by getting taxed if they sell within the first calendar year and may be responsible for double GST too. This additional tax will, in my mind, kill the pre-sale market for investors having no intention of moving in and barely being able to complete or having to assign a property.

5. What's the timeline for this proposal?

This Home Flipping Proposal will officially begin January 1, 2025 , although it is said the tax will apply if the property was purchased before the effective date.

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