House flipping falls flat after new tax targets speculators

The new tax will apply to homeowners who purchase and sell their home within two years of purchasing 

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First-time home buyers are going to find it tougher to get into the market after a new B.C. home flipping tax is implemented, according to a Fraser Valley realtor.

Details of the new tax, unveiled today by the provincial government, will apply to homeowners who purchase and sell their home within two years with the income gained from the sale.

People who already own homes will just hold on to them for longer, according to realtor Adebiyi Aderinto.

“In the grand scheme of things, investors are going to still buy and just hold,” Aderinto said. “I don’t think it’s going to impact the supply issues that we actually have.

“It’s not going to be easier for first-time home buyer to buy something.”

First time buyers left wanting by new home flipping measure

The proposed change to go into effect next Jan. 1, 2025, is a 20 per cent tax if a home is sold within 365 days of purchase. That declines to zero between 366 and 730 days.

Aderinto and other real estate professionals are questioning the provincial government’s plan to stop housing speculators from making a quick profit in the real estate market.

Andrey Pavlov, an SFU professor of finance and real estate risk management expert, said any measure to restrict what people can do with their property will drive up prices and hurt people wanting to buy homes.

He said this tax may push young people to delay purchasing a home and “increases the risk of buying a house. Especially for young people who are not that established yet.”

“This measure makes absolutely no sense,” Pavlov said. “It will be counterproductive and makes housing more difficult to attain.”

People who face unexpected life changes such as death, divorce or a job loss will be exempt from the tax.

Funeral homes staff will issue death certificates, according to Americo Punzalan, the managing partner at Clearplan Alliance, a full-service end-of-life company based in Burnaby.

“The whole industry will help make for smoother transitions because we’re in the midst of the largest wealth transfer in modern recorded history,” he said Wednesday.

The money is on its way, but not for another two years

The transfer will move money from baby boomers who are in their 70s to 80s to a younger generation.

Housing Minister Ravi Kahlon said Wednesday there are more people than homes available, and the government must provide more ways to help young people desperate for housing.

Kahlon said this new tax would reduce home flipping and give a better chance to buyers looking for their first property.

“The introduction of the flipping tax will help not only people who are having their opportunity to buy their first home, but also help home builders who find it often very frustrating,” he said.

Finance Minister Katrine Conroy said the government is targeting speculators.

“This is about going after people who are selling homes, particularly just for profit,” she said. “This is one of the tools in our toolbox, and we have to ensure that we have all the tools to, to make sure that we can make housing affordable.”

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