02/23/2024
BC Government Announces New Housing Measures in 2024 Budget
February 22, 2024
This afternoon, Finance Minister Katrine Conroy introduced the provincial government’s Budget 2024. The budget unveiled several new housing related measures, including the BC Home Flipping Tax.
While BCREA commends the provincial government’s renewed commitment and efforts to improve housing attainability for British Columbians, the budget’s introduction of a “flipping tax” is unlikely to have a meaningful impact on housing attainability.
Flipping Tax
The BC Home Flipping Tax is a 20 per cent tax on the gain from sale of a home within a one-year time horizon and a pro-rated tax on sales up to within a two-year period. The tax will apply to both properties and assignments of contracts and is in addition to any existing federal or provincial income taxes incurred from the sale of the property, including the federal anti-flipping tax. Exemptions will be available for certain life circumstances that might motivate the sale of a property within two years, including for added supply through the creation of rental accessory dwelling units.
The BCREA Economics Department’s preliminary analysis estimates the flipping tax will decrease home sales by between 1-2 per cent over a three-year period. Given the relatively small impact, prices and housing attainability are essentially unchanged by the tax. This is unsurprising, given that short-term flipping represents a low share of sales activity (less than 2 per cent in both Vancouver and Victoria).
However, because the government has now implemented a disincentive to sell within a two-year period after purchasing, there will be some potential sellers that are prompted to delay listing, resulting in a lower level of listings inventory than without the tax. As a result, home prices may increase with the flipping tax compared to a no-tax baseline. Ultimately, the only way to prevent harmful short-term speculation in the housing market is to ensure housing is abundant. Our team plans to continue to analyze the flipping tax and provide updates when available.
