By Ashley Joannou in Vancouver

The chief economist of the British Columbia Actual Property Affiliation says the incoming provincial flipping tax might find yourself decreasing the general variety of properties available on the market whereas solely making use of to a small variety of properties.

Brendon Ogmundson additionally stated the brand new legislation could not generate the sort of general income the federal government is predicting — partially as a result of it runs the danger of discouraging individuals from placing their properties available on the market, leading to misplaced property switch taxes.

“I believe that the price of this coverage, and the unintended penalties of it on the availability aspect of issues, are extra hassle than it’s value by way of its impact on affordability, which may be very minimal,” he stated.

As of Jan. 1, 2025, properties in British Columbia bought inside the first yr after being bought will face a tax price of 20 per cent of the revenue, whereas that tax price drops steadily to zero after two years.

Ogmundson stated about 10 per cent of actual property transactions in Metro Vancouver happen inside two years of a purchase order, and plenty of of these would qualify underneath a protracted checklist of exemptions together with divorce or job relocation.

He stated would-be sellers who don’t qualify for an exemption however are close to the tip of the two-year window could also be tempted to attend it out.

“It’s a really actual threat that due to the way in which this coverage is written, the way it discourages potential listings, that you could possibly find yourself with costs larger than they’d have been in any other case,” he stated.

The provincial finances estimates the tax will generate $43 million in its first full fiscal yr, however the affiliation predicts B.C. might lose out on $20 million in property switch taxes as individuals postpone their gross sales. 

Ogmundson stated there may even seemingly be extra prices associated to administering the assorted exemptions. 

Premier David Eby informed a information convention Monday that the flipping tax, introduced in final week’s finances, is “not a silver bullet” and is just one of a collection of actions the federal government is taking associated to housing.

He stated something the federal government can do to cut back the variety of individuals competing for housing available in the market is welcome. 

“It’s not going work for everyone, however it’s going to work for some individuals, and it’s going to limit speculators and traders from competing with households for a spot to reside,” he stated.

“We really need the income from this tax to be zero. We simply don’t need individuals to be flipping properties on this manner.”

The premier introduced the thought of a flipping tax final yr and Finance Minister Katrine Conroy launched particulars of the pledge in final week’s finances speech. 

This report by The Canadian Press was first printed Feb. 26, 2024.