The British Columbia government has introduced legislation enacting its new home-flipping tax on Wednesday.
The province says the tax will target speculators and improve housing supply.
“Wealthy investors are using housing as a short-term investment to make a fast profit while people looking for homes can’t get into the market,” Finance Minister Katrine Conroy told media after introducing the bill in the B.C. legislature.
“Buying a home is one of the biggest decisions and milestones in people’s lives, whether it’s their first apartment or a new home to make space for their growing family, and we don’t think families should have to compete against speculators when they are making such an important decision, so we are making profiteers think twice about their flipping behaviour.”
Under the proposal, first announced in the 2024 budget, anyone who buys a home and then sells it within two years of purchase will be taxed.
Profits on homes sold within one year will be subject to a 20 per cent tax. The tax amount will decline the longer the property is owed, hitting zero after two years of ownership. The tax will be retroactive to the 2023-2024 tax year.
Conroy said the tax is forecast to deliver “modest” revenue of about $40 million and affect about 4,000 sales annually.
“(The tax) will help not only people who are having their opportunity to buy their first home but also help homebuilders who find it often very frustrating, by the time a property gets to them, it has been flipped so many times it makes it very difficult to actually build homes on it,” Housing Minister Ravi Kahlon said.
The legislation includes exemptions for people facing unavoidable life changes, including death, divorce, job relocation or loss and people adding to the housing supply.
The initiative has earned the support of the Condominium Home Owners Association of B.C., which said property speculators will often vote against needed repairs, maintenance or increased strata costs.
“Speculators frequently create an unstable environment in strata corporations often focused on unauthorized, unpermitted and rushed alterations leaving strata communities with a legacy of building failures and conflict,” said association spokesperson Heidi Marshall.
If passed, the tax will take effect in January 2025.