The provincial government unveiled a suite of new taxes aimed at cracking down on property speculators on Tuesday, but Vancouver City Council says it doesn’t go far enough.
Tuesday’s provincial budget included a new two per cent tax on property speculators, an expansion to the foreign buyers’ tax and hiked the property transfer tax on homes worth more than $3-million.
That same day, Vancouver’s council passed a motion calling on the province to take two additional steps: a “flipping tax,” and new restrictions on foreign ownership.
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The province has already said that a ban on foreign ownership is a no-go. But councillor Adrianne Carr, who proposed the motion, says she’s hopeful the flipping tax could become a reality.
“If we keep building for everybody who has the money, we will never be able to produce the housing at the right level of affordability for those are actually living here,” Carr said.
According to Carr, the new tax would apply to capital gains on properties that are bought and re-sold within a short period of time, without reasonable cause.
Carr said she particularly wants to see it applied to presale condos, prior to their completion.
Presale condo flipping has become a significant concern as the city’s market for detached homes cools and the condo market heats up.
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Critics say unscrupulous speculators are buying condos, then using “assignment clauses” to sell their contract for the property before the units are completed — but not paying tax on the profit.
When a contract for a property is sold using an assignment clause, it also does not have a property transfer tax applied to it, a loophole Carr also wants to see closed.
She argues flipping is helping jack up prices in the condo market, which has been the last bastion of affordability for would-be homeowners.
“We need people to think about housing in this city and housing in this province as homes. Homes for people that need to be affordable.”
In July, the Canada Revenue Agency said it was launching a crackdown on presale flipping, targeting people that had bought condos, launching two separate applications in Federal Court naming specific developments in B.C.