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British Columbia has just unleashed a new weapon in its war on housing speculation: the “flipping tax.” Designed to curb the rampant profiteering of those pesky property flippers, this tax slaps a hefty fee on everyone (not just those greedy investors) selling a residential property within two years of purchase.
Imagine this: you, a first time home buyer or savvy investor, sink your hard-earned cash into a fixer-upper, pouring your sweat and tears (and maybe a few choice words) into renovations. You envision a tidy profit, the chance to move up into a different home or to find your next HGTV project, and maybe even a little family vacation… but alas, the BC government has other plans for your profit.
If you dare to sell within two years, a hefty tax bill awaits. Twenty (2o!) percent of your profits vanish like a magician’s assistant, leaving you feeling more like a magician’s hapless pigeon. And don’t even think about those “exemptions” – good luck proving your divorce was genuine and your “job loss” wasn’t just a convenient excuse to avoid the taxman.
Landlords, too, are feeling the heat. Bought a place thinking you wanted to be a landlord and then realize that it’s more work or you just aren’t able to keep doing it due to that inevitable thing called “life” getting in the way? Want to sell and relieve that burden of work from your time and financial plate? Forget it. Now, you’re stuck holding onto properties longer, hoping for a less punitive tax hit when you eventually decide to sell.
But wait, it gets worse. This “anti-flipping tax” isn’t just targeting hard-working investors and hapless landlords. Oh no, it’s about to impact you, the average homebuyer.
See, when investors are scared off by hefty tax bills, they’re less likely to enter the market. This reduces competition, right? Wrong. It actually decreases the overall supply of homes because that tear-down/fixer upper that Savy-Sally bought and spent 18-months and hundreds of thousands making live-able again and would have put on the market as soon as she finished, now she’s hanging on to that home until the dread 2 year tax-robbery timeline has passed, resulting in somewhat less inventory and potentially driving up prices for everyone. So, congrats, you’re now competing for fewer homes with an ever growing population of buyers as Boomers-downsize and Milennials and Gen Z’ers hit that “home buying” stage. All while, the specter of this draconian tax looms over your own future property sales.
And let’s not forget the renters. As renovators/investors and landlords press pause on their buying and selling activity or become more hesitant to invest at all (thanks in part to BC’s ultra unfriendly landlord laws), rental units become scarcer. This translates to higher rents, less choice, and a generally more miserable experience for those already struggling to make ends meet.
Of course, the government claims this tax is all about boosting affordability for everyday folks. But let’s be real, it’s more likely to scare off investors, stifle a portion of market activity, and ultimately do more harm than good. Who’s going to want to take the risk when the government is essentially saying, “Find a good deal and want to reap the rewards of that within 2 years? We’ll tax you into oblivion!”
So, here’s a toast to the BC government: may your tax coffers overflow, and may you enjoy the additional stress to the existing housing shortage. Just remember, when you’re struggling to find a decent rental or facing sky-high prices, you can, in part, thank the “anti-flipping tax” for making your life a little more miserable.
Disclaimer: This blog post is intended for partial entertainment purposes and should not be taken as financial advice. This is a humours take on the issue and while I jest, there are serious implicaitons to this new tax that I would be happy to discuss further with anyone who is curious what individual implications this tax could have in your own real estate journey.
