More Trouble Than It Is Worth – Analyzing the Impacts and Consequences of the Provincial Flipping Tax

Summary of Findings:

• Flipping activity, by any definition, is an insignificant share of overall transactions in BC.
• We estimate that the flipping tax will lower sales in BC by 1.7 per cent, but will have minimal impact on home prices.
• There is a significant risk that the tax will cause potential sellers to delay listing their homes, leading to lower resale housing supply and tighter market conditions.

The BC Government has announced its intention to implement a flipping tax in British Columbia. Specifically, the government is proposing to add an additional tax to the proceeds of the sale on the sale of a home sold within two years of purchasing.

We know that flipping activity can be harmful when markets become overheated, and rapid price appreciation attracts market participants who are purely short-term speculators. It is important to differentiate sellers who are merely trying to profit from short-term market conditions from those who invest their time, labour, and capital to improve the housing stock or provide additional rental units.

In this Market Intelligence, we will look at the potential impact of this policy on the BC housing market and draw out some of its potential consequences.

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