The British Columbia government’s new flipping tax will not alter housing prices or enhance affordability, says the B.C. Real Estate Association in a new report.

The province has introduced a 20% flipping tax on the gain from a sale of a home, along with a pro-rated tax on sales up to within a two-year period. The new rules are designed to curb short-term speculative investment and have implications for condominium investors.

The tax will apply to properties and contract assignments and add to any existing federal or provincial property sales tax.

The BCREA estimates that the flipping tax will only decrease home sales 1% to 2% over a three-year period. Given the relatively small impact., As a result, housing and affordability will be essentially unchanged.

“I think that the cost of this policy, and the unintended consequences of it on the supply side of things, are more trouble than they’re worth in terms of the effect on affordability, which is very minimal,” BCREA Chief Economist Brendon Orgmundson told the Canadian Press.

But Paul Kershaw, a University of British Columbia policy professor, told CP that the the province is “recalibrating” around the principle of putting home ownership first and investment second, despite the small number of properties affected.

“We still need to turn our attention to the here and now, looking back at how much wealth has already been accumulated, and just putting in a flipping tax is not going to address that,” he told CP.

According to Ogmundson, about 10% of real estate transactions occur within two years of a purchase. Many would be exempted from the flipping tax because of several situations, including divorce and job relocation.

Photo: Stillhavn Real Estate Services