Home Flipping Tax Hits BC Real Estate Market
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- Опубліковано 30 вер 2024
- The BC Government has unveiled a home flipping tax which will go into effect on January 01, 2025. The tax will be charged on 20% of the profits in the first year and then be a sliding scale up to two years. There will be an exemption for divorce, death, or job relocation. What are the impacts? New housing supply will get hit as pre-sale investors weigh the impacts.
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Given the current market situation and the precarious state of the economy, I would recommend refraining from investing in stocks for a while or, alternatively, seeking guidance from a financial advisor. However, keeping a portion of your wealth in gold remains a wise choice.
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Well, there are a few out there who know what they are doing. I tried a few in the past years, but I’ve been with Margaret Johnson Arndt for the last five years or so, and her returns have been pretty much amazing.
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I think Steve has been flipping houses.
More circus shows are coming..
A large number of mortgage renewals are coming up by the end of 2024. Many investors will not be able to renew their mortgages because of high interest rates, so they will want to sell but the tenants will not cooperate or leave and will not allow them to stage, repair, and do many showings. Tenants also have rights.. Do they want to go to court? Ok, let's wait another 5 years until the mortgage term expires.
@@MR007-r3fthese arent high rates, you were born too recently
it looks like you are one of those flippers impacted! you also have lots of properties that you buy and sell and making quick profit.....of course you are upset!
A low interest rateholic wakes up in jail.
He asks the first police officer he sees, "Why am I here?"
"For house flipping, mortgage fraud and money laundering" replies the officer.
"Great," says the man, "when do we start?"
i dont see any issues with this policy. investors are causing higher prices. if investors are primarily the ones purchasing new units, facilitating new developments, as u claim, its not like theyre reselling those investments eventually at a loss or a discount. if individuals arent purchasing those units in the first place because theyre too expensive, theyre certianly not going to be purchasing them at a further markup from the investor. so who are these investors really selling them to? rich foreigners? its a good policy. the only downside is that ur stuck in a place for a certain amount of time after buying even if u want or need to move all of a sudden for whatever reason. if developers want to make money, cater to the ppl who will actually be living in the homes instead of using it as a store of value
Maybe it’s time for Realtors to take a haircut. 60k a transaction is ridiculous. With the property purchase tax the the needs to increase 75k to sell and break even. Governments are notorious to get involved and screw it up. This will do nothing but slowdown pre-sales.
A low interest rateholic wakes up in jail.
He asks the first police officer he sees, "Why am I here?"
"For house flipping, mortgage fraud and money laundering" replies the officer.
"Great," says the man, "when do we start?"
As much as I love and support realtors - I hate to say it - they need to take a haircut. And believe me I do think they deserve more than the credit we give them. There are amazing realtors out here 👏🏾
We need to regulate the real estate commission. Sellers are paying real estate %5 commission. Why the seller need to pay for the buyer real estate. I can negotiate with my real estate but not the seller real estate. This is penalizing the seller and pushing the price up.
Steve, this is amongst your top 5 of all time.
Raw and informative with perfect examples from your experience in the field to accompany your points.
This is why we tune in.
A low interest rateholic wakes up in jail.
He asks the first police officer he sees, "Why am I here?"
"For house flipping, mortgage fraud and money laundering" replies the officer.
"Great," says the man, "when do we start?"
I just watched your latest video, Steve, and as always, it was great. However, I wanted to bring up a point about your discussion of property flipping. You mentioned that only a small proportion of sales (around 4%) are flips, but have you considered studying the actual impact that these flips have on the market? I believe that flipping houses and condos in Vancouver has been one of the drivers behind the overall increase in property prices, as it sets the latest comparable prices for new listings. This, I believe, is ultimately what the government is trying to address. Nothing about Blue Collars putting down the hard work - we agree on that but much more about the marginal impact of people buying a bunch of units with the sole intention of making a quick buck and thinking that their behaviour has no impact whatsoever. What are your thoughts on this? Cheers
It should be noted that not all of these flips made money either
@dy1mw the weird thing about homes though is people have no id a what their willing to pay. The bank tells them what they can afford and they shop. They never think about how much that really is relative to any work or their future. We've become so detached from these prices that they are just a number and we turn around and ask a banker what number is too high for me. That banker could care less if you are making the right decision because they are only looking out for their own bottom line.
@@saretskyyour note doesn’t address the points, which are valid.
Investors don’t go into flips looking to lose money. The entire idea is to buy properties, improve them, and sell the improved product for the most the market will bear. In most cases, but not all, this creates a high value comparable in the local market - which future sales in the area will use as a comparable and benefit from, pushing up prices.
Flippers aggressively jump all over listings as soon as they hit the market. The average family has almost no decent chance to buy something at a reasonable price that they can afford (in decent locations) and improve over time.
It's way higher than 4%. maybe close to that since the market cooled down. but in 2020 2021 in langley and surrey id say it was closer to 50%. Houses were bought sat on and sold like crazy. I have the stats. some where bought and sold 6x in 2 years.
Steve enjoyed low rates, house flipping so far and now he is mad cause it's his time to pay. 😂😂😂
More circus shows are coming..
A large number of mortgage renewals are coming up by the end of 2024. Many investors will not be able to renew their mortgages because of high interest rates, so they will want to sell but the tenants will not cooperate or leave and will not allow them to stage, repair, and do many showings. Tenants also have rights.. Do they want to go to court? Ok, let's wait another 5 years until the mortgage term expires.
So i hear these types of arguments that "it's not a significant part of the market" whether flippers or foreign buyers etc, ie only 4 or 5 % of sales etc. Well in an already tight market it makes a huge difference! Gold isnt money it's " shiny yellow rocks" and no one uses it for medium of exchange anymore so its not relevant . Weve gotten to the stupid stage where lots of people just arbitrage that principal residence exemption ad infinitum. When that happens the govt looks stopping the froth. Sometimes its with bad policy or taxes but it was caused by initally by "investors" scalping houses just like concert tickets!
Steve, please note that when flipping isn't attractive, sales decrease. In a multiple-offer situation, one should buy with no conditions, pay cash, stage the property, and sell for a significant profit. In fact, most multiple-offer buyers are investors who identify promising properties and don't allow first-time homebuyers to outbid them.
Credit buble - who's borrowing and why?
>>>Speculators chasing yield
1) cheap to borrow/free money
2) buys real estate, rent out to earn higher yield than what banks pay
3) refinance and take out more loan ... rinse, repeat!
We literally have "investors" running defacto hotels (20+ units ownership) on AirBnb with these free money earning "rent" chasing yield.
A "million people" coming in - these people can't buy real estate, only rent. Which further fuel 'house flippers' borrowing free money fraudulently (fake income) to earn yield. If these "million people" were the buyers that drove up the prices, their incomes must be real high
If house speculators aren't the problem and there weren't that many, then this law will affect no one and you've got nothing to worry about!
i agree to a lot of what you mentioned, however presale and assignment selling wouldn't that be the definition of investor flipping activity? I don't have the solution, just calling that transaction as to what it is. My curiousity would be why haven't we been able to push a lot of these sales to actual owners. Why haven't future home owner not been able to take advantage. Especially in the 2+ bedroom, there's a reason why 1+ sells its because we don't ahve enough family seriously considering these purchases!
Great analysis Steve! I watch your videos every Saturday. I had a renovated condo in Hamilton, ON back in 2022 that I sold when the market was crazy. So glad I sold it instead of renting it to tenants who, in my opinion, have too many rights compared to the landlord. Thanks for your info.
Thanks for tuning in !
Nice to hear Steve call it like it is. Government creates the problem, finds a scapegoat, like foreign investors or house flippers, immigrants or whatever, then comes up with a "solution" that costs the people even more money and makes the situation worse.
Foreign investor's were a real problem. In 2012 I know of one foreign investor through a friend that had multiple houses 10+ in an area in Vancouver and bought the last house and offered double for what it was actually selling for, then all the other houses they had doubled as well.
Costs the average person no money and makes the problem slightly better.
Steve has stated clearly that the level of immigration is strongly affecting housing and rental prices and is unsustainable.
I agree. You must have misinterpreted something I wrote.@@planet-karma
Stop the immigrants. Real Canadians, you guys need to work on your own, rather than reply on foreigners.
Nothing wrong with this tax. Principal residence exemption is an *exemption* to an existing tax system. Every other investment in a non registered account is generally taxable when it's profitable. Sure, you put labor into it, but I put labor into my job, and I get taxed on that labor. Flipping a home is equivalent to a part time job with some additional risk, and 20% is less than a lot of people would pay for a bunch of additional jobs. The other costs increase the adjusted cost basis, so they aren't taxed.
Certain markets though, flipping is a big thing. Chilliwack BC has seen a ton of flipping activity in 2020-2023. And worse, the flippers target entry level homes. I imagine very few entry level homes hit the market without being tire kicked by numerous flippers. Not sure how big of a diff this tax will make (the flippers also tend to be the ones who find the loopholes. But we'll see
Hmmm we had to leave north van in 1996. Prices were nuts then compared to interest rates and earnings. Bottom line after Expo vancouver was being eaten up by off shore money period. That is why vanderzam brought in the property purchase tax, it was supposed to be for these expensive homes in Vancouver. My grandmother could not afford her property tax in her house in Burnaby that she lived in for 30 years. Flipping is a small part that came later on. Also, don’t get me started on the money laundering under Christy Clark liberals. The feds and provincial government is solely responsible for this mess.
"The feds and provincial government is solely responsible for this mess."
Bullshit. I'm tired of seeing people blame the government for this. It's the people's fault. The people vote for the government they have. The greedy people got sucked into this because they were greedy.
A truth bomb. Lol
Hell they brought in a tax exemption for anyone over 55 on property tax and some years the charge to not pay property tax in BC for the elderly has been under inflation.
Don’t forget about Christie Clark’s $750,000 loan program that made $400,000 condos turn into $750,000 condos overnight.
Why is is that the people creating this policies are bunch of idiots
The difference is speculators have turned basic housing into a humanity crisis. When 30-40% of all houisng is own by specs that is a monstrous problem. As a group we've owned property for 50 years. It was never concentrated this way. It was always around 10-14% investor owned. We've sold everything as there is a moral point to owning this asset. We sold to families and refused specs. We simply moved our cash offshore into USd to protect the value of currency. Any person could have done this.
Now we have immigrant kids flipping houses like trading cards. Precons were a way to excacerbate the flipping craze. If specs would be reasonable the problem would not have materialized this way. Using excuses like currency debasement is horseshit. That is not what people were doing. Now the pain comes. It is entirely justified.
You are absolutely correct and agreed we have done pretty much the same besides principal residence and have all money in US and Canadian Treasuries both
A low interest rateholic wakes up in jail.
He asks the first police officer he sees, "Why am I here?"
"For house flipping, mortgage fraud and money laundering" replies the officer.
"Great," says the man, "when do we start?"
Eby understands and likely agrees with everything you’ve said privately. Government is always the problem.
I actually kind of like this idea. If you’re flipping you still get 80% of the profit. If you’re not flipping no downside and assets probably being priced slightly lower. Builds govt revenue off the back of flippers. It slightly disincentives using real estate as an investment vehicle. Own Canadian stocks instead.
Except the federal government takes the other 80% 🤣
@@saretsky haha you know that’s not true Steve. 50% capital gains added to income. Probably another 20(ish) percent. Zero on principle residence.
Hi, Have you done your search before quoting a hypothetical number that 2% homes are getting flipped? According to bv government that number is 7%.
Yea and either it’s 2% and this is a big nothing burger or it’s way more and that’s why everyone is crying about it.
He is a realtor who takes a cut off every flip. Of course he won't talk about it.
Hi Steve... So if i buy a pre sale condo in 2022 and sell in 2025 as an assignment... This new tax doesnt apply because its been 2 years since the contract was sign and sold... Most pre sale condos will not need to worry about this issue. 😂😂😂. Government doesnt know what they doing. CLEARLY
I understand where you’re coming from Steve but I think you’ve missed the point. This NDP government does not want anyone looking at residential property as an investment anymore, period. I have mixed feelings on this since I am a homeowner but also have grandchildren that need home prices to stabilize.
People hate flippers and investors. But without investors, how do you think there is such a boom in pre-com? Investors brought about 50-60% of rental units to the market. There are many reasons to high real estate price.
I know at least 4 people who does as a living. They build their lives around home flipping and don’t post salaries / earnings and using the capital gained from flipping their home residences to fund their lifestyle while collecting low income grants from the government. This is WAY more rampant than you think, it is a tax scheme that needs to be blocked.
And yes, the person selling for 700k profit after a year is a flipper. I have zero problem with them getting taxed.
QE. low interest rates. easy qualification for mortgages. condo focus by builders and cities. money laundering. immigration. Liberal housing boomer policies. This is the closest you have come to understanding a portion of problem. This will take 5 - 10 years to unwind. Took 6 years in the 80's. Demographics will be the best catalyst for change decline.
I agree and disagree. People have flipped pre con and homes for the last two decades as it’s been easy money. Ultimately this policy is about changing people’s mentality about making money and profiting from homes. Our country is ruined as we only view real estate as a way to make money and we don’t have innovation or businesses. We need to change the culture and mindset of Canadians to make the country profitable again and healthy and that is what the policy does.
100% agreed. Canadian got deeply addicted to home buying and selling. I hardly find any people who even see the school or its rating before buying any property , it seems for them child education is less important than making quick money in buying/ selling homes
I 100% agree. I had a friend from the states visit here in Abbotsford and he was amazing because he said all anyone ever talks about is real estate in Canada. He was amazed that no one is interested in business or anything. Canadian real estate is doomed to fail and will take the economy with it. We have no industries in Canada even though we have the most resources out of any country. We should be the most prosperous nation in the world.
Also if you watch the Calgary market people are flipping like crazy and there’s nothing stopping jt
Agree, but then vote in a pro business federal and provincial govt. liberals are anti capitalist, anti innovation, demonizing entrepreneurs and businesses. We need common sense. And less immigration. That’s it
If that is your justification it is far far too late.
The hay-day was the 2016 pre con flippers , before assignments had to be on the mls. Ghosts sales, no paper trail. Tax evasion heaven.
Now, you will need probably 20% down for a good project, have to wait for like 95% completion to sell the assignment, pay a develop assignment fee of ~ 2% and now have cap gains implication.
NO ONE is flipping pre cons anymore dude. This is just theatrics. If you don’t already own, you’ve been long long priced out. From here on, it’s just crabs in a bucket.
More and more measures should continue be coming until all abusers and loopholer leave the ground.
Problem is there isn’t enough supply. The government is responsible for all delays in construction. We need to build more than the market can handle for prices to come down
@@Observer168There will never be enough supply if the current rate of housing build and immigration stay the same.
@@silverfox1234 Bingo!
If people owning more than 1 home they should pay tax on other properties. It is like making money like when you work.
As a former realtor, home renovator and Landlord I agree with all the points you made. You summarized the situation beautifully. The root of the problem(s) have been created by various levels of government and what has brought it all to a head are the egregious levels of immigration.
Was your work inspected?
A low interest rateholic wakes up in jail.
He asks the first police officer he sees, "Why am I here?"
"For house flipping, mortgage fraud and money laundering" replies the officer.
"Great," says the man, "when do we start?"
Reading between the lines it sounds to me like you are upset with the implications of this tax on you personally. Why should the renovator/flipper in this example "work hard" and get all tax free money wheras if I work hard at my job, it's taxed. Don't see the issue in closing this loophole you've doubtless benefited from and a solid segment of your clients. Don't BS everyone.
I agree, better to say we had a good run and look for the next “grift, I mean opportunity. Agents are like water they always seek their own level. I’d put my feet up and reminisce on all the money I made with a huge smile on my face.
Agents are flipping the chess board now wait until the real fraud and chicanery (read commission structure) is addressed.
Only ppl pissed about this tax,is ones that drove the shit out of property prices,
Steve is looking at his 2023 tax return and crapping his pants. Phoney outrage about "the politics"
You are economically illiterate. Your kind is the problem.
Commies out in force I see. God forbid someone buys a house and fixes it with his/her labour and sells it for.... egad, a profit.. Commies and normies hate that shit! Go enjoy your safe supply. Your welcome.
I remember you said you flipped houses I also remember saying that foreign investors are small percentage now you are saying foreign capital is one of the big issues. I suggest you read or make notes before you contradict your self.
We need to make people stop thinking that real estate is investment and it is only a place to live. That discussion fall into that category.
Flippers are dang ridiculous Steve, honestly they are the problem. They walked into a reasonably priced family home, used cheap paint, cheap flooring, costco/amazon pot lights, had some drunk or kids to install it all and got 150k$ profit in 4 months.
They get top dollar for a trash product and now thats a new norm for the area, thats how you get 400k$ stock 1983 houses in Valemount.
Flippers/ RE agents/ Greed are the root cause of Canadas gong show.
If youre doing it right I have no beef.
Too many flips are by someone looking for quick cash and the RE agents facilitated it.
They are not the root problem when it's only 4% of transactions, as he mentioned.
Thats not the flippers fault that interest rates were so crazy low that the value would have gone up to that regardless. If we had more supply the values would never have gone that high.
@@funkspinna "4%" are the flippers that didn't live in the properties they bought, strictly the ones who openly bought to flip on paper as a business decision.
I know at least a half a dozen people who flipped homes since 2020, and they all completely avoided all capital gains taxes by living in them officially as their "primary residence" for 6 months to a year- These guys are not captured in that 4%, these guys make up the MAJORITY of flippers in Canada as it's an easy way to avoid taxes, and they stay under the radar.
What's the % of these types of flippers?
Oh, you don't know?
OK so then let's put in laws and see what happens.
If it's actually a super low 4% as you believe, then this policy won't matter at all since it only affects an extreme miniscule part of our population - so who cares?
Introducing a minimum 2 years pre-requisite of ownership to avoid a flipping tax makes sense and avoids more govt. bureaurcacy to separate the chaff... I would even suggest 5 years minimum.
Then why don’t you do that and get rich?
If it was so easy wouldn’t everyone do it ?
I did several flipping deals. It’s a hard and risky job. And people judge you when you make profit. Actually if you think twice, flippers actually provide more inventory to the market, they make unlivable property livable.
Yes, I used to flip on every few years. I find not the margins are better on larger more expensive properties. It takes me three years to complete a project now. So this tax won’t effect me at all
Yes, flipping only makes sense when there’s enough demand. Flipping is completely dead now but homes still aren’t affordable. There needs to be much more supply than demand for things to get affordable.
Not everyone rehabs unlivable properties. A lot of flips do some renovations but it could be simply dated and not unlivable, so you haven’t added anything to inventory, you’ve just moved the product upmarket (and by definition made it more unaffordable).
@@Observer168 Disagree. China is a great example (and a lot of the affordability problems here were greatly exacerbated by Chinese money).
China has a TON of excess supply (ghost cities etc.) that until recently, was more than met by (primarily) investor demand (again, ghost cities).
The only way they got housing prices to come down (by definition, you need prices not to simply stabilize but decrease to “improve affordability”) was through extreme policy measures that crushed investor expectations of housing being a sound financial asset. The shared prosperity policy figuring that the only way homes would be affordable was if the purpose of buying a home was to live in, and not to park cash.
I see no reason why Canada (so heavily influenced by Chinese capital now) would be any different. Break the mentality of housing as a financial asset and you’ll see massive price declines, otherwise, good luck meeting investor demand with supply.
@@Raygetto the most expensive real estate in China is in first tier cities like Shanghai, Beijing and Shenzhen. All the ghost cities you mentioned are in the middle of nowhere and nobody wants to live there.
It’s like someone in Canada built an entire city in Manitoba but nobody wants to live there but the homes would be dirt cheap because there’s more supply than demand.
Many of those homes in the ghost cities of China are dirt cheap. You can’t even find someone to rent them unless they were desperate.
Prices in first tier cities in China are still sky high similar to Vancouver and Toronto.
I need to send this video to my software engineers at Amazon and tell them that they should have taken a realtor certificate instead of a computer science degree. They will love it 😂
I know many real estate agents with engineering degrees. They said being a real estate agent was much more rewarding and the pay is better.
@Observer168 I know some engineers from Kurdstan who joined a mercenary army for the same reason.
@@Glin-z1t many of the Hamas leaders are multi millionaires and live in mansions. Some even own mansions in Canada.
Lol I guess those geniuses who rolled out a sleeping bag and slept on the floor of the flip to challenge revenue canada have now lost the loop hole.
I know one 😅I can’t tell you it didn’t effect the outcome of the audit. Not a comment on the proposed policy but one on the tax hounds at CRA.
Steve panicking over his retro tax bill trying to make this all macro
The rest of Canada should tax everyone if they are flippers . I would push it to 5 years- no flipping. Many of us are losing homes to these individuals. I'm tired of it! We are all tired of it. Hard for a Real Estate agent who has a house to understand those suffering in this exact situation. The last 5 homes I bid on were lost to flippers. One flipper told everyone the home will be back up for sale in 10 months for $250,000 more because he will be relocating (he laughed after that). Contractors are buying homes with no LEGAL WARRANTY or INSPECTION and ALL CASH instead of building homes that look like WHOVILLE homes.
In 2021 home flipping was insane. I have looked into it. In langley and surrey especially. Many houses were bought and sold within a few months again and again. This DOES happen a lot.
I’ll for once disagree with you Steve. Absolutely can’t stand Eby but that said not a fan of flippers. Also hard to believe it’s only 4%. Maybe this past year when prices stagnant? I know in the Fraser valley in 2020/21 when we bought it was like every 2nd or 3rd house had been bought within the past year or 2. Mostly E.I. names on the title
I'm an Optician in Ontario and a couple years ago even before COVID I was speaking to a patient. He told me he flips houses for a living. Specifically in Burlington, Ontario. He started years ago and flips 3-4 houses a year and makes 40-50k on each house he flips. Also my Optometrist who is filthy rich owns 7 properties. On a couple occasions he has moved into his rental unit so that he could kick his renter out and a year later rent it out again for a higher cost. These are my encounters with flippers and investors.
I believe policies should be introduced to discourage investment in real estate wealth creation, specifically in flipping properties in a short period for exorbitant prifits. Introduce high capital gains tax when selling investment properties. Mortgage interest rates for investment properties should be higer than for properties who buy to live. This will discourage investing in real estate.
It's worth to look into how Singapore's National Housing Policies created affordable housing for the middle class. Singapore encourages investments into stocks and there's no capital gains tax when you make a profitnon your stock market portfolio. Investment in stocks/businesses creates innovation and job opportunities.
I think your definition of flipping is too narrow. There was a period people were buying and upgrading their primary homes every 2-3 years. I have a buddy mid-thirties who has had 6 houses all of which he’s lived in. That’s flipping too in my opinion and those numbers are much much higher.
You’re missing the point Steve. They don’t want anyone in BC treating residential real estate as an investment anymore. They’re basically saying invest in stocks, commercial real estate etc… if you want to grow your capital. Not sure why people haven’t figured this out yet.
You say you like eebie your a two face Steve. Why go to school? Just take a real estate course for 3 months and make more money. Total scam these agents should not be allowed to make so much money on the backs of homeowners. Let's talk about that for the new law in America, that's a good affect this. When's it going to happen here?
In this video Steve explains how we should all feel bad for the housing speculators, hoarders, and flippers - and since Canada has incentivized malinvestment and misallocation of capital for over a decade, that it should be allowed to continue at the expense of average Canadians.
Steve is right. There is no profit left in fixing anything up and selling it, especially with the new building codes, cost of financing, finding trades, materials etc and you pay a premium for total garbage in BC right now. Also I won't be investing in rental any longer in BC. The laws meant to create more housing and protect tenants have taken any incentive out of creating suites in BC. I used convert single family into 4 affordable rental units and now there is too much risk and cost with no reward. Why invest and pour your blood sweat and tears into renovations and then essentially have the tenants own it instead of you? With costs to run a property going up - ins, taxes, maintenance, utilities, financing, legal etc. and allowance for increasing rent not even close to inflation why on earth would I do it? I can make a hassle free 6% at the bank at a minimum and sleep soundly at night. The governments are achieving the opposite of what they intend. I for one will be selling all of the investments I planned on turning into affordable rental units and never looking back. There are better ways to make money without all the risks and physical stress. There's another bunch of units that won't be coming on the market. Thank you BC government.
Will be on market hopefully for end users. Thank you for your service.
Great analysis.
The people claiming to be the solution are the problem! I am my own worst enemy, then the government. No one else can force me to do anything without a failure of either myself or my government.
The governments thinks profits are bad, except for them. All time record salaries/profits for politians for doing a crap job.
The tax system discouraging the financial activities. People probably need to stay home and collect minimum granteed income for the government to leave them alone
Compounding Capital Gains Taxes, although quite obviously 'Political'..... still provides further substantive impetus to the underlying deleveraging cycle now so critical in restoration/viability of the transactional currency base against the REAL problem.... that being currency debasement based cpi inflation.
ANYTHING to prevent further DEBT instrument expansion NOT supported within our stagnant 10+ years GDP/GDI derived therein is a step in the right direction.
Yep.... it's THAT Bad !
Sorry bro. Flipping presales should be taxed out of existence
Just leave rates at a normal level ie. 5%. Prices will come down as more and more are forced to sell and buyers won't be able to get financing. Supply will go up guaranteed. Cmhc should be abolished or amount insured should be lowered. More onus on banks. House dale profits should be taxed like financial investments. 50% of profit taxed at 30% or ,ore depending on amount. Its treated like an investment so tax it like one.
Hey Steve, I'd have to disagree with your analysis in terms of pricing houses in gold. Gold is another asset class. It's not money because nobody is paid in gold, as far as I know.
Pulp Fiction - Ending Scene (Final) HD @1:41timestamp
Hey Ivan, you are wrong. gold and silver is money. We get paid in currency that’s not backed by anything. Once shit hits the fan everything will be repriced in gold.
Turdeau was standing right behind eby during that press conference 😂 they're both swamp creatures
Most precon investors don't sell the property, they assign it before taking possession, therefore, they would not be subject to the tax. Worst case scenario, they rent it for 2 years, then sell it.
Most pre con condos will take much longer than 2 years from contract signing to being build. Meaning this tax doesn't apply.
One point - How much in fees and permits in the City of Van. are involved even for a single family dwelling as well as a Condo? I bet staggering
City of Vancouver charges around 200k in fees for each new condo.
Staggering yes, and the COV seems to be actively discouraging construction with its policies. Yes, they need money for infrastructure and to pay for the costs of administering permits, but they have gone too far with the building code and not far enough with the zoning in a housing crisis, so there are unnecessary hidden costs over and above the visible costs.
4% is really high enough to support speculation.
Hahaha bc such a beautiful place but your government is a joke
Steve, they aren't making flipping illegal my man, they are putting a tax on it.
Ultimately that means less people will develop or renovate so therefore housing supply will get worse. Look at the trend. More regulation equals less affordability and less housing starts. Its a tale as old as time. The more governments regulate the worse the supply becomes.
@@sedwatcher4541 🤣
Taxes just make everything more expensive. Everything gets passed onto the buyer.
Well done, Steve, that was a thorough explanation, and easy to understand.
Amen! It’s frustrating to sit here and be gaslit by the very institutions we fund with our own labour and that have created the problem with non-existent budgets encouraged by loose monetary policy and insane immigration policies. As a millennial who had hoped on owning a home, everything is broken. The government is too big.
It is not only one factor, but a few factors, in order and IMO percentage of how much it contributes to increasing prices:
1) interest rates low for too long, currency debasement, exactly what Steve says 80%
2) immigration too high 15%
3) speculators/investors/landlords/flippers 5%
Flipper cons:
- at the end of the flip, they do increase the prices, otherwise they wouldn't do it
- some of us, would love to buy a property even if it is not perfect has stains on carpet, smells, ... just not rent anymore!
- seeing many flippers buy reasonable homes, paint them, and sell for 500 k 1 year later, nothing major to justify the price
- as prices go up, the next person has to pay more. It is like the stock market. it is like a Ponzi scheme. next sucker pays more and next pays more and next even pays more.... so generation after generation (if you don't inherit get so poor) yes, anyone causing the prices to go up is responsible as they are accelerating the debasement.
Ponzi scheme 100%.
I agree about the flipping but not about tenant protection if there wasn’t every owner would boot their tenant so they can bump up the price to $3200 for a 500sqf shoe box. Those prices aren’t because of inflation it’s just greed t due to low availability so they can set the price as high as they like. No wonder people don’t want to move.
Its a slow march to get investors out of short term deals
Nothing is stopping you from buying a presale
Could not agree more, one of your best segments. Really well said!
I put in offers on 2 places last year. Lost out to other bidders. Both are back up for sale this year. Asking $80,000 more this year. Not sure what they sold for but $80,000 is a nice little profit even if you lose 20%. Probably lost about $17,000 in realtor fees then property transfer tax. Still decent money. More than I made on the investment market.
Eby made a blunder by splitting the two programs of taxing presale speculation and starting a homebuilder lending program.
By splitting the two programs, he opens himself to the criticism of "cutting speculation destroys demand" and "direct lending to homebuilders puts us in more debt", but if it were bundled together he could easily defend himself by saying the revenue generated from the tax will go towards the lending program, offsetting the supply effect and keeping it relatively budget neutral.
This is not a statement of whether those policies are good or bad, just a critique on his strategy.
The language isn't clear at all... Most pre sale investments take much longer from contract signing to finished build and move in date going well passed 2 years... Meaning this assignment tax should not even apply to pre sale investors.
If home flipping is only 4% of all the sales then there's nothing to worry about right?
They need to increase the tax to 100% of any after-tax, after-expenses, profit on the property flip within the first 2 years, decreasing 20% for each full year afterward.
Great representation
One of your best
You made it so anyone can relate
Maybe the flippers you know are electricians but the ones in my area are contractors with cash and that's all they do . They don't buy homes with needles inside but homes that need a reno. They live in it with their families once fixed and then flip it for a quick profit (they keep claiming it's relocation every time). Then they do it again.
Fair point, it's cheating to move into it for a year purely for the purpose of calling it a principal residence, I agree. But if they do that too many times they will be taxed as active business income. And I wouldn't call that a quick profit. They are providing value by renovating it, and they are taking a risk. I don't have a problem with renovator-flippers. It's a necessary service to maintain the livability of the housing stock.
True, gold is money.
Ssshhh dont tell the sheep.
"the budget will balance itself" code for inflation coming. That was the time to buy.
Land is better than gold
House flipping is not a problem, however, when you have people with zero construction skills flipping without doing any reno, its no longer flipping, its speculation. Canada made it way too easy for anyone with zero construction skills to flip. One example of that is what went on with pre-cons with people flipping on assignment with zero skills, making very large profit at the other end. Thats why productivity is so low in this country as easy money in real estate was the norm for over a decade pushing this country to one of the largest if not the largest bubble in record. Another factor contributing to this bubble is Fraud in the system. An environment where fraud and speculation are the norm is a very dangerous and unjust environment to be in for any good hard-working Canadians. To cut this issue, we need fundamental change in the system.
There’s nothing wrong with hiring people to take a beat up product, fixing it and selling it.
@@Observer168 You are right. Except that this was not the case. Most of the flipping that drove the market so high were based simply on speculation. Not professional buying dilapidated home, reno it and make profit.
@@MrFanstar007 what drove up the market was “demand”. Prices don’t go up with no demand. Prices don’t go up if nobody buys.
@@Observer168 I guess that the government should simply continue to talk about supply when everyone knows that supply wont come in the near future, refrain from taking any action to prevent fraud and speculation, let home price go up even higher than it is, exacerbate an already massive debt bubble in the country and create a situation where more than 80 percent of Canadians becomes unable to function due to being pushed into a financial nightmare. This will end very badly!
@@MrFanstar007 most of the expensive real estate in Canada is in Vancouver and Toronto. The rest of Canada is still pretty affordable.
The problem with 20% tax of the profits in the first year is that it does not go far enough.
How about 40% tax of the profits on all sales except primary residence held for at least 10 years? That would do it, along with bringing down the immigration to pre-pandemic level, and putting an end to money laundering.
Houses are for living, not for speculation.
Interesting, this is exactly what one of the leaders of a large country said. However the medicine that comes with such a prescription is not easy to swallow….
there is already capital gains tax applied to the profits if its not the primary residence.
So how long is the retroactive go back?
Lol those taxes are the worst.
one hundred years, my friend.
@@deetee9920 Really🤣🤣🤣In near tears
Bitcoin is the new unit of account. Denominate your “assets” in bitcoin and see how you’re doing.
20% tax on profits really isn’t that bad. That is pretty normal capital gains tax for someone in either high income.
20% is on top of the capital gains tax
@@m.b5777 ouch.
As a long time fan Steve, keep it up, you always hit the nail on the head. Which is especially important because people like me that understand how multifaceted the problem is (artificially inflated assets due to interest rates, foreign investment, supply issues, political games, money laundering, ASSIGNMENT, speculation and flipping, but not only one of these….) do not have many to discuss the complexities of the issue with!
Also used to be one the anon users on Twitter than was super into #vanre. Was a fun and informative online hobby for a while!
Like BC Governments = Rules
we had to drop a tax planning that involves with real estate property due to the flipping rule. i don't think these transactions would be captured in the stats you just showed..
It still helps, and all of canada should be doing the same
Forget building just new homes in Canada - we need to build new CITIES! The U.S. has major cities everywhere throughout continental U.S., whereas Canada? We have 4, maybe 5 'major' urban centres - that's it.
Problem is Canada has an abundant amount of land but everyone wants to live in Toronto and Vancouver. There’s tons of cheap land in Saskatchewan, Manitoba and Alberta.
@@Observer168 by 'everyone' you mean India
@@Observer168 How come in India theyve built everywhere? Why do they need to flood the city here
We have homes and cities all over Canada. The problem is everyone wants a piece of Vancouver and Toronto.
@@alexg9727why dont you go back to Europe, you guys did wipe out 90% of the people who lived here, dont be mad 😂
Flipping is bigger than you claim. You neglected to include condo assignment sales. Those are ALL flips. Stopping home flippers is one component of dismantling the financialization of residential real-estate. The BC government is dealing with other components such as clamping down on AirBNB. We have a foreign buyer ban. All of these policy decisions combined, help to cool down investor activity in residential real-estate by speculators and investors. This group of individuals is not solely responsible for the runup in prices but they are partially responsible. No one who buys a home to live in, should have any concerns with the anti-flipping law. No one who buys a home to live in, plans to remain there for less than 24 months.
So true. So true. The bitchin and moaning by Steve was amazing. The tears in his beer must be crazy.
Condo assignments are included in the chart above. Furthermore condo assignments are a tiny fraction of the market. Condo assignments are incredibly illiquid.
Investors add more supply and to the market. You’re free to go and buy a presale and wait 3-4 years.
@@Observer168 how about removing the demand instead?? Let’s stop immigration tomorrow and poof you have collapsed demand. That can be done with the push of a button. Building 5 million homes and then supporting that with jobs and infrastructure as far as know can’t be done with a push of a button. This is so easy my 13 year old nephew could fix this.
100% hit the nail on this one.
This is goimg to discourage building.
Crazy way of backward thinking they have at the government.
Yes, nothing will make things more affordable except increasing supply. Build more than the market can handle.
@@dy1mw only way for affordable housing is increasing supply to a point where there’s more supply than demand or subsidies from the government.
It will NOT discourage building if there is demand to buy. How many realtors are there in the lower mainland? Housing is the economy and it is sad to watch.
While inflation and supply issues are true , but I have seen many flippers and they made use of the principal residence exemption to avoid tax. It just takes one flipper to drive up prices because the next seller will use it as the fair market value. I agree that the tax will not improve affordability.
it's not necessarily an anti-flipping law, it discourages speculation as well and encourages people buying homes to live in them for a longer period of time (at it should be)
It's what these RE agents can't seem to understand, speculation is just as bad as flippers.
There is literally no reason to sell a house in less than a year (besides the ridiculously miniscule cases of job change and divorce) - unless you're a flipper or speculating.
Good law, needs to be upped to 4-5 years to scare off the rich foreigners as well, the housing market has to be made unattractive to everyone EXCEPT citizens actually looking for a home.
Speculation adds housing supply. Taxation reduces it.
@onecanadianpassportonehous9753 nice try ... this is a well known technique among leftists ... I'll pass. Sarettsky clearly made the case. These taxes will only serve to diminish the housing supply. Go back to your cult meetings and trauma culture.
@@onecanadianpassportonehous9753 what is your evidence?
Specs don’t *add supply they move existing supply upmarket and reset valuations for all residents into higher and higher brackets. Individual T4 workers cannot compete with REITS and “investors”. Make every tenant a “homeowner” then they’ll know real pain and they can suffer like the rest of us 😅
Why is this such a big issue. You pay tax inly if you make any profit and if you make any profit whats the problem paying taxes?
20% is on top of capital gains tax and income tax so it will be effectively a 40% tax
@@m.b5777 Yup, so if I flipped something in a year and make 100k, still 60k goes in my pocket. Easy come easy go ….. but still made 60k. What is the issue here?
Excellent insights Steve
The truth is like poetry… and most people (expletive) HATE poetry.
I’m a capitalist as well and a senior home owner. Don’t forget that the developer’s highly leveraged themselves on these properties to cater to flippers or speculators. Also, if you are a capitalist then those mortgage holders shouldn’t have been bailed out by banks offering 45 year plus amortizations. Let’s be fair with the future generation of this country.
You need to get Eby to come for an interview again and answer these points.
How does home flipping tax create more home?
its doesn't, just the like the foreign buyers tax had no effect on affordability
It will create less
I love watching @saretsky. Good ol common sense stuff. Bee watching since 2019 i think. Got yet to go to the loonie hour in vancouver when you eventually come. Thanks Steve!
👊🏼
So it's basically the same thing out west as it is here in the east! I remember when ''Entrepreneurship'' used to be respected by people. Today many will criticize those who take risk and work hard as the ones who creating the problem! And most of these same people who are the most fervent critics, don't understand the difference between ''MONEY'' and ''CURRENCY''.
The people that criticize entrepreneurship are simply jealous. They don't have the drive or the talent to do the same and, ironically, vote for government (policies) that are at the root of the problem(s).
If you actually wanted to stop flippers (the bad kind: shotty work, quick flips,...) don't add a tax just include more mandatory forms of inspection and disclosure. This way you could say the gov j's protecting buyers from potentially sketchy renovations while adding a cost and discouraging cheap flippers. This tax though.... This isn't it.
Well, this may backfire actually. In one scenario an investor may flip the property and pay the tax, but compensate those by offsetting to the buyer. If enough people do this it will mean a tick up in property prices. Scenario number two is investors who flip will instead of flipping buy and hold a bit longer, which means lower liquidity and lower inventory. So by reducing the liquidity at the cost of availability would be the outcome. All I have to say is prices of real estate WILL NOT DROP, I don't know why people think it will. If it does drop it would be a blip and it would bounce back up right after. Lower inflation means lower rate of devaluation of the currency, it isn't deflation. It just means prices will go up slower. If McDonalds prices have gone up 220% in 20 years, that means growth rate of 7.2% per year, or 10 year doubling time. Oddly enough real estate have gone up double every 10 years. This effectively means the real inflation was never 2-3%. When we had 9% inflation year and a half ago, it was actually probably 15-20% for those few months. All of this is an attempt to prevent insane skyrocketing of real estate, but it is going up watch and see.
What you said here Steve couldn't be any more true: "The government's implementation of this policy measure, seemingly driven by political pandering for votes, may ironically lead to unintended consequences for the very voter base they are trying to assist."
This feels like another setback for hardworking individuals aspiring to succeed in Canada and British Columbia. Essentially, it seems that our governments are signaling for people to consider leaving Canada and investing their money elsewhere. The message is clear: either endure exorbitant taxes, including income tax, goods tax, and now even higher property taxes, or explore opportunities in other locations.
Canada appears to be on a downward spiral, prompting the need for a comprehensive overhaul of policies and government. Unfortunately, there is a lack of incentives for capable and well-intentioned individuals to run for office. Instead, the system seems to favour extremely wealthy individuals, or trust fund babies who use leadership positions to further strengthen their own and inner circles positions. Sad.
I think removing zoning is going to have unforeseen consequences, we're going about the wrong way about this. We run the risk of having "section 8" problems like in the US. You have an area where the government reaps a lot of taxes that turns into a place where few taxes are collected, heck it might even turn into a subsidized housing area. We're removing it to accomodate virtually open borders when we shouldn't be having such an immigration policy.