B.C. to introduce home flipping tax

British Columbia is introducing a home flipping tax on properties that are owned for less than two years, in an effort to deter speculation.

If passed, the tax will affect homes sold on or after Jan. 1, 2025, Finance Minister Katrine Conroy announced Thursday when tabling the province’s election-year budget.

The tax rate will be 20% for income earned from properties sold within 365 days of purchase, and will decline to zero between 366 and 730 days. Exemptions from the tax exist for reasons of death, divorce, disability, job changes, personal safety and insolvency.

The tax applies to sellers regardless of residence, and is separate and distinct from the federal property flipping rules.

As for the rest of the B.C. budget, families and small business operators are expected to benefit from boosted spending, but the document forecasts a growing deficit of more than $7.9 billion and economic growth of less than 1%.

The budget also pledges to provide one cycle of free in vitro fertilization to anyone who wants to start a family.

B.C. is an economic leader in Canada but a slowing economy and increasing housing and grocery costs mean people needed help, Conroy said.

“At the end of the day, people have a lot on their minds right now and they’re feeling stretched,” she said in her budget speech to the legislature.

She said the New Democrat government would not resort to making cuts.

“This would only weaken the services we all rely on and drive up costs with added fees and fares,” Conroy said. “It would leave people at risk to those who take unfair advantage by putting profits ahead of people.”

The budget includes a one-year boost to the B.C. Family Benefit, giving eligible low- and middle-income families an extra $445 over a year on average, as well as a one-time electricity credit that will save households an average $100, she said.

The electricity credits will appear on customer bills starting in April and run to March 2025, Conroy said.

She said the budget includes an increase to the payroll threshold for B.C.’s Employer Health Tax, meaning an estimated 90% of businesses will now be exempt.

Small businesses across the province had been lobbying the government to raise the threshold to $1 million from $500,000, and that will be implemented.

“Our number 1 ask was to see an increase in the Employer Health Tax threshold,” said Bridgitte Anderson, president of the Greater Vancouver Board of Trade.

“But we are concerned about the debt and deficit increasing substantially.”

Conroy said the home flipping tax, to be introduced this spring, will fund the construction of housing for middle-income earners.

“To those who just want to make a quick buck by flipping homes, things are about to get more difficult,” she said. “If a home is sold within two years of purchase, the profit will be taxed.”

Conroy also said everyone in B.C. who wants to have a child should have the opportunity to do so.

The budget includes a program to fund one cycle of free in vitro fertilization to anyone who wants to start a family.

“No one should be denied the opportunity to have a child because of how much money they make, who they love and whether they have a partner,” she said at a news conference before tabling the budget. “I know this will be welcome news to people who want to start a family.”

Conroy choked up as she talked about her own family when announcing the IVF program. “Darn menopause, sorry,” she said, to laughter in the legislature.

Manitoba, Ontario and Quebec already have similar programs, she said.

The budget forecasts slowing economic growth of 0.8% this year, followed by growth of 2.3% in 2025.

B.C.’s debt is forecast to increase to $123 billion this year, up from $103.7 billion.

BC United Opposition Leader Kevin Falcon said the budget presented Thursday was a “foolish” use of taxpayers’ money.

“This is a reckless, inflationary budget that’s going to make things more unaffordable for families,” he said after Conroy’s speech.

“When government is spending this recklessly, it drives inflationary pressures, which impacts groceries, it impacts housing, it impacts everything that is already affecting British Columbians.”

Falcon said the ballooning debt would be handed down to future generations and the province’s credit rating was in danger of downgrades due to the spending.

He said young people are being driven out of the province because of spiralling living costs.

“We are seeing young people in the prime of their working lives fleeing British Columbia for Alberta, for Ontario, for almost anywhere but British Columbia, because they’re tired of living in an NDP world,” he said.

“We’ve become the most unaffordable, expensive jurisdiction in the entire country, and I think that’s very sad and tragic for families.”

B.C. Conservative Party Leader John Rustad said the budget’s increased deficit and debt forecasts signal that people in B.C. will soon face financial burdens.

“What we’re seeing in this budget, quite frankly, is a completely unrealistic picture designed simply to try to get votes,” he said.

Green Party Leader Sonia Furstenau said the NDP missed an opportunity to help people who are struggling during difficult times.

“At a time when we needed bold investments in the people and the future of this province, we got a government that found a way to spend $89 billion and achieve status quo,” she said. “It’s an astonishing feat actually.”

B.C. voters are set to go the polls in October.

Jim Huynh, a recruiter living in Vancouver with his wife and two daughters aged seven and three, said he was happy to see the family benefit bonus and the one-time electricity credit.

But he doesn’t know how far the money will go, given how much his bills have risen recently, and he worries such short-term support will disappear after the election.

“If you are going to give it to me, I’ll take it,” he said. “Everything helps. When you look at these one-time promises right before an election, you are just kind of a bit skeptical that it’s being used to buy your vote for this year, and then it disappears next year.”

Huynh owns the duplex where he and his family have lived since 2019, and said he understood the need for something like the flipping tax but the province should be flexible.

“If you spend $2 million on something, you should be able to do whatever you want with it,” he said.

“You should be able to sell it if you want to or if you need to.”

But Surrey renter Inderjit Ghuman applauded the tax. Ghuman, a taxi driver who rents a basement for $1,700 with his wife and son, said their previous home had been sold three times in 10 years.

The price went from $700,000 to $2.2 million, he said.

“I am out of my credit card [limit] and started using my savings and I also took money from my RRSP,” said Ghuman, describing the struggle to make ends meet.

With files from Chuck Chiang, Nono Shen and Darryl Greer in Vancouver