British Columbia's premier says his proposed home resale tax, which would impose a 20 per cent tax on properties sold within a year of purchase, is not a panacea for the province's housing problems, but it is aimed at providing more homes for people who want to live in them.
“Anything the Government can do to shorten the competition list for that housing will be welcomed,” Premier David Eby said.
“A resale tax is not a silver bullet. If it were, it would have been implemented a long time ago. It's just one part of a comprehensive strategy to address our housing problem.”
Eby, along with Housing Minister Rabbi Kalon, were in Vancouver to promote the proposed tax on Monday morning, four days after the intention to introduce the tax was made public during the 2024 budget announcement.
British Columbia Premier David Eby (left) and Housing Minister Ravi Kalon speak about a proposed tax on home resales at Queen Elizabeth Park in Vancouver on Monday. (CBC News)
The measure is scheduled to come into effect on January 1, 2025, meaning the 20% tax rate will drop to zero in the second year after purchase.
The tax has been criticized by some experts, advocates and politicians as a largely symbolic gesture that won't free up enough housing for people struggling to find it.
“Either way, I don't think this tax is going to make a huge difference,” said Tom Davidoff, director of the Centre for Urban Economics and Real Estate at the University of British Columbia.
Davidoff highlighted the federal government's 2023 residential property resale restrictions, which tax profits from the disposal of resold properties as business income, but which he said have not helped to lower home prices.
Davidoff also said B.C.'s proposed resale tax, whether it would be effective or not, could be passed with impunity by an NDP government and heralded as part of a package of measures to make housing more affordable in the province.
“A vacant house is a place where no one is voting,” Davidoff said. “So, [they’re] It's an attractive tax target.”
On Monday, Eby and Calon couldn't say exactly how many homes are currently being resold in B.C., but said the tax is expected to bring in more than $40 million a year, which is a significant amount.
“That's telling us that that's a pretty big number,” Calon said, “and we hope that over the next few years that that number will actually go down because we want to make it possible for people in our community to buy more homes and for homebuilders to buy more land.”
The tax will have several exemptions for people who have to sell within two years due to life circumstances. Exemptions will also be offered “to those who add to the housing supply and those working in construction and property development”, according to budget documents.
Cooling the market
Real estate agents told CBC News the province's housing market is currently cooling, with fewer resales happening than in past years, when prices were rising at an incredible rate.
The chief economist for the British Columbia Real Estate Association says the tax being introduced may not generate as much revenue as the government hopes and only affect a small number of properties.
Brendon Ogmundson said about 10 per cent of real estate transactions in Metro Vancouver happen within two years of the purchase, and many of those are exempt from the new tax for reasons such as divorce or relocation.
Opposition councillors like BC United's Peter Milobar agreed that a resale tax would provide little benefit because of the cooling market.
“To think that a resale tax is now going to be a savior is just not accurate,” he said.
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Paul Kershaw, a demography professor at the University of British Columbia, told BC Today host Michelle Elliott that the tax, which the BC government announced as part of its 2024/2025 budget and which applies to homes sold within two years of purchase, is “better late than never.” Meanwhile, Tony Gioventu of the BC Condominium Homeowners Association says flipping is driving up home prices.
Milobar also told CBC News that further increases to housing-related taxes could ultimately undermine the intended effect.
“We have concerns about putting these taxes on housing and how do we make housing more affordable if we're going to tax housing so heavily,” Milobar said.
Alex Hemingway, senior economist at the Canadian Centre for Policy Alternatives, said a resale tax could ultimately reduce housing transactions and reduce provincial real estate transfer tax revenue, which is projected to rise by more than $2.05 billion in 2025-26 and to grow in future years, according to the budget.
The Greater Vancouver Real Estate Association announced in January that the region's overall benchmark home price in December was $1,168,700, up 5 per cent from December 2022 but down 1.4 per cent from November 2023.