Many groups have been cast as villains in Canada’s housing affordability narrative—foreign buyers, speculators, investors, and owners of vacant properties have all been blamed for driving up prices. However, recent data from Statistics Canada suggests that when it comes to homeowners who “flipped” their properties, that narrative is full of holes.
Statistics Canada analyzed properties that were flipped in British Columbia between 2019 and 2021, defining flipping as reselling a property within a year of purchase. In 2021, this activity accounted for just three per cent of homes sold in the province. More importantly, after factoring in transaction and renovation costs, flippers earned minimal profits—and some likely lost money.
The typical flipped property was lower in value and required renovations to generate resale value. While Statistics Canada reported a gross profit of 20.3 per cent for these transactions, this figure doesn’t account for real estate fees, taxes, renovation expenses, or financing costs. If you look at the median house price increase of 18 per cent between 2020 and 2021, flippers’ profit was just 2.3 per cent—nothing to flip out about.
Since January 1, 2023, profits from residential properties sold in under a year have been taxed as business income. Despite this, BC plans to implement a flipping tax in 2025. It will be interesting to see if the province will even recover the administrative costs of implementing and enforcing this tax policy.
Another tax measure, implemented at the federal, provincial and municipal level, is the vacant home tax. These taxes require casting a wide net to find the few properties that are vacant. For local governments, this necessitates the creation of new—and sometimes messy—processes.
Toronto introduced a vacant home tax with a messy rollout, prompting the city to spend $2.6 million to revamp the tax. Despite the administrative burden placed on all homeowners to identify a small number of vacant properties, Toronto City Council voted in the fall of 2023 to increase the tax rate from 1 per cent to 3 per cent of the assessed value.
The tax generated $56.5 million in 2022 and roughly $50.6 million in 2023. With the increased rate, Toronto expects to collect $105 million in revenue for 2024, based on an estimated 8,700 to 10,200 empty homes out of the city’s 820,000 properties.
As Jack Mintz points out, governments “may levy vacant property taxes with the best of intentions but if, as seem likely, such taxes discourage long-run residential development, their effect will be the exact opposite of what proponents intended.”
Similarly, a study by the C.D. Howe Institute found that “[v]acant home taxes can improve housing availability, but not affordability.”
While these types of tax policies create the illusion that governments are tackling the affordability crisis, they ultimately deflect attention from the core problem: how to build more homes.
Independent Opinion
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