First of its kind registry in B.C. targets under the radar condo flippers

The British Columbia government says it has launched Canada’s first registry aimed at cracking down on pre-sale property flipping and tax evasion in B.C.’s real estate market.

The Ministry of Finance says the Condo and Strata Assignment Integrity Register will improve fairness and transparency in property transactions

In British Columbia, a new provincial law is the first legislation of its kind in Canada to specifically target property flipping. Photo by KirinX via Wikimedia Creative Commons.
In British Columbia, a new provincial law is the first legislation of its kind in Canada to specifically target property flipping. Photo by KirinX via Wikimedia Creative Commons.

Finance Minister Carole James says in a news release that the register will take “real action to moderate the condo market,” and is already starting to see results in Metro Vancouver.

Condo developers will be required to securely gather and report the identity and citizenship of anyone completing a contract assignment in a project.

A contract assignment occurs when a buyer sells, or “flips,” their purchase contract of a condo to another buyer, often at a higher price, before construction of the building is complete.

Currently flipping can occur without any oversight and the province says the practice has been a factor in raising real estate prices while facilitating tax evasion when capital gains and other taxes are not applied.

“For too long, speculators and tax evaders have been taking advantage of loopholes in our real estate market, driving up prices and shutting British Columbians out of the market,” James says in the news release.

The finance ministry says it’s unknown how many pre-sale property flips occur each year because the transactions aren’t reported.

Developers are now required to collect and record assignment information and file a report each quarter, with the first due April 30, covering the period from Jan. 1 to March 31, 2019.

“The B.C. government will use this information to ensure that people who assign condos are paying the appropriate income tax, capital gains and property transfer tax,” the release says.

The filing fee per assignment is $195, which the government says is a small fraction of the cost of flipping a condo unit.

The register is one part of the New Democrat government’s 30-Point Housing Plan to address housing affordability.

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1 Comment
  1. Harald says

    So stupid, but I guess the NDP needs to reward the public sector unions that supported them by creating an even bigger bureaucracy within the BC gov’t.

    People who flip on pre-sales, they aren’t getting the full amount of the flip, the developer is. They are getting the difference between what they agreed to purchase it for, and the sale price to the new buyer…less the penalty the developer charges for the right to assign the contract which ranges from 1% – 5% of the total value of the sale. I personally charge 1%, but on my next project, will most likely increase that to 3%. Why? Because I don’t want to deal with the paperwork that needs to be done behind the scenes to make the flip work.

    For example: Person A buys a pre-sale for $400,000 plus GST. They then assign the contract for $420,000 plus GST. This gives a gross profit of $20,000. The developer charges 2.5% for the right to assign the contract, or $420,000 * 2.5% = $10,500. The buyer is now only earning $9,500, but the realtors who work with the buyer and seller also need to be paid. That sucks up the balance of the gross profit.

    The point of all this is that the days where condos prices jumped $100,000 or more in a matter of months are gone. Condo flippers can’t make that much money any more on flipping, so this registry, is going to do nothing but cost money. It will be exactly like the long-gun registry, a waste of time and money which will not do anything to help people. James was a fool when she was NDP leader, and she’s a damn fool now.

    I sincerely hope the Liberals return here in BC, so this idiocy can be removed, and idiocy which will only end up costing us more money as taxpayers.

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