Flipped "Principal" Residences


Blog by Arnold Shuchat | September 22nd, 2016


Think back to when you were growing up.  Can you remember any of your friends moving? Moving more than once? Moving more than once in a two year period?
Things are different now.  A recent review that I conducted in Richmond over a two year period from 2014-2015 inclusive revealed that out of 160 single family properties described as having lots greater than 7000 sq ft, frontages greater than 60 feet and homes on the land older than 34 years, 42 of them, or around 25% were sold and relisted at least once during that two year period, often within a few months.

Here's the problem.  They are houses. Houses may qualify for the principal residence exemption and therefore afford a tax free gain on the price increase since purchase. If a person bought a property and sold it, they would only be required to file taxes on it by April of the following year.  That is, if they account for the gain at all.  Being that it is a house, its sale is likely to not even be reported.  In any event, that person may not even live in Canada if they ever did, and the money is long gone.

So 25% of the properties would be by any objective standard to be "investment" properties intended to be a vehicle for a profit flip.  Who do you think buys large land properties with very old tear down houses on them?  Is that something your parents would have done?

We need a stronger assessment procedure to capture a holdback at the time of the sale so that the money does not "fly the coop". This law must be changed.