Sales activity in Greater Vancouver rose by 32% in October compared to last year, with the Fraser Valley up 37%. This follows five consecutive months of year-over-year declines and four rate cuts by the Bank of Canada. While one month doesn’t establish a trend, and most sales occurred in early October, it remains to be seen whether November will bring a typical seasonal slowdown. After months on the sidelines, buyers are showing renewed optimism. Properties that sat idle are now seeing more activity, even drawing multiple offers. Both attached and apartment segments are leaning toward a seller’s market, both at a 22% sales ratio, and the detached segment at 13.4%, indicating price moderation may be nearing its end.

The BC Real Estate Association forecasts home sales to carry the momentum into 2025, rising 13%. In addition to lower mortgage rates, new policy changes allowing longer amortization for first-time homebuyers and increased mortgage insurance caps will provide a boost to market activity. While new listings activity has been much stronger than last year, the accumulation of inventory in 2024 was mainly due to a prolonged slump in home sales. With active listings returning to more healthy levels across BC, it's expected the market will absorb the anticipated rise in sales activity without causing a sharp increase in prices. As a result, the average price in BC is forecasted to increase by a modest 3.3% in 2025, following stable prices in 2024.

Effective January 1, 2025, if you sell a property in BC you've owned for less than 730 days, the income (or lift) earned from the sale will be subject to up to a 20% tax. If you owned the property for less than 366 days, the tax rate is 20%. If you owned the property for more than 365 days and less than 730 days, the tax rate is reduced until it reaches zero according to the following formula:

Tax rate = 20% x [ 1 - ( (days held - 365) / 365) ]

There are certain exemptions that are only available if you file a BC home flipping tax return. For instance, if you and the individual purchasing your property are considered related individuals, you will not have to pay the tax. Individuals are considered related if they are connected by blood relationship, marriage, common-law partnership or adoption. As well, builders, developers, and anyone carrying out building or renovating activity on their property are exempt if they ordinarily buy and sell property for the purpose of constructing or placing buildings on the property, or construct or place buildings on property held for that purpose.

The BC home flipping tax is distinct from the Federal Residential Property Flipping Rule, which applies to properties held for less than 365 days. Profits are fully taxable as business income and cannot benefit from capital gains treatment or the Principal Residence Exemption.

Many homeowners have untapped potential in their properties—like an unused basement or a garage that could be transformed into a laneway home. Traditionally, the high cost of renovations, coupled with layers of municipal red tape, has made adding these types of rental suites challenging and costly.

Recent zoning reforms in major Canadian cities, enabled through Housing Accelerator Fund agreements, are opening up new possibilities. Homeowners now have the chance to increase density by adding rental suites, creating much-needed housing options and potentially generating additional income—particularly beneficial for seniors wanting to age in place.

In Budget 2024, the federal government committed to targeted adjustments to mortgage insurance rules aimed at supporting densification and making it easier for homeowners to add more units to their homes. Starting January 15, 2025, lenders and insurers can begin offering a new insured mortgage refinancing product designed to support these goals. 

The devil is in the details, as it would make more sense for a professional rental property developer to build the addition. You would also need an income of $330K to $350K a year to qualify for that mortgage. Most importantly, if you add an income producing property, you may no longer qualify for the full residential capital gains exemption. 

Since its introduction in 1991, a rebate on GST was available to 95% of homes priced under a threshold of $450K. Fast-forward to today, housing costs have doubled in the 9 years of the NDP-Liberal government, rising faster than any other G7 country. Yet the rebate threshold hasn’t budged from that $450K cap. Back in October of 2015, it took only 39% of the median pre-tax household income to cover home ownership costs. Now, it takes nearly 60%.

In Ontario and British Columbia, government charges account for more than 30% of the cost of a new home, with the Federal government taking the biggest share. GST adds $50,000 in costs to a $1 million home. Homebuyers are also taxed on top of other government-imposed charges, with sales tax applied to what many consider essentials. The Conservatives have pledged to eliminate sales tax on new homes priced under $1 million—a move that aims to catalyze the construction of 30,000 new homes annually.

How will it be funded? By ending programs like the Housing Accelerator Fund, Canada Housing Infrastructure Fund, and HICC, which have yet to deliver any housing. Eliminating the 5% GST would certainly make new homes more price-competitive with the resale market.