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Cooling B.C. real estate market may not be catastrophic for province's coffers

Last Updated Jul 14, 2019 at 6:26 pm PDT

FILE: Condos and apartment buildings are seen in downtown Vancouver, B.C., on Thursday February 2, 2017. (THE CANADIAN PRESS/Darryl Dyck)
Summary

For the past decade the province has counted on raking in revenue from the property transfer tax

Taxes on presold condos due to be completed may help make up for the shortfall of a slower market

The provincial government is taking in more cash from the Speculation and Vacancy Tax than it originally forecast

VANCOUVER (NEWS 1130) — Metro Vancouver’s real estate market may be slowing, but one expert says that won’t necessarily mean a hit to the province’s coffers.

For the past decade, the province has counted on raking in revenue from the property transfer tax imposed on every real estate transaction.

Professor Tom Davidoff with UBC’s Sauder of School of Business says the 2019 budget didn’t anticipate this much of a dip.

“You get the negative surprise, of course,  from the steady worsening of the market, even beyond possibly what people anticipated.”

RELATED: Metro Vancouver real estate market continues to cool

But Davidoff says taxes on presold condos may help make up for the shortfall of a slower market.

Those condos would have been purchased during the frenzy of the building boom, but the tax is only due when they’re complete. Davidoff adds many of these will likely end up as rental units.

His comments come on the heels of new figures showing the provincial government is taking in more cash from the Speculation and Vacancy Tax than it originally forecast.

“They don’t have a crystal ball, I’m not sure that people really had a good grip on what the impact of all the different taxes would be,” he says.

On July 11, the Ministry of Finance announced that the tax has brought in $115 million.

It’s pledging to use that revenue to build more affordable housing.