The promised condo-flipping registry, designed help crack down on tax evasion and create transparency in B.C.’s real estate market, was launched November 5 by the B.C. government.
The new regulations will require developers selling presale condos and other strata units to report contract assignments on those units, and ensure all buyers are aware of the new rules. A contract assignment is when a buyer sells, or “flips,” their purchase contract of a presale unit to another buyer, prior to completion of the building.
The system as it currently exists allows a buyer to flip that unit to another buyer for a higher price than they paid for it, without a centralized record of such transactions, which has made it easy for unscrupulous real estate speculators to evade income tax on the profits made from the sale. This has created an attractive method for such speculators to make fast, easy money on buying and flipping presale units, which many people argue has fuelled rising real estate prices across the province.
The registry of assignments, called the Condo and Strata Assignment Integrity Register (CSAIR), will create a database of buyers who have flipped the units that they purchased. This is intended to create much more transparency in the process, and will enable the B.C. government to pursue condo flippers for the applicable taxes.
Carole James, Minister of Finance, said, “We will not allow real estate speculators and tax frauds to take advantage of loopholes in the system any longer, and this register sends a clear message. The days of avoiding taxes through condo flipping are over. This register will help bring fairness and integrity back to B.C.’s real estate market, so that people can afford homes in the communities where they live and work.”
The province said that, effective January 1, 2019, developers who sell strata units must:
• include terms and a notice in their contracts to inform buyers of the new collection and reporting requirements;
• collect information, including the terms of the assignment and the name and social insurance number or business information of the parties to the assignment; and
• report this information in the online register.
The announcement added, “The B.C. government will provide this information to the Canada Revenue Agency so that transactions can be traced back to the assigner’s income tax return. This will ensure that people who assign condos are paying the appropriate income taxes.”