In episode 2 of The Closing Couch Podcast, Kim and Polly sit down with real estate guru Jeff Fitzpatrick to uncover the latest and greatest in Vancouver's ever-changing property market. In this episode, Jeff brings his 19 years of experience to the table, offering us insights into the new tax laws, market trends, and strategic tips that can make or break a real estate deal.The episode kicks off with Jeff addressing the current buzz in the industry. He discusses how rumors of impending tax changes are causing a stir, with some property owners scrambling to sell before the new laws take effect. Jeff emphasizes that while the changes are significant, the real impact will be felt more on the commercial side due to the larger numbers and corporate holdings involved.
Kim and Polly then introduce Jeff, highlighting his role as a partner at Engel & Völkers in West Vancouver. Jeff is known for his extensive knowledge and approachable demeanor, making him a favorite in the office. He sets the stage for the discussion by outlining the recent policy changes implemented by the BC government and the federal government. These changes aim to address the capital gains tax and the new flipping taxes at both the federal and provincial levels.
Jeff dives into the specifics of the current real estate market in Vancouver, noting that while the market appears to be improving, it remains highly variable. He explains how the Bank of Canada's rate increases have put many potential buyers and sellers in a holding pattern, waiting to see if interest rates will drop. Despite the rate hikes, property prices have remained relatively stable due to low inventory levels.
One of the key points Jeff elaborates on is the capital gains tax changes set to be implemented on June 25th. He breaks down the concept of capital gains, using a simple example: if you buy a property for $1 million and sell it for $2 million, your capital gain is $1 million. Under current legislation, 50% of this gain is taxable. However, the new rules introduce a higher inclusion rate for corporately held properties, increasing the taxable portion to 66.67%. For personally held properties, the first $250,000 of the gain remains at the 50% inclusion rate, but anything above that will be taxed at the higher rate.
Jeff also touches on the new flipping taxes. The federal flipping tax, introduced in 2023, treats any profit from a property sold within a year of purchase as income rather than a capital gain, thus eliminating the 50% tax-free benefit. The BC flipping tax, effective January 1, 2025, extends this concept by applying a 20% tax on properties sold within the first year and gradually decreasing to zero after two years. This tax even applies retroactively, affecting properties purchased in 2024 and sold after the implementation date.Throughout the episode, Jeff provides practical advice for listeners. He shares his own considerations about transferring his corporately held investment property to personal ownership before the new rules take effect, despite the immediate tax implications. This strategic move could save him money in the long run by resetting the property's cost base.
Jeff’s insights extend beyond tax laws. He discusses how these changes might influence market behavior, with some sellers rushing to close deals before the new laws are enforced. He also highlights the importance of consulting with professionals, such as accountants, to navigate these complex changes effectively.
In conclusion, Episode 2 of The Closing Couch Podcast is a must-listen for anyone involved in Vancouver's real estate market. Jeff Fitzpatrick’s expert analysis and practical tips offer a roadmap through the new tax landscape. Don't miss out on this deep dive into the intricacies of real estate taxes and market strategies!