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First-of-its-kind registry in B.C. targets under-the-radar condo flippers

The British Columbia government says it has launched Canada’s first registry aimed at cracking down on pre-sale property flipping and tax evasion in B.C.’s real estate market.


The Ministry of Finance says the Condo and Strata Assignment Integrity Register will improve fairness and transparency in property transactions.


Finance Minister Carol James says in a news release that the register will take “real action to moderate the condo market,” and is already starting to see results in Metro Vancouver.


Condo developers will be required to securely gather and report the identity and citizenship of anyone completing a contract assignment in a project.


A contract assignment occurs when a buyer sells, or “flips,” their purchase contract of a condo to another buyer, often at a higher price, before construction of the building is complete.


Currently flipping can occur without any oversight and the province says the practice has been a factor in raising real estate prices while facilitating tax evasion when capital gains and other taxes are not applied.


“For too long, speculators and tax evaders have been taking advantage of loopholes in our real estate market, driving up prices and shutting British Columbians out of the market,” James says in the news release.


The finance ministry says it’s unknown how many pre-sale property flips occur each year because the transactions aren’t reported.


Developers are now required to collect and record assignment information and file a report each quarter, with the first due April 30, covering the period from Jan. 1 to March 31, 2019.


“The B.C. government will use this information to ensure that people who assign condos are paying the appropriate income tax, capital gains and property transfer tax,” the release says.


The filing fee per assignment is $195, which the government says is a small fraction of the cost of flipping a condo unit.

The register is one part of the New Democrat government’s 30-Point Housing Plan to address housing affordability.


Article: Vancouver Sun https://goo.gl/uC58Jb


Tibor Bogdan

*Personal Real Estate Corporation
Sutton Showplace Realty
cell: 604-855-2521
TF: 1-877-858-2408

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What is a pre-sale?

Example scenario: When the developer intends to build an apartment building and applies for financing, the bank will grant financing under certain conditions. One of them will likely be a certain percentage of pre-sales the developer will need to secure before receiving the funds.
It is common practice for a developer to approach several real estate investors and offer them an opportunity to purchase units of the non-existent building at a discounted price, and on good terms.

Once the number of pre-sales is accomplished, the developer goes ahead with the construction, which will likely take two years or longer to complete. During construction, their marketing team offers the remainder of the units for sale at market value to the public.

If you are a RE investor, you know that it is preferable to be buying at the pre-sale prices, not market value prices.

The question is, how do you get the invitation to buy a pre-sale?
In the past many years, investors have made substantial income by buying at wholesale prices and selling at retail prices even before they needed to complete their purchase. I saw many of them lining up and sometimes even camping overnight in front of the sales center to get a chance to buy at lower prices, but not everyone was lucky enough. You needed to be well-connected to get an opportunity, and you had to act fast.

Today is a bit of a different story. Several projects in the Lower Mainland and Fraser Valley offer really good prices and incentives to secure a unit now and complete the purchase two or three years later. The list of incentives varies from one project to the next. Besides attractive prices, you can get low deposit amounts (5-15%), low or no assignment fees, free updates, a mortgage rate buy-down program, extra parking and more.

A month ago, I helped a few of my clients purchase a presale in Surrey that sold out in 2 days, and I know of another good developer that will be offering a few units for sale as well.

If you would like to know more about these opportunities, I would encourage you to call or email me, and I’ll be happy to send you details on those projects.
 
Kind regards,
 
Tibor Bogdan
Century 21 Creekside Realty Ltd.
45428 Luckakuck Way #190, Chilliwack, BC V2R 3S9
cell: 604-855-2521
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