Vancouver Pre Sale Condos- Sold OffShore, Flipped Locally
As the focus shifts from the single family market to condos the crunch to enter the market has never been more fierce. Bidding wars are ravaging anything that resembles four walls and a roof. To make matters worse, record supply under construction is being largely sold offshore. Similar to a Ponzi scheme, pre sale condos are sold to offshore investors who sometimes buy multiple units at a time and later assign or “flip” to local buyers at an even higher cost.
Here is the current number of assignment sales listed on the MLS.
This was exposed last summer by Kathy Tomlinson but in recent months has become even more glaring. Since the introduction of the foreign buyers tax, which has deflated the luxury house market, the attention has shifted to pre sale condos. Pre sale condos are exempt from the 15% foreign buyers tax, and have no doubt become a very attractive investment. Further, once assigned to a local buyer at a higher cost, it’s easy to avoid capital gains tax as nothing ever registers in land titles office.
It’s the perfect speculative system. Pay deposit increments of 5%, if the market tanks, one simply walks away from the 5, 10, or 15% worth of deposits. If the market continues to boom you flip it for an easy profit and dodge capital gains tax. Good luck tracking down an international buyer living in China, they are long gone.