The California Housing Speculation Act

[Zarrin M.]

Hello!

I’m very new to real estate investment community (literally two months into learning via reading, joining bigger pockets), and have yet to invest in real estate, so please be kind in your response.  Thank you! 

I'm learning about all the different types of REI and house flipping seems to be the one I have the most interest in. However, I recently learned about the AB 1771: The California Housing Speculation Act that took effect on January 2023. The new bill imposes a 25% tax penalty if there is resale of a home within the first 3 years.

Link to bill: https://leginfo.legislature.ca...

Questions:

-I was wondering if anyone is aware of how much of an impact the tax penalty will have on the house flipping industry in California?

-The bill also raised a social question I have about the impact of house flipping on communities with historically low socioeconomic resources. Any thoughts on this? 

TIA! 
Tahirih 

[Brad S.]

I didn't think that bill went anywhere yet, but I haven't followed it for a while. More stupid CA tricks which will no doubt have many unintended consequences. So, if it passes, flippers will have to reduce their purchase price accordingly, penalizing Sellers, and many houses that flippers buy, will not be available to owner occupants, since they may be in poor condition and unfinanceable. And this would push some flippers to hold on to their properties longer, to avoid the tax, thereby reducing available inventory and causing the opposite of what is intended. So, prices will go down for the flippers, those sellers will get less money, inventory will go down, putting upward pressure on prices or reducing typical downward market pressure. Sweeeet...you go CA!   hmmmm, I suppose I am one of those bad bad flippers though.  :(