Posted on
February 23, 2024
by
Michelle Fendelander
The proposed BC home flipping tax applies to income you realize from the sale of properties in British Columbia if you have owned them for less than 2 years.
The tax, which is subject to legislative approval, is separate and distinct from the federal property flipping rules and is not harmonized or administered with the federal or B.C. income tax.
Overview
The BC home flipping tax will apply to income from B.C. properties sold on or after January 1, 2025. Income from property purchased before the tax’s effective date may be subject to the new tax if sold on or after January 1, 2025 if the property is sold within 2 years, unless an exemption applies.
As previously announced in British Columbia’s Homes For People plan, the intention of the tax is to discourage short-term holding of property for profit.
How the tax will work
The BC home flipping tax will apply to income from the sale of property that was owned for less than 2 years.
The tax rate will be highest for those who owned properties for the shortest period and will decline the longer the property is owned. The tax rate will be 20 percent for income earned from properties sold within 365 days of purchase and will decline to zero between 366 and 730 days.
You may be exempt from paying tax on income earned from the sale of your property if you are eligible for an exemption.
Who will be subject to the tax
If you sell your property on or after January 1, 2025, income earned from the sale of your property may be subject to the new tax if the property was purchased less than 2 years prior. Whether income earned from the sale of your property is subject to the tax depends on when you purchased the property.
Examples:
If you purchased a property on May 1, 2023 and sold the property on January 31, 2025, income you earn from the sale of the property would be taxable.
If you decide not to sell a property until June 1, 2025, then income you earn from the sale of the property would not be subject to the tax.
Note: The seller of the property may be a B.C. resident or a resident anywhere else in the world.
Exemptions
You may be eligible for exemptions if there are life circumstances that motivated the sale of a property within 2 years, such as:
If you sell your primary residence within 2 years of purchase, you may also be able to exclude up to $20,000 when calculating your taxable income.
The purpose of this tax is to support housing supply, not impede it. Exemptions will be provided for those who add to the housing supply or engage in construction and real estate development.
The above information does not reflect an exhaustive list of the exemptions that will be included in this new tax. More information on these exemptions and others will be provided in the future.
Relevant properties
The tax will apply to income earned from the sale of:
Properties with a housing unit
Properties zoned for residential use
The right to acquire the above properties, such as the assignment of a purchase contract
The tax will include special rules for properties, or portions of properties, that have non-residential purposes.
Income earned from the sale of properties located on reserve lands, treaty lands and lands of self-governing Indigenous Nations will not be subject to this tax.
Ministry of Finance. BC Home Flipping Tax - Province of British Columbia. 22 Feb. 2024, www2.gov.bc.ca/gov/content/taxes/income-taxes/bc-home-flipping-tax#exemptions.
