A new tax measure that will soon take effect in British Columbia called the BC Home Flipping Tax. This tax is part of the provincial government’s efforts to curb real estate speculation and ensure housing affordability.
What is the BC Home Flipping Tax?
Starting January 1, 2025, the BC Home Flipping Tax will apply to the income earned from selling a property in BC if the property was owned for less than 730 days. This tax is designed to discourage short-term holding of properties for profit, aligning with the government’s broader Homes for People Plan.
Who is Subject to the Tax?
The Home Flipping Tax affects anyone who sells or disposes of a taxable property within 730 days of purchase. This includes individuals, corporations, partnerships, and trusts, regardless of their residency status. For example, if you purchase a property on May 1, 2023, and sell it on January 31, 2025, the income from this sale will be subject to the tax.
Taxable Properties
The tax applies to residential properties and rights to acquire such properties, including pre-sale contracts for condos. However, it does not apply to deemed dispositions, mortgages, leases, gifts, or other transactions that do not change beneficial ownership.
Tax Rates
The tax rate is 20% of the income earned from a property sold within 365 days of purchase. This rate decreases over the next 365 days, and after 730 days, the tax no longer applies.
How is the Tax Calculated?
The tax is calculated based on the net taxable income from the sale of the property. If you sell a property within 365 days of purchase, 20% of the income earned will be taxed. This percentage decreases gradually until the 730-day mark, after which the tax does not apply1.
Exemptions
Several exemptions exist for the Home Flipping Tax:
- Life Circumstance Exemptions: Certain life events, such as death, disability, or divorce, may qualify for exemptions.
- Builders and Developers: Exemptions are available for those involved in building or renovating properties.
- Property Sales Between Related Persons: Transactions between related individuals may be exempt.
- Exempt Locations and Entities: Properties in specific locations, such as Indigenous lands, and certain entities, like registered charities and government bodies, are exempt.
Filing Requirements:
If you are subject to the tax, you will need to file a BC Home Flipping Tax return. Some exemptions require filing a return to claim the exemption, while others do not2.
Next Steps
- Review Your Property Holdings: Assess any properties you own or plan to purchase to understand how the Home Flipping Tax might affect you.
- Consult a Tax Professional: Seek advice from a tax professional to navigate the specifics of the Home Flipping Tax and identify any applicable exemptions.
- Plan Property Transactions Carefully: If you are considering selling a property, evaluate the timing of the sale to minimize tax liabilities.
- Stay Informed: Keep up-to-date with any further announcements or changes to the Home Flipping Tax regulations.
Conclusion:
We encourage all our clients to review their property holdings and consider the implications of this new tax. If you have any questions or need further assistance, please do not hesitate to contact us.
1: BC Home Flipping Tax – Province of British Columbia 2: Exemptions from the BC Home Flipping Tax – Province of British Columbia
