Starting January 1, 2025, British Columbia introduced the Home Flipping Tax, aiming to reduce speculative short-term property sales and improve housing affordability. Here's what you need to know to stay ahead of these changes.
What is the Home Flipping Tax?
The tax applies to profits earned from selling a property in BC (including presale contracts) if the property is owned for less than 730 days. Properties sold within 365 days face a 20% tax rate on profits, decreasing over the next 365 days. After 730 days, the tax no longer applies.
This tax is imposed under the Residential Property (Short-Term Holding) Profit Tax Act. It operates separately from federal property flipping rules, focusing specifically on discouraging short-term property holding as part of BC’s Homes for People Plan.
Who Does It Apply To?
Anyone, including individuals, corporations, partnerships, and trusts, who sells a qualifying property owned for less than 730 days after January 1, 2025, may be subject to this tax. Even properties purchased before this date could qualify if sold after January 1, 2025.
Exemptions and Deductions
Exemptions apply in cases like significant life events (e.g., death, divorce) or specific circumstances such as property gifts or related-party transfers. Additionally, a primary residence deduction of up to $20,000 may be available if you meet ownership and residency conditions.
Key Considerations for Buyers and Sellers
Presale Contracts: The tax applies to assignments of presale contracts if owned for less than 730 days.
Days of Ownership: Calculated from the purchase date to the sale date, including presale assignments.
Separate Tax Filing: This tax requires a distinct return, independent of your annual income tax filing.
Plan Ahead
Whether you're buying, selling, or holding, understanding this tax is crucial to making informed real estate decisions. Reach out to discuss how these changes could impact your real estate plans—I'm here to help you navigate these new rules confidently!
Source: Government of British Columbia - https://www2.gov.bc.ca/gov/content/taxes/income-taxes/bc-home-flipping-tax