As of January 1, 2025, the BC Home Flipping Tax applies to the profit earned from selling a property in British Columbia (including presale contracts) if the property was owned for less than 730 days.
Property purchased before January 1, 2025 will still be subject to the tax if sold on or after January 1, 2025 if it was owned for less than 730 days, unless an exemption applies.
The BC Home Flipping Tax is different from the Federal property flipping rules and additional to the federal and B.C. Income tax. It’s meant to discourage short term home ownership and property flipping.
Anyone (other than an exempt entity) who sells “taxable property” on or after January 1, 2025 and has held it for less than 730 days before the sale.
A sale generally refers to signing a contract where a beneficial interest in taxable property is transferred for money (or other consideration). This obviously includes standard residential transactions.
It doesn’t include:
Taxable property essentially means residential property. So the tax will apply to the sale of: a property with a housing unit; a property zoned for residential use; or the right to acquire a property (for example, an assignment of a presale contract).
There are two classes of exemptions:
All of the exemptions are relatively nuanced and proper legal advice should be given to determine whether a specific fact pattern fits within an exemption.
This includes things such as a death; a serious illness or disability; a relocation due to a job or attend university; a breakdown of a marriage; a termination of employment or a threat to personal safety. Other examples include: bankruptcy, insolvency and foreclosure; a destroyed housing unit; expropriation; disposing of a property acquired by winning the lottery; and a year-long delay in a completion of a presale unit.
This includes an exemption for builders and developers, for renovations or construction of additional housing units on a property and constructing a new housing unit on a property.
This is relatively self-explanatory – there is an exemption for sales between related persons. Related persons are those connected by blood relationship, marriage, common-law partnership or adoption. This exemption can also be extended to friendships in certain circumstances. Also, there is an exemption if a person sells a property to a related corporation (or partnership).
There are cases where an exemption always applies and so a Flipping Tax Return is not required, these include: a property in an exempt location; an exempt entity selling property; property being used exclusively for commercial purposes.
Exempt locations are generally First Nations lands, including reserve lands, treaty lands as well as other specific First Nations Bands land.
Exempt entities are generally government bodies, First Nations bodies and/or non-profit institutions.
Please note, the BC Home Flipping Tax is additional to annual income tax filings. It requires a separate filing within 90 days of a sale, if:
If property was held for 730 days or more, or an exemption that does not require a Flipping Tax Return is available, then a Flipping Tax Return does not need to be filed.
If property is sold within 365 days, the tax rate is 20 percent of net taxable income, or in lay terms, 20% of the “profit”. The rate decreases over the next 365 days – so that at 730 days, the BC Flipping Tax no longer applies.
The key dates are: (i) the date of acquisition; and (ii) the date of disposition. In other words, the Completion Date for each standard residential transaction.
For buyers of pre-sale contracts that originally bought a pre-sale, completed on the unit, and then sold it, the starting date is the date the pre-sale contract was made.
There is a deduction for the sale of a primary residence of up to $20,000 if certain conditions are met.