As of January 1, 2025, British Columbia has implemented the BC Home Flipping Tax to curb short-term property speculation and promote housing affordability.

 

Who Is Subject to the Tax?

 

This tax applies to individuals, corporations, partnerships, and trusts that sell or dispose of residential property in B.C. within 730 days (approximately two years) of acquisition. Both residents and non-residents of B.C. are subject to this tax.

 

Taxable Properties

 

The tax targets profits from the sale of:

 

  • Properties with a housing unit
  • Properties zoned for residential use
  • Rights to acquire such properties, including assignments of purchase contracts for pre-construction condominiums

 

Certain property locations and transactions are exempt from this tax.

 

Exemptions

 

Exemptions are available under specific circumstances, such as life events (e.g., death, divorce), builder or developer activities, and property sales between related persons. Some exemptions require filing a return, while others do not.

 

 

Tax Calculation

 

The tax is calculated based on net taxable income from the property sale:

 

  1. Calculate Taxable Income: Sale proceeds minus purchase cost and improvement costs.
  2. Determine Net Taxable Income: Taxable income minus any applicable primary residence deduction.
  3. Apply Tax Rate:
    • 20% if owned for 365 days or less.
    • Decreasing rate if owned between 366 and 729 days, calculated as:
      • Tax rate = 20% × [1 – ((Days owned – 365) / 365)]
    • No tax if owned for 730 days or more.

 

Filing and Payment

 

Sellers must file a BC Home Flipping Tax return within 90 days of the property sale if the property was owned for less than 730 days. The return is filed separately from annual income tax filings. Failure to file or pay on time may result in penalties and interest.

 

Conclusion

 

The BC Home Flipping Tax aims to discourage short-term property speculation and support housing affordability in British Columbia. Property owners should be aware of this tax when considering selling residential property within two years of purchase.

 

For detailed information and specific scenarios, refer to the official BC government page.