British Columbia Home Flipping Tax

Starting January 1,2025, British Columbia introduces the Home Flipping Tax, targeting quick property sales.  Whether you’re a BC resident or a non-resident.  If you sell your property within two years of purchase, this tax will likely apply to you, unless you meet specific exemptions. 

Who does the Home Flipping Tax Apply to?

The Home Flipping Tax affects anyone who sells a property within two years of purchase, including both BC residents and non-residents.  It applies to residential property, presale contracts and assignments of presale contracts.

Exemptions to the Home Flipping Tax

Several exemptions exist to alleviate the tax burden under specific circumstances:

1. First Nations Land: Certain First Nations lands are exempt
2. Special Entities: Exemptions apply to entities like registered charities and municipal entities.
3. Life Circumstance Exemptions:  These include:
   1. Death or serious illness
   2. Divorce
   3. Bankruptcy, expropriation and foreclosure
4. Transactional Exemptions:  These include:
   1. Related party transactions
   2. Commercial use and developer exemptions
   3. Renovations or construction of additional housing units

For a comprehensive list of exemptions, please refer to the official BC Government page on Home Flipping Tax Exemptions.

Calculating the Home Flipping Tax

The Home Flipping Tax is calculated based on your net taxable income from the sale of a property owned for less than two years.  Here’s how it works:

• Net Taxable Income:  This is your taxable income from the sale minus the primary residence deduction.
• Tax Calculation:  Multiply your net taxable income by your tax rate.

The tax rate is 20% if the property is sold within 365 days.  For properties sold between 365 and 730 days, the tax gradually reduces and no longer applies after 730 days.

Primary Residence Deduction

If the property was your primary residence for at least 365 consecutive days before the sale, you might qualify for a deduction of up to $20,000.  Note that this deduction is not available for presale contract assignments.

Example:  Consider Amrita, who bought a condo and lived in it for six months, before selling it.  Since she did not own the property for at least 365 consecutive days, Amrita does not qualify for the primary residence deduction.

Filing a BC Home Flipping Tax Return

You must file a BC Home Flipping Tax Return within 90days of the sale if:

• You sold the property within 729 days and are liable for the tax.
• You qualify for an exemption that requires filing a return.

No return is needed if:

• You owned the property for more than 729 days
• Your exemption applies automatically
• You’re a developer entering an initial agreement to acquire property.

Remember, the Home Flipping Tax return is separate from your annual income tax filing.

The Home Flipping tax aims to curb property flipping in BC, ensuring fair taxation on quick property sales.  By understanding the exemptions and filing requirements, you can better navigate this new tax landscape.  For more detailed information, visit the BC Government website.