BC Home Flipping Tax

BC Home Flipping Tax: What You Need to Know

Starting January 1, 2025, the BC Home Flipping Tax applies to profits from selling a property (including presale contracts) if owned for less than 730 days. The tax, introduced under the Residential Property (Short-Term Holding) Profit Tax Act, is part of the provincial government's Homes for People Plan to discourage short-term property holding for profit.

Who Does the Tax Apply To?

The tax applies to any individual, corporation, partnership, or trust that sells a property owned for less than 730 days. This includes residents of BC and non-residents.

Example:

• If you bought a property on May 1, 2023, and sold it on January 31, 2025, you owned it for 642 days, and the tax applies.

• If you sold the same property on June 1, 2025, after owning it for 762 days, the tax would not apply.

Taxable Properties

The tax applies to profits from the sale of:

• Properties with housing units.

• Properties zoned for residential use.

• Rights to acquire such properties (e.g., presale contracts).

Certain transactions, such as gifts, leases, or changes in legal title without a change in beneficial ownership, are exempt.

Tax Rates

The tax is calculated based on the profit earned and decreases the longer you hold the property:

• 20% for properties sold within 365 days.

• Gradually decreases over the next 365 days.

• The tax no longer applies after 730 days.

Filing a Tax Return

A separate BC Home Flipping Tax return must be filed within 90 days of the sale if:

• The property is subject to the tax.

• You are claiming an exemption that requires filing.

You do not need to file if:

• The property is exempt without filing.

• You owned the property for more than 729 days.

Primary Residence Deduction

If the property was your primary residence for at least 365 consecutive days, you may qualify for a deduction of up to $20,000 from taxable income.

Example:

• Eligible: Sam owned and lived in a house as his primary residence for 20 months before selling it.

• Ineligible: Amrita owned a condo for 6 months and sold it without meeting the 365-day requirement.

The deduction does not apply to presale contract assignments.

Special Rules for Presale Contracts

• Ownership begins on the date you sign the presale contract or pay the deposit.

• If you assign a presale contract, the tax applies based on your ownership period.

Example:

• You enter a presale contract on June 1, 2025, for a condo completing on March 1, 2027. Your ownership is considered to start on June 1, 2025.

Exemptions

You may be exempt from the tax in certain cases, such as:

• Sales between related persons.

• Specific transactions, like gifts or leases.

For properties purchased from a related person, ownership is deemed to begin when the first related person acquired the property.

Example:

• If Jennifer buys a property from her mother on August 1, 2025, and her mother originally purchased it on January 1, 2024, Jennifer’s ownership period starts on January 1, 2024.