BC Home Flipping Tax
What is it?
As of January 1, 2025, the BC home flipping tax is now in effect. This new tax is distinct from the existing federal property flipping tax and specifically targets short-term property sales within British Columbia.
How it works
- The tax applies to income from sales of residential properties, presale contracts, or assignments owned for less than 730 days (two years). This includes properties bought before January 1, 2025, if they are sold on or after that date and owned for less than two years.
- The rate is 20 per cent for sales within the first 365 days of ownership, gradually decreasing until it is eliminated at 730 days.
- This tax applies to any person or entity (individual, corporation, partnership, or trust) selling property within BC, regardless of residency.
- Exemptions include certain primary residences, though exemptions are subject to specific conditions and filing requirements.
Taxable Income Calculation
The BC home flipping tax is calculated based on the net taxable income from the sale of the property. This involves the following steps:
1. Determine Proceeds: Calculate the proceeds from the sale of the property.
2. Subtract Acquisition Costs: Deduct the cost to acquire the property.
3. Subtract Improvement Costs: Deduct any eligible costs paid or payable to improve the property while owned.
Net Taxable Income
Net taxable income is the taxable income minus the primary residence deduction.
Tax Rate
The tax rate is 20% for income earned from a property sold within 365 days of ownership. The rate decreases linearly until 730 days, at which point the tax no longer applies.
The BC Government has released a new video about the tax.
Exemptions from the tax
You may not need to pay the tax if you are eligible for an exemption. Depending on your exemption, you are either exempt only after filing a return, or can be exempt without filing a return.
Do I need to file a BC home flipping tax return?
The BC home flipping tax return is separate and distinct from the annual income tax filings.
You must file a BC home flipping tax return within 90 days of the sale, if either of the following applies:
- You qualify for the tax, as you sold your property within 729 days of purchasing it and are not eligible for any exemptions
- Your exemption applies only after you file a return
You do NOT have to file a return if one of the following applies:
- You do not qualify for the tax as you sold your property after owning it for more than 729 days
- Your exemption applies without needing to file a return
- You are a developer and you are initially entering into an agreement which establishes a right to acquire a property (for example, when a developer enters into a presale agreement with an initial purchaser)
