BC Home Flipping Tax - What you need to know - Beginning January 1, 2025

January 1, 2025 marks the beginning of an additional tax intended to curb the inflated demand that has put immense pressure on residential home prices. 

This tax is targeting the re-sale of purchased residential real estate within 2-years of the initial purchase (pre-sale and re-sale properties). 

Taxable Properties:

- Properties with a housing unit, properties zoned for residential use, acquisition via assignment of a pre-sale residential asset, 

There are Exemptions:

Thank goodness, there are reasonable exemptions!

- Life Circumstances: death, illness/disability, eligible re-location, change in household membership (new partner, breakdown in marriage/common law), involuntary termination of employment, threat to personal safety.

- Additional considerations: bankruptcy, housing destroyed, expropriation, lottery acquisition, foreclosure

How Much Tax is to be paid?

Applies to the Net Taxable Income from teh sale of taxable property owned les than 730 days. Tax rate is 20% of income earned from a property sold within 365 days. The rate decreased over the following 365 days. At 730 days, the tax no longer applies. 

Do you need to file a BC home flipping tax return?

If you sold your home within 729 days of the sale you must, within 90 days of the sale. Exemptions applies only AFTER you file a return.

Note: the BC home flipping tax return is separate from annual income tax filings.

LINKS:

BC HOME FLIPPING TAX - BC GOV'T

*blog is intended as a summary only. Please lean on your accounting professional for further action and guidance.

**This new tax is separate from the federal property flipping tax and is calculated independently of federal or provincial income tax systems. Began January 2023.

**Note: Starting on January 1, 2023, the new deeming rule (federal) applies to flipped property to ensure that profits are subject to full income inclusion. Under the new rule, profits from the sale of a flipped property are deemed to be business income.  Where the new deeming rule applies, profits on the sale cannot be treated as a capital gain (50-per-cent income inclusion) and the Principal Residence Exemption is not available.