The BC Home Flipping Tax comes into effect on January 1, 2025. It applies to the net income from properties sold within two years (730 days) of purchase, even if the purchase was made before January 1, 2025. Certain property types and circumstances are exempt from this tax. It is important to note that this tax is separate from/ in addition to the Federal Property Flipping Tax.
How is the BC Home Flipping Tax Calculated?
The BC Home Flipping Tax is based on the net income from the sale. This amount is calculated as the sale price minus the purchase price and any expenses for improvements.
- Tax Rate: If the property is sold within 365 days of purchase, the net income is taxed at 20%.
- Rate Reduction: This tax rate gradually decreases over the next 365 days and ends after 730 days.
If you’ve owned the property for at least 365 days and used it as your primary residence, you may qualify for a primary residence deduction of up to $20,000
What Properties Are Subject to the Tax?
The BC Home Flipping Tax applies to the income earned from selling:
- Properties in a housing unit
- Properties zoned residential
- Assignment of a Purchase Contract for a pre-sale property
However, all leasehold properties are exempt from the tax.
Exemptions From Paying the Tax
If you sell your property within 2-years of owning if for any of the following reasons, you may be exempt from the BC Home Flipping Tax:
- Serious illness or disability affecting you or a related individual
- Death of an owner
- Relocation due to work or school
- Change of household membership (e.g., marriage, divorce, expecting a child)
- Involuntary loss of employment
- Threats to personal safety
- Property was acquired through a lottery
- Foreclosure
- Bankruptcy and insolvency
Some exemptions are automatic, while others require filing a BC Home Flipping Tax return within 90 days of the sale.
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