Low and behold, the BC government has announced a new flipping tax that will come into effect on January 1, 2025. The proposed BC home flipping tax applies a 20% tax to income you earn from the sale of BC properties sold within 2 years of the purchase of the property. The tax applies to:
- Properties with a housing unit
- Properties zoned for residential use
- The right to acquire the above properties, such as the assignment of a purchase contract
- The tax will include special rules for properties, or portions of properties, that have non-residential purposes.
- Income earned from the sale of properties located on reserve lands, treaty lands and lands of self-governing Indigenous Nations will not be subject to this tax.
The flipping tax will apply to the taxable income on a property sold within 730 days of ownership. If the property is sold within 1 year the tax will be the full 20%, from 366 -729 days the tax will decrease on a pro-rated basis to zero.
This new tax is different from the federal property flipping rules and is NOT harmonized with the federal or BC income tax. It is being implemented to discourage residential owners from gaining large profit after only a short period of time.
Income from property’s purchased before the date the tax takes effect COULD be subject to the new tax if sold on or after January 1, 2025. For example;
- A property purchased May 1, 2023 and sold January 31, 2025, will be subject to the tax.
- A property purchased May 1, 2023 and sold June 1, 2025 would not be subject to the tax.
This applies to BC residents and residents from anywhere else in the world.
Exemptions for the BC Home Flipping Tax
You MAY be eligible for an exemption if you had no other options but to sell within 2 years of purchasing the property if you any of the following circumstances have taken place:
- Separation or divorce
- Death
- Disability or illness
- Relocation for work
- Involuntary job loss
- Change in household membership
- Personal safety
- Insolvency
If you sell your primary residence within 2 years of purchase, you may also be able to exclude up to $20,000 when calculating your taxable income. Exemptions will be provided for those who add to the housing supply or engage in construction and real estate development.
Presale Contracts
Presale contracts will have their dates calculated from the date that the Buyer(s) enter into the contract for the development. If a contract is assigned to a new person, the acquisition date for the 2 year window of time would be the date the new purchaser was assigned the contract. When a person assigns a presale contract to another person within 2 years of entering into the contract with the development, that original purchaser will pay taxes on any profit received from the assignment.
Learn more by visiting these links:
BC home flipping tax – Province of British Columbia (gov.bc.ca)
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Speaking to a professional if about the flipping tax and your own personal circumstances is essential. Please always verify the accuracy of this information through your own due diligence. Nicole McWilliams will assume no responsibility or liability for the accuracy of the information within.
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