What You Need to Know About the New B.C. Flipping Tax

Dated: February 24 2024

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What You Need to Know About the New B.C. Flipping Tax

If you are planning to sell a property in British Columbia within two years of purchase, you may have to pay a new tax on your profit. The B.C. government announced the tax as part of its 2024/2025 budget, which aims to curb speculation and support affordable housing in the province.

How the tax works

The B.C. flipping tax applies to income from the sale of properties with a housing unit and properties zoned for residential use. It also applies to income made from condo assignments. The tax does not apply to land or portions of land used for non-residential purposes.

The tax rate depends on how long you owned the property before selling it. The tax rate is highest for those who owned properties for the shortest period and declines the longer the property is owned. The tax rate is 20 percent for income earned from properties sold within 365 days of purchase and declines to zero between 366 and 730 days.

The tax will apply to properties sold on or after January 1, 2025. Income from property purchased before the tax’s effective date may also be subject to the new tax if sold on or after January 1, 2025 within two years, unless an exemption applies.

The government forecasts the flipping tax will raise $11 million in its first year, rising to $43 million the following year. All revenue from the tax will “go directly to building homes in B.C.,” the budget says, similar to proceeds from the existing speculation and vacancy tax.

Who will be subject to the tax

The tax will affect anyone who sells a property in B.C. within two years of purchase, regardless of their residency status. Whether income earned from the sale of your property is subject to the tax depends on when you purchased the property.

For example, if you purchased a property on May 1, 2023 and sold the property on January 31, 2025, income you earn from the sale of the property would be taxable. If you decide not to sell a property until June 1, 2025, then income you earn from the sale of the property would not be subject to the tax.

What are the exemptions

You may be eligible for exemptions if there are life circumstances that motivated the sale of a property within two years, such as:

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 two years of purchase, you may also be able to exclude up to $20,000 when calculating your taxable income.

The purpose of this tax is to support housing supply, not impede it. Exemptions will be provided for those who add to the housing supply or engage in construction and real estate development.

How to report and pay the tax

The B.C. government has not yet released the details on how to report and pay the tax. The tax is subject to legislative approval and is not harmonized or administered with the federal or B.C. income tax. The government says it will provide more information on the tax in the coming months.

If you are planning to sell a property in B.C. within two years of purchase, you should consult a tax professional to understand the implications of the new tax and whether you qualify for any exemptions.

 

More information can be found here

https://www2.gov.bc.ca/gov/content/taxes/income-taxes/bc-home-flipping-tax

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Damian Dowell

D&T Real Estate GroupWith over 22 years of combined real estate service under our belt, Damian and Tricia can assure you that you are in good hands with us. Representing current and future homeown....

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