Another year, another flipping tax! (See what I did there?!)
The British Columbian government is again pulling the lever they love the most… taxation. Property transactions and ownership can now involve property transfer tax, goods and services tax, speculation and vacancy tax, empty home tax, property tax, capital gains tax, federal underused housing tax, federal anti-flipping tax, and now… a provincial anti-flipping tax.
As of January 1, 2025, British Columbia introduced the BC Home Flipping Tax, claiming it will curb short-term property speculation and address housing affordability challenges. I’ll leave aside for now the fact that speculators are actually a necessity to grow housing supply and try to leave things as objectively as possible. This new tax targets individuals who profit from selling residential properties owned for less than two years, even retroactively, so this is a serious change that should be taken into account by many homeowners.
Here’s a quick breakdown of the key details so you can be informed:
How the Tax Works
Applicability: The tax applies to profits from selling homes, including presale contracts and assignments, owned for less than 730 days. Even properties purchased before 2025 are subject to the tax if sold after January 1, 2025.
Tax Rates:
– 20% on profits for properties sold within the first year of ownership.
– Reduced rates apply for properties held between 366 and 729 days.
– No tax is charged on properties owned for two years or more.
Exemptions
Thankfully there are at least certain life events that exempt sellers from this tax, such as:
– Death of the owner
– Divorce or separation
– Disability or serious illness
– Job loss or work relocation
– Bankruptcy or insolvency
– Threats to personal safety
Primary Residence Deduction
There is also a potential deduction if you’ve lived in the home as your primary residence for at least 365 consecutive days, you may qualify for a deduction of up to $20,000 from your taxable income.
Filing Requirements
More paperwork too! Sellers that are subject to the BC Home Flipping Tax must file a separate return within 90 days of selling the property, in addition to your regular income tax filings.
Our Advice: Speak To Your Accountant & To Us!
With so many taxes at play when it comes to home ownership we are continuing to advise seeking out your accountant to consider all the variables for you in your specific scenario. Whenever we recommend discussions with another professional it’s not to remove the liability from ourselves, it’s to ensure that you are provided the advice most pertinent to your situation.
As always, we’re available to discuss your situation and look forward to working with our clients’ other professionals to provide the most accurate information possible.