BC’s New Home Flipping Tax: What You Need to Know
January 1, 2025, British Columbia has introduced a home flipping tax that targets properties sold within 730 days of purchase. This new tax applies to residential properties, including pre-sale contracts, and is designed to curb speculative real estate activity. The tax rate is 20% for properties sold within the first year and decreases in the second year. Sellers must file a return within 90 days of the sale, regardless of eligibility for exemptions. The tax applies to both B.C. residents and international sellers, making it essential for anyone involved in real estate transactions in the province to understand the new rules.
Who Is Subject to the Tax?
Who Is Subject to the Tax?
The home flipping tax is triggered when a property is sold within 730 days of purchase. For example, if you bought a property on May 1, 2023, and sold it on January 31, 2025, the profit would be taxable. The tax applies to housing units, residentially zoned properties, and presale contracts. However, properties sold after 730 days are exempt from the tax. If you are considering selling a recently purchased property, it's important to calculate the timeline carefully to determine if the tax applies.
Exemptions and Deductions: What You Should Know
Exemptions and Deductions: What You Should Know
There are some exemptions available under this new tax, such as the primary residence exemption. If you sell a primary residence that you’ve owned for at least 365 consecutive days, you may be eligible for a deduction of up to $20,000. Sellers must file a return to claim this exemption, and it only applies to properties where the seller lived in the home as their primary residence. For presale contracts and related person transactions, different rules apply, so it's essential to seek guidance to ensure you meet the criteria. With the potential for significant tax implications, it’s crucial to understand whether your property qualifies for an exemption or deduction before making a sale.