Selling a home shortly after purchasing it can have tax consequences that British Columbia property owners should consider before entering into a sale. Since January 1, 2025, the BC home flipping tax has applied to certain profits from residential property sold within 730 days of acquisition.
How Does the BC Home Flipping Tax Work?
The tax applies to certain residential properties located in British Columbia, including the assignment of a contract to purchase residential property, such as a pre-sale condo contract. It is separate from the federal property flipping rules, which can treat gains on residential property held for less than 12 months as business income, and from ordinary federal and provincial income tax.
If a taxable property is sold within 365 days of acquisition, the BC home flipping tax rate is 20% of the net taxable income from the sale. For properties held between 366 and 729 days, the rate gradually decreases. Once the property has been held for 730 days, the BC home flipping tax no longer applies.
Are There Exemptions?
Selling a property within two years does not necessarily mean tax will be payable. The legislation provides exemptions for certain qualifying circumstances, including specified life events, certain building and renovation activities, and certain sales between related persons. A primary residence deduction of up to $20,000 may also be available to an individual who owned the property for at least 365 consecutive days and lived in it as their primary residence. This deduction is not available on the assignment of a pre-sale contract.
Some exemptions apply only if the seller files a return, even where no tax is ultimately payable. Where a return is required, it is generally due within 90 days of the sale. The rules can also become more complicated where property was gifted, acquired from a related person, acquired in portions at different times, or involves a pre-sale contract.
Planning Before You Sell
Considering these issues before entering into a contract of purchase and sale can help avoid unexpected tax or filing obligations after completion. Sellers should also remember that the BC home flipping tax is separate from other potential tax consequences of selling real estate, and should speak with their accountant about the income tax side of a sale.
Every real estate transaction is unique, and whether the BC home flipping tax applies will depend on the particular circumstances of the purchase and sale. For guidance regarding your British Columbia real estate transaction, please contact Northam Law Corporation at 604-630-2350 or melissa@northam-law.com.
** The information in this article is for general informational purposes only and does not constitute legal advice. Laws can and do change over time and every legal situation is unique. You should consult with a qualified legal professional, such as the team at Northam Law, to obtain advice tailored to your specific circumstances before making any decisions.
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