What is the Flipping Tax in BC?

The BC Home Flipping Tax is a tax on profits made from selling a residential home or land zoned for residential use within two years of its purchase. The tax rates start at 20% for profits within the first year, gradually declining to 10% after 18 months, and reducing to zero after two years of ownership. The tax applies to properties sold starting January 1, 2025, and includes exclusions for primary residence sales within two years (up to $20,000) and exceptions for events like divorce, death, illness, and relocation for work.

About the New BC Flipping Tax

Premier David Eby's NDP government has unveiled a new measure aimed at curbing speculation in the real estate market in British Columbia, Canada, dubbed the "BC Home Flipping Tax."

Targeting “those who take unfair advantage by putting profits ahead of people,” the BC government intends to support housing supply.

This new tax is a strategic move to generate revenue - anticipated at 43 million annually - and channel it into addressing the housing crisis. The NDP intends to allocate this funding towards the construction of new affordable housing.

Key Points of the BC House Flipping Tax

Tax Rates

• 20% tax rate on profits within the first year.
• Gradually declines to 10% after 18 months.
• Reduces to zero after two years of ownership.

Exclusions

• Primary residence sales within two years can exclude up to $20,000 from taxable income.
• Exceptions for events like divorce, death, illness, and relocation for work.

Appeals and Documentation

• Mechanism for appeal and required documentation still under consideration.
• Details and forms expected post-legislation passage.

Effective Date

• Applies to properties sold starting January 1, 2025.
• Applies retroactively, even if the property was purchased before the effective date.

Market Outlook

• Despite challenges in 2023, the government anticipates a rebound in home sales activity in 2024.
• The NDP expects real estate prices in BC to rise by an average of 2.3% in 2024 and 2.9% in 2025.

How The BC Home Flipping Tax Will Work | An Example

Let's say you buy a home for $800,000 and then sell it for $900,000 within the same year. You would owe 20% of the $100,000 profit - or $20,000 in BC Home Flipping Tax.

It's essential for homeowners to be aware of these calculations when engaging in real estate transactions, especially within the specified time frames outlined by the new tax legislation.

BC Property Transfer Tax Exemption

Along with the flipping tax announcement, the BC government has also introduced a new increase to the property transfer tax exemption for first-time buyers in BC which will take effect in April 1st, 2024.

If you'd like any guidance on managing your real estate portfolio in light of this new legislation, or you're interested in the real estate development projects in Kelowna, contact our real estate professionals at Vantage West Realty.