What is the BC Home Flipping Tax?
Starting January 1, 2025, British Columbia is introducing a Home Flipping Tax to discourage people from buying and quickly reselling homes just to make a profit. The goal is to reduce speculative buying, keep housing more affordable, and encourage long-term homeownership.
If you sell a residential property (like a house, condo, or townhouse) within 2 years (730 days) of buying it, you might have to pay this tax.
How Does the Tax Work?
- If you sell within the first year (365 days): You’ll pay a 20% tax on the profit you make from the sale.
- If you sell between 1 and 2 years (366–730 days): The tax decreases the longer you own the home.
- After 2 years (over 730 days): No tax applies.
This tax applies to anyone who sells property in BC, whether you live here, elsewhere in Canada, or even in another country.
Example:
- You buy a condo in January 2024.
- You sell it in March 2025, 14 months later.
- You’ll need to pay the BC Home Flipping Tax because you owned it for less than 2 years.
What Types of Properties Are Included?
The tax applies to:
- Houses, townhouses, and condos
- Pre-sale contracts (where you buy a property before it’s built and then sell the contract)
- Property assignments (transferring your purchase rights to someone else)
It does not apply to properties like commercial buildings or farmland.
Who is Exempt from the Tax?
Not everyone selling within two years will have to pay this tax. There are important exemptions, including:
- Primary Residence: If the property is your main home, you may qualify for an exemption (but you’ll need to meet specific conditions).
- Major Life Changes: If you sell due to divorce, separation, or job relocation over 100 km away.
- Serious Illness or Disability: If health issues force you to sell.
- Death of a Homeowner: If the owner passes away and the home needs to be sold.
- Other Legal Reasons: Such as government expropriation (when the government takes land for public use).
If you think you might qualify for an exemption, make sure you keep detailed records and speak with a tax professional.
Why is BC Introducing This Tax?
The BC government wants to:
- Reduce House Flipping: Prevent people from driving up home prices through quick resale profits.
- Encourage Long-Term Ownership: Reward people who stay in their homes longer.
- Improve Housing Affordability: Make homes more accessible to everyday buyers.
How Will This Affect You?
If You’re a Homeowner:
- If you plan to sell within two years, consider waiting to avoid the tax (if possible).
- If you must sell due to a life event, check if you qualify for an exemption.
If You’re Buying a Property:
- Think about your long-term plans.
- If you might need to sell within two years, be prepared for potential tax costs.
Do You Need to File a Tax Return for This?
Yes, you’ll need to file a BC Home Flipping Tax Return within 90 days of selling your property if:
- You sold within two years and owe tax.
- You sold within two years but qualify for an exemption.
If you owned the property for more than two years, you don’t need to file anything for this tax.
Final Thoughts
The BC Home Flipping Tax is an important change that affects many homeowners, buyers, and sellers. Whether you’re planning to buy a new home, sell your current one, or invest in property, understanding this tax can save you from unexpected costs.
If you’re unsure about how this might affect your situation, it’s always a good idea to talk to a real estate professional or a tax advisor who can guide you through the details.
Thinking of buying or selling in BC? Reach out today, and let’s plan your next move wisely!