BC’s New Home Flipping Tax: Who It Affects and Why It’s Important

By Jayson Sidhu

Jayson Sidhu is a trusted real estate advisor with over 17 years of award-winning service in the North Delta and Surrey areas.

If you’re considering flipping a home in B.C. to grow your investment portfolio, there’s a new rule you should be aware of—the B.C. Home Flipping Tax. While it might seem like just another regulation, understanding it can help you avoid unexpected costs when flipping a property. Here’s a quick breakdown:

How the tax works. The B.C. Home Flipping Tax is a tax on the profit you make from selling a residential property in B.C. if you’ve owned it for less than 730 days. If you’re planning to flip a home in less than two years, this tax will likely apply. It is designed to discourage short-term property flipping and operates separately from federal property flipping rules.

Who is affected by this tax? This tax applies to anyone, whether an individual, corporation, or trust, who sells a property they’ve owned for less than 730 days. The tax also applies to residential properties, properties zoned for residential use, and even pre-sale contracts. The tax isn’t limited to residents since non-residents are subject to it as well if they sell within this time frame.

Are there exemptions? There are a few exemptions. For instance, if you sell due to life events like divorce or death, or if the sale involves related persons, you might be exempt. Properties that are strictly used for commercial purposes or those in designated exempt locations won’t be taxed. Developers and builders may also qualify for exemptions under specific conditions.

How do you file the tax? If you sell a property within 730 days, you will need to file a B.C. Home Flipping Tax return within 90 days of the sale. It is important to meet this deadline to avoid penalties. However, if you’ve owned the property for over 729 days or qualify for an exemption, you don’t have to file anything.

What’s the tax rate? The tax rate is 20% of your net taxable income if you sell within 365 days. If you sell a property after owning it for 366 to 729 days, the tax rate decreases. Properties owned for at least 730 days aren’t taxed. If the property was your primary residence for at least 365 days, you can deduct up to $20,000 from your taxable income.

The new B.C. Home Flipping Tax is definitely something to consider if you have real estate plans in B.C. The good news is with a little planning, you can avoid or minimize this tax. If you’re looking to sell or just want more details about this rule, feel free to reach out. Call or text me at (604) 805-5897 or send an email to Jayson@JaysonSidhu.com. Let’s talk about how you can prepare for this market.