Understanding the BC Flipping Tax: What You Need to Know
As a REALTOR® with eXp Realty in Golden, BC, one of my top priorities is ensuring my clients are informed about the latest regulations that could impact their real estate transactions. One significant change on the horizon is the BC Flipping Tax, introduced in the 2024 provincial budget and set to take effect on January 1, 2025. This tax could influence how and when you sell your property, so let’s break it down.
What Is the BC Flipping Tax?
The BC Flipping Tax is designed to curb short-term property flipping and reduce competition between homebuyers and investors. The tax will apply to the profit earned from selling a property within 730 days of its acquisition. This initiative aligns with the province’s Homes for People plan, which focuses on creating a housing market that prioritizes personal use over investment gains. The Flipping Tax is separate from federal property flipping rules, which cover a shorter 365-day period.
Navigating the New BC Home Flipping Tax and Federal Property Flipping Tax
Starting January 1, 2025, British Columbia will introduce the BC Home Flipping Tax, adding another layer of complexity to property sales in the province. This tax will work alongside the Federal Property Flipping Tax that has been in place since 2023. Let’s break down how these taxes work and what you need to know.
The BC Home Flipping Tax (Effective January 1, 2025)
- Who it applies to: Anyone selling residential property in BC that they’ve owned for less than 730 days (2 years), including presale contracts or assignments.
- Tax rate:
- 20% tax on gains for sales within the first 365 days of ownership.
- Decreases gradually until it’s eliminated after 730 days.
- Exemptions: Certain primary residences may qualify, but specific conditions and filing requirements apply.
- Key point: Applies even to properties purchased before January 1, 2025, if sold after that date and owned for less than two years.
For more information about the BC flipping tax you can read directly here.
The Federal Property Flipping Tax (Effective January 1, 2023)
- Who it applies to: Anyone selling property across Canada that they’ve owned for less than 365 days.
- Tax treatment:
- Gains are taxed as business income, meaning they’re fully taxable at your personal tax rate.
- The principal residence exemption does not apply to flipped properties.
- Exemptions: Sales may be exempt if tied to significant life events, like death, divorce, or serious illness.
Key Differences Between the Two Taxes
Aspect | Federal Property Flipping Tax | BC Home Flipping Tax |
|---|---|---|
Effective Date | January 1, 2023 | January 1, 2025 |
Scope | Properties owned < 365 days | Properties owned < 730 days |
Tax Rate | Fully taxed as business income | 20% (first year), decreases to 0% |
Exemptions | Life events like death or illness | Certain primary residence exemptions |
Administered by | Canada Revenue Agency (CRA) | Province of British Columbia |
Resource* Government of Canada website
Why It Matters for Buyers and Sellers in Golden, BC
Golden’s real estate market, with its mix of rural and mountain properties, often attracts buyers seeking quick transactions or investment opportunities. If you’re considering buying or selling, here are some tips:
- Plan for potential taxes: Flipping homes quickly can significantly affect your profits due to these taxes.
- Understand exemptions: Whether it’s your primary residence or a life event impacts your decision, consult a tax professional early.
- Stay informed: These taxes are separate, meaning both can apply to a single transaction.
Takeaway: Always seek professional tax advice before buying or selling property, especially if you’re considering short-term ownership.
Reach out to me, Amber Granter your Golden BC REALTOR® with eXp to discuss how the BC Flipping Tax could impact your real estate goals. If you’re interested in more resources click here for our new mortgage rules blog.
