British Columbia’s Home Flipping Tax: What You Need to Know Before You Sell

What is the BC home flipping tax?

The BC home flipping tax applies to anyone who sells a residential property within 2 years of buying it. The tax is applied to your net profit from the sale and follows a tiered structure:

• If you sell within 365 days (year 1): 20% tax on the profit.

• If you sell between 366 and 730 days (year 2): 10% tax on the profit.

• If you sell after 730 days (2+ years): No tax applies.

How is the BC home flipping tax different from federal property flipping rules?

While the BC home flipping tax is specific to British Columbia, the federal government also has its own property flipping rules. Federally, if you sell a home within 365 days, your profit is fully taxed as business income, unless you qualify for an exemption under circumstances such as marital breakdown, death, or disability. This means you could owe taxes to both BC and the federal government.

Who is subject to the BC home flipping tax?

The tax applies to anyone selling a residential property in British Columbia within 2 years, including:

• individuals

• corporations

• partnerships

• trusts

• both BC residents and non-residents (including international owners)

Which properties are taxable?

Taxable properties include:

• houses, condos, townhouses, and other residential units
• vacant land zoned for residential use
• presale contract assignments (selling a contract for a new-build property before taking ownership)

Properties that are NOT subject to the tax include:

• leasehold interests (e.g., long-term leases)
• gifts of property (more on tax exemptions below)
• certain exempt transactions (e.g., sales between related persons)

How much federal capital gains tax can you expect to pay?

When you sell a property you don't live in and receive more than you paid for it, you have to pay a federal capital gains tax on part of that profit. Currently, only 50% of your profit is taxable.

Examples of when the BC home flipping tax applies

Example 1: Anton buys a condo on May 1, 2023, and sells it on January 31, 2025 (642 days). He has to pay a 10% BC home flipping tax on the profit. If he doesn't live in this condo he will also have to pay a federal 50% capital gains tax on the profit.

Example 2: Moira buys a townhouse on May 1, 2023, and the closing date of the sale is on May 31, 2025 (762 days). No tax applies because she held it for more than 730 days. If she lives in the townhouse she is exempted from federal capital gains tax; if she does not, she will pay a 50% tax on the profit.

More on property tax exemptions

Certain circumstances may allow you to avoid the BC home flipping tax:

1. Primary residence deduction. If you've lived in the property as your primary residence for at least one year (365 consecutive days), you may qualify for a deduction of up to $20,000. Note that presale contract assignments do not qualify for this exemption.

Consider the following examples:

• Eligible for the deduction. Sheila buys a house, lives in it for 20 consecutive months, and sells it.
• Ineligible for the deduction. Bob buys a condo, lives there for only 6 months, and sells it.

2. Gifts from related persons. If you receive a property as a gift, and the original owner held it for more than 730 days, you are exempt from the tax.

3. Sales between related persons. If you sell or transfer a property to a spouse, child, sibling, or parent, the tax does not apply. The original purchase date applies for tax purposes.

For example:

Michael's father bought a property in 2020 and sold it to Michael in 2024. Michael's deemed ownership date is 2020, meaning he may not owe tax if he sells.

4. Other exemptions. Divorce or separation, death of the owner, and certain corporate transactions may also qualify as tax exemptions.

Presale contracts

Keep in mind your ownership period starts when you sign the contract, not when the property is completed.

Example:

Sarah signs a presale contract on June 1, 2025, for a condo that will be completed on March 1, 2027. If she sells her contract before June 1, 2027, she will owe tax, unless exemptions apply.

Tax filing requirements

Both the provincial rules and federal capital gains tax rules come into effect when filing your taxes. Federal rules are reported on your T1 personal income tax return. The BC home flipping tax requires a separate filing to the province. If the BC home flipping tax applies to you, you must file a separate BC provincial tax return within 90 days of selling the property.

When to file a BC home flipping tax return

If you sell a property within 2 years and don't qualify for an exemption, you'll need to file a BC home flipping tax return. If you qualify for an exemption, you still need to file in order to claim it.

When you don't need to file a BC home flipping tax return

You don't need to file a return if you meet the following conditions:

• You've owned the property for more than 2 years.
• You're a developer selling presale contracts.
• Your sale qualifies for an automatic exemption.

The BC home flipping tax is a major change for anyone buying and selling real estate in British Columbia. Whether you're an investor, a homeowner, or someone facing unexpected life changes, understanding the rules and exemptions is crucial.

Since the BC home flipping tax is separate from federal property flipping rules, both may apply. Consider seeking professional advice from a TurboTax expert to ensure proper filings and to determine eligibility for exemptions.

No matter your tax situation, we've got you covered.

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