Tax Changes for British Columbia’s 2024-2025 Budget

A new BC tax for home flippers

As of January 1, 2025, British Columbia has enacted a new tax aimed at house flipping to curb speculative real estate practices. If you sell a residential property within 2 years of purchasing it, you’ll be subject to this new tax, regardless of when the legislation takes effect. The tax rate starts at 20% for properties sold within the first year and gradually decreases during the second year. This measure is intended to discourage quick property sales, which can drive up prices and make housing less affordable for long-term residents.

If you own a home as a primary residence and have lived there for at least 365 days, there’s a benefit: If you sell within 2 years of purchasing, you may be eligible for a deduction of up to $20,000. This deduction is meant to provide some relief for homeowners while the tax still applies.

This BC tax is separate and distinct from the federal property flipping rules and isn't harmonized or administered with federal or BC income tax. If you find yourself selling a residential investment property quickly, you'll need to file a BC home flipping tax return within 90 days of the sale, depending on your eligibility and exemptions.

The BC carbon tax for climate action

Starting with the 2024-2025 budget, the carbon tax rate will increase incrementally and further incentivize the reduction of greenhouse gas emissions. This means there will be a slight rise in the cost of fossil fuels like gasoline, diesel, and natural gas, encouraging both individuals and businesses to shift toward more sustainable energy sources.

The revenue generated from the carbon tax will be reinvested into green initiatives across the province. This includes funding for renewable energy projects, public transit improvements, and energy-efficient building programs. Additionally, to offset the impact on households, the BC government is enhancing the Climate Action Tax Credit. The new benefit amounts are:

• $504 for individuals
• $252 for a spouse or common law partner (or the first child in a single-parent family)
• $126 for each additional child

The BC Climate Action Tax Credit is reduced by 2% of income above the income threshold, and payments are made quarterly.

Low- and middle-income families could see an increase in their rebates, making it easier to manage the cost of living while contributing to a greener future. This balanced approach aims to reduce carbon emissions without placing undue financial burden on BC residents.

BC's Family Benefit Bonus

The BC government has introduced a temporary BC Family Benefit Bonus as part of the 2024-2025 budget to provide BC residents with additional financial support to help manage the rising cost of living.

The BC Family Benefit Bonus will be available to low- and middle-income families. The exact amount of the bonus will vary based on the number of children in your household and your family's adjusted net income level. This additional support will help you cover essential expenses such as groceries, childcare, and other day-to-day needs.

Here’s how the BC Family Benefit Bonus works:

• If your income is $35,902 or less, you’re eligible for the maximum annual benefit amount.
• If your income is between $35,902 and $114,887, the benefit amount gradually reduces.
• For incomes over $114,887, the benefit amount decreases by 4% for each dollar over this threshold.
• Low-income, single-parent families can also be eligible for an annual supplement of up to $500 per family, provided certain conditions are met.

You’ll receive your BC Family Benefit Bonus payments automatically, without needing to fill out additional applications or paperwork. This seamless process ensures you can quickly access the funds you need, without added stress or bureaucratic hurdles.

Several changes to BC property taxes

Changes to property taxes are also part of BC's 2024-2025 tax budget. These changes are aimed at ensuring fairness, affordability, and sustainability in the housing market across the province.

 First-time home buyers

The BC first-time home buyers’ program reduces or eliminates property transfer tax for eligible purchases. As of April 1, 2024, the fair market value threshold for both full and partial exemptions increased to $835,000.

Newly built homes

Newly built homes in BC may qualify for exemptions or reduced rates under specific conditions. The fair market value threshold for a full exemption on newly built homes has increased from $750,000 to $1,100,000. A partial exemption is also available for properties just above this threshold, allowing refunds within 18 months from the registration date.

Purpose built rental buildings

New purpose built rental buildings in BC also see notable changes in property transfer tax regulations for building owners:

• Purpose built rental buildings are properties designed just for renting, not for sale. They must be kept as rentals for at least 10 years and should have all their residential areas rented out. Each building needs to have at least 4 apartments to qualify.
• Since January 1, 2024, purchases of qualifying purpose built rental buildings may be exempt from the additional 2% property transfer tax on the portion of residential property value exceeding $3,000,000.
• Additionally, the 2024-2025 budget introduces an exemption from the general property transfer tax for purchases of new qualifying purpose built rental buildings occurring between January 1, 2025, and December 31, 2030.

Along with these tax changes, there are also updates to homeowner grants as well as to the speculation and vacancy tax. These adjustments are designed to help stabilize the housing market and make sure that homes remain available for people who want to live in them long term.

Extensions and other tax changes

The following extensions and tax changes are also included in the new BC budget:

• Training tax. This tax credit supports employers who invest in training programs for their employees, aiming to enhance productivity and competitiveness in the labour market.

• Employer health tax. The employer health tax continues to undergo adjustments to ensure equitable contributions from businesses while supporting health care funding in the province. How much tax is deducted from a paycheque in BC may impact employers differently based on their payroll size and industry sector.
• Oil and gas exploration. Expenses related to oil and gas exploration will no longer be eligible for the mining exploration tax credit.

Highlights of BC's 2024-2025 budget

The new British Columbia tax budget introduces a range of measures designed to impact residents and businesses across the province. From the implementation of a new home flipping tax to enhancements in the Climate Action Tax Credit and the introduction of the temporary BC Family Benefit Bonus, these changes aim to foster a fairer and more sustainable economic environment.

For homeowners and prospective buyers, adjustments to property transfer taxes, including increased thresholds for exemptions and reductions, offer significant relief and support for housing affordability. Moreover, extensions in tax credits for training, incentives for animation productions, and adjustments in oil and gas exploration incentives underscore the government's commitment to fostering growth while addressing environmental and economic challenges.

These reforms collectively reflect BC's proactive approach to navigating current economic landscapes and supporting the wellbeing of its taxpayers.

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