British Columbia’s New Home Flipping Tax
Thinking of selling your home or residential property in British Columbia (“BC”) within two years of buying it? A new provincial tax could have a big impact on your bottom line. Starting January 1, 2025, BC has introduced an Home Flipping Tax aimed at cooling down the real estate market and discouraging quick resale of residential properties for profit.
Let’s break down what this means for everyday homeowners, investors, and property sellers—without all the legal jargon.
What Is the BC Home Flipping Tax?
The BC government has introduced a new tax on homes sold within two years of their purchase. If you (includes individuals, corporations, partnerships and trusts) buy a residential property and sell it within 730 days (that’s two years), you could be taxed by BC on the profit—unless you qualify for an exemption.
The closer you are to the purchase date when you sell the residential property, the higher the tax. Here’s how it works:
- Sold within the first year? You’ll pay 20% tax on your profit.
- Sold between one and two years? The tax decreases the longer you hold onto the property, phasing out completely after the two-year mark.
- Even if you owned the property before 2025, this tax could still apply if sold while the tax is in effect and the sale is within the 730 days from when it was purchased.
And no matter where the property is located in BC, if you’re selling BC residential property, this tax can apply to you. The tax is separate and distinct from the federal income tax rules regarding residential property “flipping” and BC’s Speculation and Vacancy Tax.
Does the BC Home Flipping Tax apply to every property sale?
Not quite. This new tax is focused on residential real estate purchased and then sold by and individual, corporation, trust or partnership, including:
- Residential properties with one or more housing units (e.g., self-contained homes, excluding floating or manufactured homes);
- Lots zoned for residential housing; and
- Rights to buy homes (like assignments of purchase contracts).
But the good news? It doesn’t apply to properties located on Indigenous lands or to leasehold interests. Also, not every sale counts as a “taxable” event—things like gifting a home or adding a mortgage don’t trigger the tax, rather changes in beneficial ownership (not necessarily legal ownership) could result in this new tax applying.
What are the exemptions from BC’s Home Flipping Tax?
The tax isn’t designed to punish people dealing with major life changes. If you sell your residential property while the tax is in effect for reasons such as:
- A breakup or divorce,
- A death in the family,
- A serious illness or medical issue,
- A job loss or job-related move,
- Financial hardship, or
- Safety concerns,
…you may not have to pay tax. You might also be exempt if you’re building homes, helping to add to the housing supply, or selling to a close family member, or you’re an organization like a non-profit organization or a charity.
That said, even if you’re exempt, you’ll still need to file a return to report the sale and claim your exemption. This return is now available online and must be filed electronically with BC Finance within 90 days of the sale in most cases. In some cases, you do not have to file a return if any of the following situations apply to you.
- You sold your residential property after owning it for more than 2 years (729 days),
- You qualify for an exemption that does not require a return to be filed, such as if you are an “exempt person” (e.g., a charity), the property is in an “exempt location” (e.g., certain First Nation lands) or was used only for a non-residential purpose, or
- You’re a builder/developer that enters into a presale agreement with a purchaser.
Does BC’s home flipping tax apply to the sale of my primary residence?
If the residential property you’re selling is your main home, and you’ve lived there for at least a year (but less than two), you might be eligible for a deduction of up to $20,000 from your taxable gain. That could help reduce the amount of tax you owe—if any.
How do I report BC Home Flipping Tax to the government?
This tax isn’t part of your regular income tax return. If you sell a home in BC and the tax applies, you must still file a special return within 90 days of the sale and claim an exemption if one is available. If you skip this step or give false information, there could be big penalties—including fines or even jail time in serious cases.
In some cases, you don’t need to file a return and/or claim an exemption if you sold the residential property after owning it for more than 729 days, you are an exempt entity (e.g., a registered charity, the government or agent thereof, etc.) or the property is in an “exempt location” (certain Indigenous lands) or the property was used exclusively for a commercial or business purpose.
Final Thoughts
The BC Home Flipping Tax is designed to crack down on short-term real estate speculation and complements several other measures aimed at cooling the housing prices in many parts of BC and putting more rental properties into available inventory. If you’re buying a home in BC, make sure you understand how long you’ll need to hold onto it—or what counts as a valid reason to sell early. Planning ahead could save you a lot of cash and heartburn.
Another thing to watch for, is an important anti-avoidance rule for transactions between and amongst related persons (individuals, corporations, etc.) that aims to ensure that “games cannot be played” by transferring beneficial ownership (i.e. no change in legal title at BC Assessment) to avoid the tax.
Do you have any questions about your specific situation? Talk to a tax advisor or real estate professional who understands the BC market, along with this new tax and the other tax measures in place as noted above.