The BC NDP government has followed through on a February 2024 budget promise and introduced legislation to tax home flipping, beginning in 2025.

Bill 15 2024: Budget measures implementation (Residential Property (Short-term holding) Profit Tax) Act, known as the home flipping tax, applies to income from the sale of a property, including presale contracts, in BC if the property was owned for less than 730 days.

The tax will apply to income earned from the sale of:

• residential properties with a housing unit;
• properties zoned for residential use; and
• the right to acquire properties, such as the assignment of a purchase contract for a pre-build condo building.

If your client enters into a presale contract to buy a property under development, and buys the property – they close on the property once it is complete, for the purposes of the two-year window of the tax – they’ll be considered to have acquired it on the date they entered into the presale contract.

If your client is assigned a pre-sale contract and then closes on the built property, the acquisition date is the date they were assigned the contract.

When your client assigns a presale contract to another person within two years of entering into the presale contract, they’ll pay tax on any income received from the assignment.

The tax applies to:

• individuals or companies selling property; and
• net taxable income from the sale of taxable property that was owned for less than 730 days.

The tax is:

• 20 per cent tax on profits of homes sold within a year of purchase.
• 10 per cent if sold after 18 months.
• Not applied if your client sells after two years.

The tax is effective on January 1, 2025. Residential property bought before this date may be subject to the tax if sold on or after January 1, 2025 and owned for less than 730 days unless an exemption applies.

For example:

• If your client purchased a property on May 1, 2023, and sold the property on January 31, 2025, income earned from the sale of the property would be taxable.
• If your client decided not to sell the property until June 1, 2025, then income earned from the sale would not be subject to the tax since your client owned the property for more than 729 days.

The property seller may be a BC resident or a resident anywhere else in the world.

There are exemptions for:

• life circumstances including separation or divorce, death, disability or illness, relocation for work, involuntary job loss, a change in household membership, personal safety, or insolvency; and
• those adding to the supply of housing or engaging in real estate development and construction.

The tax doesn’t apply to Indigenous Nations, charities, governments and government-owned corporations, and non-profits.

If your client sells their primary residence and they owned the property for less than 730 days, they may qualify for a deduction of up to $20,000 from their taxable income if:

• they owned the property for at least 365 consecutive days before they sold it; or
• the property includes a housing unit that they lived in as their primary residence while they owned it.

If your client sells a portion of their interest in the property, their primary residence deduction amount will be proportionate to that interest.

The Ministry of Finance has provided more details on their website, including how the tax is calculated and additional examples related to pre-sales.

Note: the BC home flipping tax is NOT the federal property flipping rule, which is a separate federal tax.

• Learn more about the BC home flipping tax
• Read Bill 15 2024: Budget measures implementation (Residential Property (Short-term holding) Profit Tax) Act