BC Home Flipping Tax
The BC Home Flipping Tax, introduced under the Residential Property (Short-Term Holding) Profit Tax Act, came into effect on January 1, 2025. This tax applies to profits made from the sale of properties owned for less than 730 days and is designed to discourage speculative property sales, supporting long-term housing stability in British Columbia.
This tax is distinct from federal property flipping rules and is administered independently of income tax regulations.
How the tax is calculated:
The BC home flipping tax applies to net taxable income from the sale of taxable property that was owned for less than 730 days.
The tax rate is 20 percent of net taxable income earned from a property sold within 365 days, and the rate decreases over the next 365 days. At 730 days, the tax no longer applies.
Calculate your tax: Check how much tax you need to pay with a step-by-step calculation.
Who is Subject to the Tax?
Any individual, corporation, partnership, or trust that sells a property in British Columbia within 730 days of purchase may be subject to this tax.
This applies to:
• Residential properties (e.g., single-family homes, condos).
• Presale contracts (e.g., pre-build condos).
• Zoned residential properties.
The tax applies regardless of whether the seller is a resident of B.C. or resides elsewhere in the world.
Examples:
If you purchased a property on May 1, 2023 and sold it on January 31, 2025 (642 days of ownership), the profit is taxable.If the same property is sold on or after June 1, 2025 (762 days of ownership), the tax no longer applies.
Key Highlights
Exemptions from the Tax
Certain circumstances may exempt you from paying the BC Home Flipping Tax. These include:
There are two categories of exemptions:
1. Exemptions That Require Filing a Return
These exemptions apply if the tax would typically apply, but specific circumstances make the seller eligible for relief.
Examples include:
– Life Circumstance Exemptions: Such as divorce, job relocation, death, or severe illness.
– Builders or Developers: Those involved in property development or renovation.
– Transfers Between Related Persons: Property sold or transferred between family members.
2. Exemptions Without Filing a Return
In these cases, no return or tax payment is required:
• Properties in exempt locations, such as First Nations lands or Treaty Nations lands.
• Sales by exempt entities, including registered charities, government bodies, and Indigenous Nations.
• Properties used exclusively for commercial purposes throughout the ownership period.
Days of Ownership
Ownership duration is calculated from the purchase date (usually the closing date) to the sale date (when funds are received).
Special Situations:
1. Presale Contracts:• Purchase date is the date the contract was signed or assigned.• Sale date is when the assignment or resale occurs.
2. Related Persons:• Ownership begins from the original purchase date by the first related owner.
Example:
If Michael buys a property from his father (original purchase date: January 15, 2020) on August 1, 2025, Michael’s ownership period is deemed to start on January 15, 2020 for tax purposes.
Primary Residence Deduction
If you sell a property that was your primary residence, you may deduct up to $20,000 from taxable income, provided:
• You owned the property for at least 365 consecutive days.
• You lived in the property as your primary residence during ownership.
Examples:
Eligible: Sam lived in his house for 20 months before selling.
Not Eligible: Amrita lived in her condo for 6 months and sold it after less than 365 days.
Filing a Tax Return
You must file a BC Home Flipping Tax return within 90 days of the sale if:
• The tax applies, or
• You are claiming an exemption that requires a return.
No Filing Needed:
• If the property is owned for 730+ days, or
• If your exemption doesn’t require a return.
ความคิดเห็น