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A close-up shot of a residential real estate "For Sale" sign that has "Sold" plastered over it, with a single family home in the background.

B.C. Home Flipping Tax: Answering Your Top Nine FAQs

April 12, 2024

On April 3, 2024, the Government of B.C. introduced draft legislation— The Residential Property (Short-Term Holding) Profit Tax Act—to implement the “B.C. Home Flipping Tax” proposed in the 2024 B.C. Budget

Short term holdings of residential property are already subject to additional B.C. income tax because of the Federal residential property flipping rule, which deems gains on the dispositions of such property to be business income[1]. This treatment increases the taxpayer’s taxable income, and thus increases both the Federal income tax and the B.C. income tax payable on such gains.

By introducing the BC Home Flipping Tax, the Government of B.C. is double-dipping on gains from the disposition of such properties. For an individual taxpayer in the top tax bracket, the combined Federal and Provincial tax rate on such gains could be as much as 73.5%.

Below, you’ll find answers to some of the burning questions you might have about this new tax and how it could impact your personal tax situation.

When does the tax apply?

The tax applies to dispositions of “taxable property” that occur on or after January 1, 2025.

There are two types of “taxable property”:

  • A beneficial interest in residential property; and,
  • A right to acquire a beneficial interest in residential property (for example, a pre-sale agreement)

Who is subject to the tax?

The tax applies to any person who disposes of taxable property less than 730 days after acquiring that property.

Who is exempt from the tax?

Based on the nature of the owner: The legislation provides an exemption from the tax for a variety of entities, including charities, non-profit organizations, government bodies, and Indigenous nations.

Based on life events affecting the owner: It also exempts individuals from the tax where the disposition of a taxable property by the individual occurs as a result of certain life events, such as (but not limited to):

  • Death;
  • Serious illness or disability;
  • Moving for the purpose of work or post-secondary education;
  • Marriage break-down;
  • Involuntary termination of employment; or,
  • Threats to personal safety;

Various conditions must be met to qualify for any of these exemptions.

Which properties are subject to the tax?

The tax applies to the disposition of a residential property, or of a right to acquire a residential property.

A residential property is:

  • A housing unit[2] located in British Columbia, together with any land underneath or immediately contiguous to (i.e., touching) a housing unit; or,
  • Land located in British Columbia (including any building or other structure on the land) that is zoned all or in part for residential use, unless:
    • Any part of the land is included in the first bullet; or,
    • Any part of the building or structure is a housing unit.

Which properties are exempt from the tax?

A residential property is exempt from the tax if it is located on a reserve (as defined in section 2(1) of the Indian Act), or on lands of certain First Nations.

How much is the tax?

The tax is a percentage of the person’s “net taxable income” from the disposition of the taxable property. If the person held the property for:

  • Less than 366 days, then the tax rate is 20%
  • More than 365 days, then the tax rate is 20% multiplied by (730 days – number of days held)/365.

Length of ownership

Special rules apply for the purpose of determining how long the property was held:

  • The holding period includes the day the property was acquired and the day it was disposed of
  • If a person enters into a pre-sale agreement and acquires the property that is the subject of that agreement, the person is considered to have acquired the property on the day that they entered into the pre-sale agreement
  • If a person acquires a property from a related person, they are considered to have acquired the property on the date that the related person acquired the property
  • The person is considered to dispose of the property on the date that:
    • The consideration for the disposition of the taxable property is received or receivable; or,
    • The first instalment is received or receivable by the person, if the consideration is payable by instalment.

Related persons

As expected, related persons include parents, children, spouses, siblings, controlled corporations, etc. 

However, two individuals who don’t meet any of these tests will be considered related persons if immediately before disposing of a property:

  • Each of the individuals held the property for a minimum of 365 consecutive days; and,
  • The residential property comprising the taxable property includes a housing unit that was the primary residence[3] of each of the individuals during the period each individual held that taxable property.

Given the high cost of home ownership in the lower mainland, some families have taken to jointly buying a home with another family and living with that other family in the home—otherwise known as a joint living arrangement. This rule appears to be designed to accommodate a tax-free transfer of a co-owner’s interest in a property to the other co-owner of the property if the two co-owners occupied the property as their primary residence in a joint living arrangement.

What is my net taxable income?

A person’s net taxable income from a disposition of a taxable property is generally equal to their taxable income from the disposition.

However, where the person is an individual and certain conditions are met, their net taxable income is equal to their taxable income minus $20,000.

Those conditions require that:

  • The taxable property is a residential property; and,
  • The individual:
    • Owned the residential property for at least 365 consecutive days; and,
    • Occupied the housing unit that is the residential property as their primary residence during that ownership period.

What is my taxable income?

A person’s taxable income from a disposition of a taxable property is equal to:

  • The proceeds of disposition; minus
  • The cost of acquiring the taxable property; minus
  • The cost of improving the residential property comprising the taxable property

Certain amounts cannot be included in the calculation of any of these figures. Ineligible amounts include amounts that will be reimbursed or that entitle the person to some form of assistance such as a subsidy or grant, amounts in excess of a reasonable amount, and certain fines and penalties.

If the calculation produces a negative number, then the person’s net taxable income is $0.

Proceeds of disposition

The proceeds of disposition is equal to the sale price of the taxable property, minus the following amounts relating to the disposition:

  • Legal costs;
  • Appraisal costs;
  • Realtor fees;
  • Costs of a home inspection carried out by a licensed home inspector under the Business Practices and Consumer Protection Act; and,
  • Costs of a survey of any residential property comprising the taxable property

Cost of acquiring the taxable property

The cost of acquiring the property is equal to the purchase price of the taxable property, plus the following amounts relating to the acquisition:

  • B.C. property transfer tax[4];
  • Legal costs;
  • Appraisal costs;
  • Fees for registration under the Land Title Act;
  • Costs of a home inspection carried out by a licensed home inspector;
  • Costs of title insurance;
  • Costs of a survey of any residential property comprising the taxable property;
  • GST/HST under the Excise Tax Act (Canada); and,
  • Costs to obtain documentation required by home insurance providers;

Cost of improving the residential property

The cost of improving the property is equal to the total of the following amounts:

  • Expenses incurred for an improvement that is of an enduring nature, but not including:
    • The cost of annual, recurring or routine repair, maintenance or service; or,
    • The financing costs in respect of an improvement
  • The cost of a major appliance[5], that is sold with the residential property, but not including:
    • The cost of annual, recurring or routine repair, maintenance or service; or,
    • The financing costs in respect of a major appliance
  • Costs incurred to assess the feasibility of constructing or placing a new housing unit on the residential property or of undertaking a substantial renovation of an existing housing unit that is part of the residential property

Who is required to file a tax return?

A tax return must be filed for each disposition of taxable property and is due 90 days after the date of disposition. Any tax payable as a result of the disposition is due at the same time as the tax return.

A tax return is not required where:

  • The taxpayer is a person who is exempt from the tax; or,
  • The residential property is exempt from the tax

Whether you’re planning to buy or sell property, understanding your tax obligations and potential exemptions is crucial. This is particularly important given the layered approach of both federal and provincial taxes affecting short-term property holdings, which could significantly impact your financial planning and tax liabilities.

For personalized advice and to ensure you meet all compliance requirements with this new tax landscape, we strongly encourage you to reach out to your DMCL advisor. Our team of experts is well-equipped to guide you through the complexities of these changes, providing tailored strategies that align with your unique circumstances and real estate goals.


Article written by Stewart Bullard, CPA, CA


[1] 100% of such gains are included in income (as compared to a 50% inclusion rate for capital gains), and they do not qualify for the principal residence exemption.

[2] A housing unit is a self-contained unit of residential accommodation with cooking, sleeping, bathroom and living area facilities. A float home or a manufactured home (e.g., a mobile home) is not considered to be a housing unit.

[3] The place in which an individual resides longer than any other place during the period.

[4] Only the general tax imposed under Section 2(1) of the B.C. Property Transfer Tax Act. The so-called “foreign buyer’s tax” payable under Section 2.02(1) of that Act can not be included in the cost of acquiring the property.

[5] E.g., a range, refrigerator, washing machine, dryer, or other major appliance.