BC and Federal Home Flipping Taxes
There is the BC Flipping Tax and there is the Federal Flipping Tax and both affect residents and non-residents of Canada. Then once you have navigated those, there is a Federal Tax on the Capital Gain. In this blog, I will cover all 3.
The following content on BC Flipping Tax and Federal Flipping Tax is courtesy of the BC Real Estate Association (BCREA).
Starting January 1, 2025, the new BC home flipping tax will add another layer of tax consideration for home sellers who resell a home within a short timeframe. This tax will be in addition to the 2023 federal property flipping tax introduced by the Canada Revenue Agency (CRA).
Here’s a breakdown of both taxes.
1) BC home flipping tax
Effective January 1, 2025, this new tax will be implemented in addition to the federal tax, specifically targeting short-term property sales within the province:
- The tax applies to income from sales of residential properties, presale contracts, or assignments owned for less than 730 days (two years). This includes properties bought before January 1, 2025, if they are sold on or after that date and owned for less than two years.
- The rate is 20% for sales within the first 365 days of ownership, gradually decreasing until it is eliminated at 730 days. This is a sliding scale.
- This tax applies to any person or entity (individual, corporation, partnership, or trust) selling property within BC, regardless of residency.
- Exemptions include certain primary residences, though exemptions are subject to specific conditions and filing requirements.
2) Federal property flipping tax
The following information on the Federal
The federal property flipping tax rule, in effect since January 2023, applies to gains from the sale of a property owned for less than 365 consecutive days:
- Gains are treated as business income rather than capital gains, resulting in full taxation at the individual’s tax rate.
- Principal residence exemption generally does not apply if the property is flipped, meaning it is no longer automatically tax-exempt if sold within the short period.
- Certain life events exempt property sales from this rule.
Understanding the two taxes
Both the provincial and federal property flipping taxes target income earned from short-term property sales, but they differ significantly in terms of applicability, administration, and exemptions.
| Provincial Flipping Tax | Federal Flipping Tax | |
|---|---|---|
| Date implemented | January 1, 2025 | January 1, 2023 |
| Length of time | Applies to properties held for less than 730 days | Applies to properties held for less than 365 days |
| Tax on gains | Additional 20 per cent tax on gains within first 365 days, decreasing to 0 per cent at 730 days. Sliding Scale. | Gains taxed as business income (no capital gains treatment) |
| Exemptions | Some exemptions apply automatically, while others require filing a tax return within 90 days of the sale | Some exemptions for life events (death, marriage breakdown, serious illness, eligible relocation) |
3) Tax on Capital Gain
Whether you are flipping or not flipping, the Canada Revenue Agency (CRA) wants a share of your capital gain. Note. There is no Tax on capital gain for primary residences. The term, primary residence only applies to Canadian Citizens.
On January 7, 2025, the CRA confirmed it will administer the changes to the capital gains inclusion rate based on the proposed legislation, despite parliament prorogation. This means it will apply the new 66.67% inclusion rate even though the related legislation hasn’t been enacted.
For non-residents selling Whistler real estate, there is a Withholding Tax to include in your calculations. Please read my blog post
Whistler Accountant
For those who decide to buy and flip within 2 years, you must speak with your Whistler accountant to understand how this will affect you. Some exemptions may apply. It is too complex a topic for any real estate agent. In the meantime, please link through to BC home flipping tax – Province of British Columbia (gov.bc.ca) to read more and learn about exemptions. Here is the link to the Federal Government’s website, “Tax effects of buying real estate to sell for a profit”.
Sign Up For BC Government Emails
This is from the BC Government: “We will be updating our website as additional information about the BC home flipping tax becomes available. If the information is not currently available on our webpage, you can subscribe to receive email notifications when we update our website using this link Subscribe for tax updates – Province of British Columbia (gov.bc.ca)“
If you think I would be a good fit to work with you and your family, and you are not already working with a Whistler realtor, please contact me. I look forward to hearing from you.
It’s a Good Life in Whistler!
Marion
Marion Anderson Personal Real Estate Corporation
marion@WhistlerSkiinSkiout.com (604) 938-3885