Starting January 1, 2025, British Columbia implemented a new "Flipping Tax" under the Residential Property (Short-Term Holding) Profit Act. This tax targets speculators by applying to residential property sales made within two years (730 days) of acquisition. The tax is calculated based on net income from the sale, with rates varying depending on how long the property was held. If sold within the first 365 days, the tax rate is 20%, decreasing on a sliding scale after that.

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The Flipping Tax applies to individuals, corporations, and trusts selling residential property, including pre-sale contracts and assignments. Certain exemptions exist, including properties used exclusively for commercial purposes, sales by charitable organizations, or transfers between related individuals. Exemptions also apply for sales due to personal circumstances, such as death or relocation, and for builders or developers involved in construction or renovation.

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Sellers must file a tax return within 90 days of disposal unless exempt. Failure to file can result in penalties, with severe consequences for tax evasion, including fines or imprisonment.

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This measure is part of BC’s broader strategy to curb housing price inflation and increase affordability. Property owners should review their situations carefully, especially in light of exemptions, to determine their potential tax liability.

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If you have questions on the new Flipping Tax or your real estate investments, reach out to Aman Bindra at [email protected] or 604-591-7321.

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