What is the B.C. home-flipping tax?
The home-flipping tax is a new tax on profits made from reselling residential properties within two years of purchase. It aims to deter short-term speculation in the housing market and increase the availability of homes for long-term residents.
When does the tax come into effect?
The tax applies to residential properties resold on or after January 1, 2025. However, it applies retroactively to properties purchased in 2023 and 2024 if resold within 730 days (two years) of purchase.
How is the tax calculated?
The tax is applied to the net taxable income from the sale, which is the difference between the selling price and the purchase price minus any eligible renovation costs. The tax rate is:
- 20% for properties sold within the first year of ownership.
- Gradually declining to 0% between 366 and 730 days of ownership.
Who is exempt from the tax?
- Primary Residence Exemption: Sellers who used the property as their primary residence for at least one year out of the two years of ownership can exclude a maximum of $20,000 from their taxable income.
- Life Circumstances Exemptions: The tax may not apply if you sell due to death, divorce, illness, job relocation, involuntary job loss, or other specific situations.
- Builder Exemptions: Builders who develop new housing units or significantly renovate existing properties may qualify for exemptions.
- Other Exemptions: There are additional exemptions for unique circumstances, such as winning a home through a lottery or selling property to a family member.
How will the tax revenue be used?
The revenue generated from the tax, estimated at $43 million annually, will be directed towards building affordable housing and strengthening housing programs in British Columbia.
B.C. Government's plan to address housing affordability
The home-flipping tax is part of a broader provincial strategy called Homes for People. Here are some other initiatives:
- Expanding the speculation and vacancy tax to more communities.
- Increasing the eligibility for the First Time Home Buyers program.
- Raising the threshold on the newly built home exemption.
- Establishing the BC Builds program to create more housing options for middle-income earners and families.
- Introducing regulations to turn short-term rentals back into long-term rentals.
- Implementing a homebuyer protection period for securing financing and arranging inspections.
- Launching a Land Owner Transparency Registry to combat tax evasion and money laundering in real estate.
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The content of this article is for informational purposes only and should not be considered as financial, legal, or professional advice. Coldwell Banker Horizon Realty makes no representations as to the accuracy, completeness, or suitability of the information provided. Readers are encouraged to consult with qualified professionals regarding their specific real estate, financial, and legal circumstances. The views expressed in this article may not necessarily reflect the views of Coldwell Banker Horizon Realty or its agents. Real estate market conditions and government policies may change, and readers should verify the latest updates with appropriate professionals.
