New Home Flipping Tax to Hit B.C. Property Sales: Here’s What You Should Know
Premier David Eby has set his sights on speculators, and with the unveiling of the 2024 budget, his government has introduced the “BC Home Flipping Tax” aimed at curbing speculative activity in the housing market.
Effective January 1, the new tax mandates that any profits accrued from the sale of a residential property within two years of its purchase will be subject to taxation, albeit with certain exceptions.
Outlined in the forthcoming legislation to be passed during the spring session, the tax will follow a progressive scale: 20 percent on profits from homes sold within the initial year, gradually decreasing to 10 percent if sold within 18 months, and ultimately dropping to zero after two years of ownership.
According to the Ministry of Finance, this tax measure is anticipated to generate approximately $43 million in annual tax revenue.
“The tax will be applicable to income derived from the sale of properties with a housing unit and those zoned for residential use. It will also extend to income generated from the assignment of contracts related to the purchase of these properties,” states the Budget and Fiscal Plan.
However, exemptions will be granted for individuals selling their primary residence within two years of acquisition, with a maximum exclusion of $20,000 when calculating taxable income.
Exceptions for circumstances such as divorce, death, illness, and work-related relocation will also be considered to waive the tax liability. Details regarding the appeals process and required documentation are yet to be finalized, with tax administrators expected to develop forms and guidelines between now and January.
The revenue collected from this tax will be earmarked for the construction of new affordable housing units across the province, aligning with the government’s objective to bolster housing supply.
Set to take effect on January 1, 2025, the tax will be applicable to properties sold after this date, regardless of the purchase date.
In addition to the new tax, the B.C. budget confirms substantial investments in housing initiatives, including programs like BC Builds. The budget also offers a comprehensive analysis of the housing market’s current state and future trajectory.
Despite challenges such as declining building permits, growing unsold inventory in certain regions, and inter-provincial migration losses, the ministry anticipates a rebound in home sales activity in 2024. Prices are projected to increase by an average of 2.3 percent in the current year and 2.9 percent in 2025, indicating a cautiously optimistic outlook for the real estate market.