As of January 1, 2025, the Home Flipping Tax Act is in full effect in BC. It is targeted at consumers who purchase and sell residential property for a quick profit and is estimated to generate $43 million in it's first fiscal year.
Profits from flipped residential properties face a 20% tax rate if the residential property is sold within one year of acquisition. It gradually decreases between one and two years and eventually reaches 0% after two years (730 days).
If a buyer purchased the property prior to January 1, 2025, the proceeds would still be deemed taxable income if the property was not owned by the purchaser for 2 full years.
Are there exemptions to this new tax implementation? Yes! Let's explore them here:
The following exemptions apply if you sold the property because you anticipate these events will happen or if the event has already happened by the time of the sale: life circumstance exemptions including death or death of a related individual, serious illness or disability, eligible relocation, or change in household membership.
The following exemptions apply if you sold the property because the event has already happened prior to the sale: breakdown of marriage or common law, involuntary termination of employment, or threat to personal safety.
If the property was purchased in a corporation or partnership, you are also eligible for the following exemptions: bankruptcy and insolvency, housing unit was destroyed, expropriation of the property, property acquired through the lottery, death of an individual, foreclosure or estimated completion is beyond 365 days.
Consult with your realtor or mortgage broker if you have questions regarding this new tax implication!
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