BC Bill 15: BC’s New Flipping Tax Taking Shape

In February, the BC government announced several housing affordability initiatives as part of the 2024 budget. One of those announcements was about a new flipping tax—now officially dubbed BC Bill 15 the ‘Residential Property (Short-Term Holding) Profit Tax’.

Expected to pass during the upcoming Spring session, new details about the legislation have now been released. Below is brief overview of what this new provincial initiative contains.

What is BC’s New Flipping Tax (“Flipping Tax”)?

Effective January 1, 2025, subject to legislative approval, a new 20% tax will be applied to income derived from the sale of BC properties that are zoned for residential use or contain a “housing unit”. The Flipping Tax is in addition to the Federal government’s 50% capital gains counterpart introduced in 2022.

Unlike the Federal flipping tax—which targets sales made within a year of purchase—the Flipping Tax will include a declining tax percentage on sales made between the first and second year of purchase. Homes sold within a year of purchase will be subject to the full 20%, while homes sold between 1 to 2 years will be subject to the tax on a sliding scale.

Funds collected from the tax—estimated to be $11 million in 2025, and $43 million in 2026—will be put towards provincial housing programs.

Who does it apply to?

The tax will apply to any profits from the sale of BC residential properties held for less than two years, including income derived from the resale of purchase contracts (for example, presale contracts for newly-built condominiums). The effective date of January 2025 also means that residences purchased as far back as 2023 could be subject to the new tax if they sell before the two-year speculation window has expired.

The new legislation does include a few key exemptions, in certain circumstances, including but not limited to:

• Divorce
• Serious illness, disability or death
• Moving for work or post-secondary education
• Involuntary job loss
• A threat to someone’s personal safety
• Bankruptcy
• Builders adding housing stock to the market

What else is included in the legislation?

Apart of the timing provisions, potential exemptions, and enforcement mechanisms, the legislation also includes specific details around broader tax implications. In particular, the legislation provides rules for the calculation of taxable income and net taxable income. It also includes an income tax deduction of up to $20,000 upon the sale of a person’s primary residence within the speculation window, if certain conditions are met.

For questions about the new BC Flipping Tax, please contact Hugh H. Claxton of our Real Estate Group.