Real Estate Law Blog

On February 22, 2024, British Columbia’s 2024 Budget was introduced. Included in the Budget are the following measures relating to real estate taxes:

[1] New Home Flipping Tax: The home flipping tax will apply to income from the sale of certain residential property sold on or after January 1, 2025 that was owned for less than 2 years. The tax rate will be 20% for properties sold within 365 days of acquisition, with a declining rate for properties sold within 366 – 730 days of acquisition.

Draft legislation for this tax is not yet available, but it is expected to:

1. apply to the sale of mixed use properties, but only the residential portion of such properties;
2. apply to income from the assignment of residential pre-sale contracts;
3. contain exemptions for transactions that add to the housing supply (e.g. sales of vacant development land will likely be exempt), and;
4. contain exemptions from the tax for “life circumstances” e.g. separation or divorce, death, disability or illness, insolvency, etc. Note that these exemptions generally match the exemptions under the Federal Residential Property Flipping Rules, but BC’s home flipping tax will be a distinct tax.

[2] Property Transfer Tax Exemption For Purpose Built Rentals: Newly constructed purpose-built rental buildings acquired between January 1, 2025 and December 31, 2030 will be exempt from property transfer tax. In order to qualify for this exemption, the building must be newly constructed, non-stratified, contain at least 4 housing units, and be offered for rent on a monthly basis (or longer) for at least 10 years following the acquisition. If the building is sold during the 10 years following initial acquisition, the owner will be required to repay a proportionate share of the exempted tax (calculated based on the length of time the owner has owned the building). There will also be various exemptions to the requirement to continuously offer the units in the building during this 10 year period for: 1) significant renovations; 2) force majeure; 3) up to 2 units in the building being occupied by the owner or a caretaker.