Do these 5 things if you want to build capital faster and get your home working for you right away.

1. Always buy the outdated but well cared for home that you can strategically improve upon over time, building up your equity over time as it appreciates. When it’s your principle residence, in B.C, Canada, all of that gains is exempt from tax, allowing you to carry it forward to your next purchase.

2. Whenever you can,  always try to find a way to make your property work for you. It can be simple extras like renting out a parking space, to having a rental suite or renting storage space. Can you run a business, get ALR status or even grow your own food?

3. Consider long term Development.  Properties flourish close to things like transit and city centres. Have a look at your local zoning and municipal plans so you can see where a good up and coming location will be that will be desirable. Things like being close to schools, hospitals, shopping, recreation and transit are important. Strategize to buy homes these up and coming neighbourhoods to get in before they are in high demand and prices soar. 

4. Highest and best use. There are homes I come across all the time with untapped potential to really maximize value. I’ve witnessed some amazing gains made by cleaning up poor landscaping, adding skylights and more natural light into a home. Do you have an awkward layout that you could open up? Can you add an ensuite where there is none? Can you build a shop? Can you add a coach home?  Can you stratify or subdivide?

4. Repeat # 1 every time you sell and upgrade. By doing this over and over through the various stages of life as you need it, you will be able to grow your principle residence over time without the payment of capital gains tax. This compounding effect over time really makes a difference. Again this only applies to principle residences and according to tax law. We advise that you seek out professional advice from an accountant to get advise that’s right of you as I am not an accountant. 

As of January 1, 2025 B.C.'s new flipping tax is something we need to think about as we make our real estate purchase and sale decisions.

If you purchased recently and may have intended to sell before 2 years is up, you now have until the end of December 2024 to sell without any tax payable.  If you sell after January 1, 2025, the tax is payable.

For those who purchased pre-sales, if you sell your presale and enter into a contract prior to 24 months of entering into the original agreement, the flipping tax is applicable. If you wait until 24 months has passed, you may assign without owing the flipping tax. 

There are exemptions to the tax, and you can check out the government of B.C. website for more information. For detailed questions about the application of the tax to a specific transaction, you should seek independant professional advice. 

Some exemptions listed include, the passing of a life, serious illness or disability, some relocations for work or education, involuntary job loss, registered builders, marriage breakdown, foreclosure and more. Sales between related persons are also exempt.  I found this pretty interesting too about about renovation exemptions according to their website.

"If there is a substantial renovation of a housing unit, the property will be exempt from the BC home flipping tax.

If a housing unit is demolished and a new housing unit is constructed or placed on that property, the property will be exempt.

If there is an additional housing unit added to either an existing housing unit (in other words, a basement suite) or constructed or placed on the residential property with an existing housing unit, the property will be exempt from the BC home flipping tax.

The renovation, addition, construction, or placement of the housing unit must be in accordance with a bylaw of a local government with jurisdiction over the property or a British Columbia Building Code established under the Building Act."

If you look under their definition of substantial renovation, it defines it as such:

"Substantial renovation, in relation to an existing housing unit, means a renovation or alteration of the housing unit to such an extent that:

• All or substantially all of the housing unit has been removed or replaced, other than structural components, which include, without limitation, the roof, the foundation, external walls, interior supporting walls, floors, and staircases, or
• The habitable area of the housing unit is increased by at least 100 percent"

So it sounds like as long as you're increasing housing units and square footage, you may be exempt. It will be interesting to see if this is something that takes off.  If someone can buy a home, apply for a coach suite and detached garage, add a basement suite, it sounds like this would be an opportunity for those with land to do it.