B.C.'s New Home Flipping Tax effective January 1, 2025.

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.