B.C. to tax sellers who flip property after 2 years or less

The B.C. government will slap a 20 per cent tax on profit made by people who sell properties within 365 days of purchasing it themselves, with the tax sliding to zero between 366 and 730 days after the acquisition.

B.C. Finance Minister Katrine Conroy announced the tax as one of the province's latest tools to try and curb speculation over housing in a province where many residents struggle to afford appropriate shelter.

"Prices went up as governments stepped back and speculators moved in," said Conroy during her speech presenting her latest budget in the Legislature.

"That's why we're bringing in a home-flipping tax as our latest measure to crack down on bad actors."

The tax is one of 20 pieces of legislation that government plans to introduce this session, meaning it will need to be passed at some point over the next three months before becoming law.

The plan is to have it in effect for properties sold on or after Jan. 1, 2025 and will also apply to properties purchased before then.

Conroy's 2024/2025 budget forecasts that the tax, once in place, would result in an additional $44 million in revenue once fully implemented in the 2025/2026 fiscal year.

Revenue from the tax will go directly to building affordable housing throughout the province, she said.

A chart from the 2024/2025 provincial budget shows how a tax on selling a new home two years or less from purchase would reduce over time. (Government of B.C.)

Homesellers would be taxed around 10 per cent even after owning a home for a year and a half, with the penalty lifted after ownership for 730 days, which is two years.

The tax will apply to income from the sale of properties with a housing unit and properties zoned for residential use. It also applies to income made from condo assignments.

It does not apply to land or portions of land used for non-residential purposes, according to the government's budget documents.

Other exemptions under the tax include life circumstances such as separation, divorce, death, disability or illness, relocation for work, involuntary job loss, change in household membership, personal safety, or insolvency.

"The purpose of this tax is to support housing supply, not impede it," said the government's budget documents. "Exemptions will be provided for those who add to the housing the supply or engage in construction and real estate development."

The tax is to be paid in addition to any federal or other provincial income taxes incurred from the sale of property.

Alex Hemingway, a senior economist with the Canadian Centre for Policy Alternatives, said although the tax is another tool to try and address speculation, he's not confident in how successful it will be.

"I think a flipping tax can take a little bit of air out of the tires in terms of speculation, but it's not really getting at the root of the housing crisis, which is a shortage of housing overall and a shortage of non-market housing in particular."

He also said that the tax could inadvertently drive down house sales and transactions, siphoning tax revenue away from property transfers.

First-time homebuyer credit

Meanwhile, the budget also introduced expanded property transfer tax exemptions, increasing the First Time Homebuyer's Program threshold up to $500,000 on the purchase of a home worth up to $835,000.

The province says it would result in savings up to $8,000 and double the amount of residents — approximately 14,500 — that will benefit.

The province will also waive the property transfer tax for eligible purpose-built rental buildings that have four of more units until 2030.