Real Estate Tax

The following information can not be guaranteed. Please consult with your tax accountant.

Flipping Tax

BC Home Flipping Tax will begin in 2025

An implementation date for the new BC Home Flipping Tax (HFT) will officially begin on January 1, 2025, although it is noted that the tax will apply even if the property was purchased before the effective date.

This tax will apply on the sale of the residential property held by the owner for less than two years, with the seller being taxed up to 20% on their income from the sale. The tax rate will be 20% for properties sold within the first year of purchase. Over the second year (between 366 days to 730 days after purchase), the tax rate will gradually decline to 0%.

For the types of residential property this tax will apply, it includes not only a housing unit and properties zoned for residential use, but also the income from the assignment of contracts to purchase such properties. It will not apply to land or portions of land used for non-residential uses.

Some exemptions to the HFT are sellers who experience:

Other exemptions will also be provided to “those who add to the housing supply or engage in construction and real estate development.”

As well, individuals selling their primary residence within two years of purchase can exclude a maximum of $20,000 when calculating their taxable income.

New Property Transfer Tax exemptions for first-time buyers and new homes in BC

In an effort to improve housing affordability, three major changes are being made to the Government of British Columbia’s Property Transfer Tax (PTT) framework. The threshold to be eligible for the first-time homebuyers’ exemption will be increased from a fair market value of $500,000 to $835,000, with the first $500,000 exempt from the tax. The phase-out range for the complete elimination of the exemption will be $860,000, while properties with a fair market value under $500,000 will be completely exempt. These changes will start on April 1, 2024.

1. It is estimated these changes for first-time homebuyers will benefit about 14,500 people — twice as many as before — with total savings up to $8,000 from buying their home

2. The newly built home exemption for purchasers who buy a new home for their principal residence will grow from $750,000 to $1.1 million on the fair market value. Homes with a fair market value between $1.1 million and $1.15 million will see a phase-out range of the exemption. This exemption change will also start on April 1, 2024.

3. A brand-new PTT exemption will be created for purchases of new qualifying secured purpose-built rental housing buildings, with such buildings required to contain at least four apartment units, be non-stratified, and be used as rentals for at least 10 years, and the residential uses of the building must be entirely used for rental purposes. This specific PTT exemption will apply to transactions for such buildings between January 1, 2025, and December 30, 2030. With home ownership out of reach for many given the elevated home prices, such a policy will help catalyze more “missing middle” rental housing. 

The provincial government anticipates these various exemptions will reduce transaction costs by over $100 million per year. 

According to the provincial government, most first-time homebuyers are under the age of 35, with the increase in threshold expected to mainly benefit individuals buying in urban areas. 

Even with the changes, property transfer tax growth is expected to rise by an average of 8.6% annually over the next two fiscal years.

Every registered owner of residential property in a designated taxable region must complete a declaration each year to declare their residency status and how their property has been used. You have to declare each year because your circumstances may change during the year. Your declaration is due on March 31 of each year.

Over 99% of British Columbians are exempt from the speculation and vacancy tax. Generally, an owner is exempt from the tax if the home is their principal residence.

• 2% for foreign owners and satellite families
• 0.5% for Canadian citizens or permanent residents of Canada who are not members of a satellite family

The speculation and vacancy tax is different from Vancouver's empty homes tax. The rules for each tax and how they apply are not the same.

This means that if you own residential property in the City of Vancouver, you:

• Must declare separately for each tax
• May be exempt from one tax but have to pay the other

Foreign buyer tax There is currently a foreign buyer ban in Canada as of January 1st, 2023 for 2 years

The foreign buyer tax, previously only levied throughout Metro Vancouver, has expanded to cover Greater Victoria and the Capital Regional District, the Nanaimo Regional District, Kelowna, West Kelowna and the Fraser Valley. The tax has also increased from 15% to 20%. 

Property transfer tax
British Columbia’s property transfer taxes are calculated at 1% for a property’s first $200,000 of fair value and at 2% for the remaining portion up to and including $2 million. The portion valued at over $2 million is taxed at 3%. Under the new rules, properties with a value of $3 million and above will see a new layer of tax that will push the taxable rate to 5% for a property’s portion of fair value over $3 million.

School tax
Residential properties valued at $3 million and above will pay a higher school tax starting in 2019. The rate will be 0.2% on properties valued between $3 million and $4 million, and 0.4% on properties valued in excess of $4 million. fot E.g. $3,000,000 home shool tax $6000, $4,000,000 home school tax $16,000