How to calculate your BC home flipping tax
Last updated on June 19, 2024Calculate your BC home flipping tax in 4 steps
Step 1: Calculate your taxable income on the sale of the property
Taxable income from the sale of a property is calculated as:
Proceeds from the sale of the property minus cost to purchase the property minus cost to improve the property
Step 2: Calculate your net taxable income
If the property is your primary residence, you may be eligible to also claim a primary residence deduction.
Your net taxable income is calculated as:
Your taxable income from Step 1 minus primary residence deduction
Your net taxable income cannot be a negative amount. A calculation of net taxable income that results in a negative amount is deemed to be zero.
Step 3: Calculate your tax rate
If you own the property for less than 366 days, the tax rate is 20%.
If you own the property for more than 365 days and less than 730 days, the tax rate is reduced until it reaches zero according to the following formula:
Tax rate = 20% x [ 1 - ( (Days held - 365) / 365) ]
If you own the property for more than 729 days, you are not subject to the BC home flipping tax.
The amount of the tax rate is rounded to the nearest one-thousandth.
Learn how to determine the number of days you’ve owned your property for this tax.
Step 4: Calculate your tax owing
Your tax owing is:
Your tax rate from Step 3 multiplied by your net taxable income from Step 2
Example calculation for the BC home flipping tax
Jacqueline purchased the property for $900,000 on December 1, 2023. They lived in it as their primary residence until they sold it for $1,000,000 on January 1, 2025. New major appliances including a new fridge, washer, dryer and range totaling $10,000 were added to the property in December 2024 and sold with the property on January 1, 2025.
Since Jacqueline held the property for less than 730 days, and is not eligible for any exemptions, the sale of the property is subject to the tax.
Step 1: Calculate your taxable income
Taxable income is $1,000,000 - $900,000 - $10,000 = $90,000
Step 2: Calculate your net taxable income
Jacqueline qualifies for the primary residence deduction and can claim a deduction of $20,000.
Net taxable income is $90,000 - $20,000 = $70,000
Step 3: Calculate your tax rate
Jacqueline owned the property for more than 365 days (398 days). Therefore, Jacqueline’s tax rate will be below 20% and determined according to the following formula:
Tax rate = 20% x [1 - (398 - 365) / 365 ] = 18.082%
Step 4: Calculate your tax owing
Jacqueline’s tax owing is the net taxable income of $70,000 x 18.082% = $12,657.40
If Jaqueline held the property for 365 or fewer days
If Jacqueline purchased the property on or after January 3, 2024 and sold it on January 1, 2025, they held the property for less than 366 days. Jacqueline would not be eligible for the primary residence deduction, and is not eligible for any exemptions. They would have a tax rate of 20% applied to their taxable income from Step 1.
Jacqueline’s tax owing is $90,000 x 20% = $18,000