Exemptions from the BC home flipping tax
Last updated on April 3, 2024
The proposed BC home flipping tax applies to income from the sale of a property, including presale contracts, in British Columbia if the property was owned for less than 730 days, unless an exemption applies.
The tax is imposed under the Residential Property (Short-Term Holding) Profit Tax Act, which takes effect starting January 1, 2025, subject to approval by the legislature.
Exemptions can be based on the property location, the entity that sells the property, certain life circumstances or other exemptions.
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Exempt property locations
Residential property located in any of the following locations is exempt from filing a return and paying the BC home flipping tax:
- A reserve as defined in section 2(1) of the Indian Act (Canada)
- Nisga’a Lands
- Nisga’a Fee Simple Lands as defined in the Definitions Chapter of the Nisga’a Final Agreement
- shíshálh lands as defined in section 2(1) of the shíshálh Nation Self-Government Act (Canada)
- Treaty lands of a Treaty First Nation
- Maa-nulth First Nation Lands as defined in the Definitions Chapter of the Maa-nulth First Nations Final Agreement
- Tla’amin Lands as defined in the Definitions Chapter of the Tla’amin Final Agreement
- Tsawwassen lands as defined in the Definitions Chapter of the Tsawwassen First Nation Final Agreement
Exempt entities
If you qualify as one of the following entities on the date of the sale of the property, you are exempt from the BC home flipping tax:
- A registered charity as defined in section 248(1) of the Income Tax Act (Canada)
- An association as defined in section 1(1) of the Cooperative Association Act
- The government
- An agent of the government
- An Indigenous Nation
- An organization included in the government reporting entity as defined in section 1(1) of the Budget Transparency and Accountability Act
- A government body as defined in section 1 of the Financial Administration Act
- A local public body as defined in Schedule 1 of the Freedom of Information and Protection of Privacy Act
- A public body referred to in Schedule 2 of the Freedom of Information and Protection of Privacy Act
- A corporation owned by a municipality
- A corporation owned by a regional district
- A corporation owned by an Indigenous Nation
- Certain housing corporations which are exempt from tax under section 149(1)(i) of the Income Tax Act (Canada)
- A non-profit organization described in section 149(1)(l) of the Income Tax Act (Canada)
- A limited-dividend housing company described in section 149(1)(n) of the Income Tax Act (Canada)
Life circumstance exemptions
You will still have to file a BC home flipping tax return, but may not have to pay the BC home flipping tax if you experience any of the following life circumstances and they are considered to lead to the sale of a property.
The following exemptions apply to individuals if the sale reasonably occurred due to, or in anticipation of, at least one of these events.
Death of a related individual
If you receive a residential property due to the death of a related individual, you may either sell the new property you received or sell your own property to move into the new property and not pay the BC home flipping tax.
Serious illness or disability
If you or a related individual suffers from a serious illness or disability.
Eligible relocation
If you or your spouse or common-law partner make an eligible relocation for one of the following reasons:
- To carry on a business or to be employed at a particular location
- To be a student enrolled full-time in a program at a post-secondary level at a particular location of a university, college, or other educational institution
To qualify for the eligible relocation exemption to sell your primary residence, your primary residence must be 40 kilometres (km) farther from your new job or school than your new primary residence.
To qualify for the eligible relocation exemption to sell a secondary property that is not your primary residence, the secondary property must be 100 km farther from your new primary residence than it was from your current primary residence.
Change in household membership
If there’s a change in household membership that results in a property sale, that property sale is exempt from tax. A change in household membership can include a person related to you moving in with you, you moving in with a related person, and having or expecting a child.
The following exemptions apply to individuals if the sale is reasonably considered to have occurred due to at least one of the following events.
Breakdown of marriage or common-law partnership
If there is a breakdown of your marriage or common-law partnership and you have been living separate and apart from your spouse or common-law partner for at least 90 days prior to the sale.
Involuntary termination of employment
If you or your spouse or common-law partner experience an involuntary termination of employment and have to sell your property, you are exempt from the BC home flipping tax.
This exemption does not apply to self-employed individuals.
Threat to personal safety
If you or a related person who lives with you experiences a threat to personal safety and you sell your property, you are exempt from the BC home flipping tax.
The following list of additional exemptions are available if the sale can reasonably be considered to occur due to one or more of the following events having occurred before the sale. Unlike the other life circumstance exemptions, these additional exemptions are also available to corporations, partnerships, and trusts.
Bankruptcy and insolvency
- The taxpayer has, under the Bankruptcy and Insolvency Act (Canada):
- Made an assignment in bankruptcy
- Filed a notice of intention to make a proposal with the official receiver, or
- Made a proposal under Division 1 of Part III of that Act
- Has had a bankruptcy order made against them
- The taxpayer is a corporation and has obtained a court order granting a stay of proceedings under section 11.02 of the Companies’ Creditors Arrangement Act (Canada)
- The taxpayer has had a winding-up order made against them under the Winding-Up and Restructuring Act (Canada) based in whole or in part on the person being insolvent
- The taxpayer has made an application to the administrator under section 5 of the Farm Debt Mediation Act (Canada) and has been found by the administration to be eligible to make that application
- The taxpayer is a corporation and the only shareholder of the corporation is a person who is described above
Housing unit was destroyed
If a residential property is sold because a housing unit is uninhabitable because it was destroyed by, or couldn’t be rebuilt because of damage caused by:
- An earthquake
- A fire
- A flood
- A landslide
- A spill or leakage of oil, gas or another poisonous or dangerous substance
- Any other natural disaster or dangerous event
Expropriation of the residential property
If you experience the expropriation of your residential property, you are exempt from the BC home flipping tax.
Property acquired through lottery
If you acquire residential property through a lottery and sell that property, you are exempt from the BC home flipping tax.
Death of an unrelated individual
If you receive a residential property as a direct consequence of the distribution of the property of a deceased person, you may sell that residential property and not pay the BC home flipping tax.
Foreclosure
You are exempt from the BC home flipping tax if the sale of your residential property is due to:
- The exercise of a power of sale by the registered owner of a charge on the residential property
- An order absolute of foreclosure
- Any other order of a court ordering a sale of the residential property
Estimated completion date delayed more than 365 days
You are exempt from the BC home flipping tax if all of the following are met:
- You enter into an agreement to purchase a new housing unit that’s going to be constructed or placed on the residential property, and
- You are given a new estimated completion date and that date is more than 365 days later than the original estimated completion date given to you when you entered into the agreement, and
- The original and new estimated completion dates were provided to you in writing by the developer
Additional exemptions
Related party transactions
Related party transactions are exempt from the BC home flipping tax. Related party transactions are sales between related persons.
Exemption for builders and developers
A person is exempt from the home flipping tax if:
- In the ordinary course of business, the person ordinarily buys and sells property for the purpose of constructing or placing buildings on the property (developers) or constructs or places buildings on property held for that purpose (builders); and
- The taxable property was held by the person for the purposes above.
These activities do not have to occur on the residential property to qualify for this exemption.
Exemption for exclusive commercial use
You are exempt from the home flipping tax if you used a residential property exclusively for a commercial purpose for the entire time that you held that property.
Building activity on land without a housing unit
If building activity occurs on a residential property that does not contain a housing unit at the time of purchase, the taxpayer will be exempt from the BC home flipping tax in respect of the construction or placement of a housing unit.
Building activity means:
- Completion of clearing or excavating the site in preparation for a house
- Constructing or placing the housing unit on the residential property
- Any other prescribed activity necessary for the construction or placement of the housing unit
Exemption for renovations and construction of additional housing units
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.