Exemptions for builders, developers, and building or renovating activity
Last updated on December 2, 2024The following exemptions are for builders, developers, and anyone carrying out building or renovating activity on their property. You will still need to file a BC home flipping tax return but will not have to pay the tax if you meet the requirements.
On this page
- Exemption for builders and developers
- Exemption for building activity on land without a housing unit
- Exemption for renovations and construction of additional housing units
Exemption for builders and developers
Builders and developers
You are exempt from the BC home flipping tax if you meet all of the following:
- In the ordinary course of business, you ordinarily buy and sell property for the purpose of constructing or placing buildings on the property (developers) or construct or place buildings on property held for that purpose (builders)
- You held the taxable property for the purpose of constructing or placing buildings on that property
These activities do not have to occur on the residential property to qualify for this exemption. If you meet the above criteria, the sale of a property will be exempt even if no activity related to the construction or placement of buildings has occurred on the property before it is sold.
Example: On March 1, 2025, a developer that ordinarily buys and sells properties, and constructs housing units on these properties, purchases another property intending to build an apartment tower. If the developer later decides that the property is not suitable for the intended project and sells it on December 1, 2025, before any construction has occurred, the sale is exempt from the BC home flipping tax.
Related person is a builder or developer
You may also be exempt from the BC home flipping tax if all of the following apply:
- As part of their ordinary course of business, a related person ordinarily buys and sells property for the purpose of constructing or placing buildings on the property or constructs or places buildings on property held for that purpose
- You held the taxable property for the purpose of constructing or placing buildings on that property
For the purposes of this exemption, a related person does not include related individuals or individuals related to a corporation.
Example 1: On January 1, 2025, a developer that ordinarily places houses on properties incorporates a new wholly-owned subsidiary. On January 15, 2025, the subsidiary purchases a property on which it intends to place new housing units. Prior to the purchase, the subsidiary did not complete any activities related to the construction or placement of buildings. If the property is later determined to be unsuitable for the project and is sold on November 1, 2025, the subsidiary will be exempt from the BC home flipping tax. Although the subsidiary is new and the ordinary course of its business has not been established, it is related to a person that ordinarily places buildings on properties that it purchases.
For the purposes of this exemption, a beneficiary of a trust is a person related to a trust if the beneficiary is a corporation, partnership or trust, but not an individual.
Example 2: A property that was intended to be used to construct new housing units was purchased by a trust on February 1, 2025, and sold on January 15, 2026, before any construction was completed. If the trust does not ordinarily buy and sell properties and construct or place buildings on the properties, the trust would be exempt from the BC home flipping tax if the beneficiary of that trust is a developer that buys and sells properties in the ordinary course of its business.
For the purposes of this exemption, a partner of a partnership is a person that is related to the partnership, if the partner is a corporation, partnership or trust, but not an individual.
Example 3: A partnership purchases property on January 1, 2025, to build a condominium and sells it on March 1. 2026. The partnership does not ordinarily construct or place buildings on properties that it buys and sells. If one of the partners is a construction company that constructs or places buildings on properties that it buys and sells in the ordinary course of its business, the partnership would be exempt from the BC home flipping tax.
Exemption for building activity on land without a housing unit
If you carry out building activity on a residential property that did not contain a housing unit at the time of purchase, you 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
Example: Matt and Lilly bought a vacant lot and wanted to build their own housing unit. They had only cleared their lot of stumps and rocks and were ready to lay the foundation, before they had to sell since they did not have enough funds to finish building the housing unit. Since Matt and Lilly had completed clearing the site, they engaged in a building activity and are exempt from the BC home flipping tax.
Exemption for renovations and construction of additional housing units
Any 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.
Renovation of a housing unit
If there is a substantial renovation of a housing unit, the property will be exempt from the BC home flipping tax.
Example 1: Aria bought an older house. In the process of renovating the house, Aria replaced the roof, tore down and replaced all the interior walls, replaced all the flooring, completely redesigned and replaced all the components of the kitchen and bathrooms and replaced and upgraded the electrical and plumbing throughout the house. Aria sold the house after 19 months. As this was a substantial renovation, Aria is exempt from the BC home flipping tax.
Example 2: Mike bought an older house, painted the interior walls, added a patio and replaced the bedroom carpets. Mike sold the house after 14 months. As this was not a substantial renovation, Mike will have to pay the BC home flipping tax.
Example 3: Karen and Chad bought a smaller older home. As part of the renovation, they added an upper floor and an addition to the home that more than doubled the habitable area of the home. Karen and Chad sold the home after 11 months. As they increased the habitable area of the home by more than 100 percent, they will not have to pay the BC home flipping tax.
Construction of a housing unit
If a housing unit is demolished and a new housing unit is constructed or placed on that property, the property will be exempt.
Example 1: Hana and Arjun bought a small rundown housing unit. They decided to tear it down and build a new larger housing unit. Once the housing unit was completed, they sold it shortly after. Hana and Arjun are exempt from the BC home flipping tax.
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.
Example 2: Eric bought a house with an unfinished basement and turned it into a separate basement suite. Eric then sold the property after owning it for 20 months. Since an additional housing unit was added Eric is exempt from BC home flipping tax.
Example 3: Karina and Bowen bought a large property and decided to add a secondary housing unit on the property, about half a hectare away from the main housing unit. Karina and Bowen then sold the property with the second housing unit. They are exempt from the BC home flipping tax.