Acquisition and disposition of portions of taxable property for BC home flipping tax
Last updated on January 26, 2026Disposition of taxable property acquired on different dates
Special rules apply if you dispose of a taxable property and portions of that taxable property were acquired on different dates. For example, these rules would apply if you dispose of 100% of a taxable property and you acquired 20% of that taxable property on January 1, 2025, 30% of that taxable property on January 1, 2026, and 50% of that taxable property on December 1, 2026.
If you dispose of a taxable property and portions of the taxable property were acquired on different dates, you will be subject to the BC home flipping tax for each portion of the taxable property that you owned for less than 730 days, unless an exemption applies. To calculate the total tax owing, you will need to:
- Determine which portions of a taxable property are subject to the tax,
- Calculate the amount of tax owing for each portion of the taxable property, and
- Add together the tax owing for every portion.
Below is a description of A, B, and C, followed by an example calculation to show how A, B, and C apply in calculating the tax for the disposition of a taxable property where portions of that taxable property were purchased on different dates.
A. Determine which portions of a taxable property are subject to the tax
You must determine how long you owned each portion of a taxable property. You will be required to pay the tax on any portion that is owned for less than 730 days. You will not have to pay the tax for a portion that is owned more than 729 days. To determine how long you owned each portion, start counting with the day you acquired the portion and end with the day that it was disposed.
B. Calculate the tax owing for each portion
The four steps to calculate the tax owing are reproduced below and can also be found on the Calculate your tax page:
Step 1: Calculate your taxable income
Taxable income from the disposition of of a taxable property is calculated as:
Proceeds from the disposition of the portion of the taxable property
Minus:
Cost to acquire the portion of taxable property and the cost to improve the portion of residential property that is a taxable property
If the proceeds from the disposition and the costs to acquire, dispose of, and improve the taxable property cannot be specifically traced to each portion of the taxable property that is sold, you must proportionately allocate the proceeds and costs to each portion.
Step 2: Calculate your net taxable income
If the taxable property is a residential property that 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:
If a residential property is your primary residence, you will have to allocate the primary residence deduction proportionately amongst the portions.
A calculation of net taxable income that results in a negative amount is deemed to be zero. Your net taxable income cannot be a negative amount.
​Step 3: Calculate your tax rate
If you own a portion of a taxable property for less than 366 days, the tax rate is 20%.
If you own the portion 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 ]
The amount of the tax rate is rounded to the nearest one-thousandth.
Note: Depending on the length of time that each portion is owned, each portion may have a different tax rate.
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 for each portion of the property that is disposed.
C. Add together the tax owing for every portion
Add together the tax owing as calculated under section B for all of the portions of the taxable property to determine the total amount of BC home flipping tax that you owe. Since a calculation of taxable income and net taxable income that results in a negative number is deemed to be zero, you cannot use the loss from the disposition of one portion of the taxable property to reduce the amount of tax owing in respect of another portion.
Example calculation for the disposition of taxable property acquired on different dates:
Stephanie acquired portions of a residential property that is a taxable property on different dates. On January 1, 2025, she acquired 20% of the taxable property for $200,000 and began living in a housing unit on the residential property as her primary residence. She then acquired 30% of the taxable property for $300,000 on January 1, 2026, and the remaining 50% for $500,000 on December 1, 2026.
In February, 2025, Stephanie paid $10,000 for improvements of an enduring nature. She then disposed of 100% of the taxable property on March 1, 2027 for total proceeds of $1,600,000. Stephanie must determine which portions are subject to the tax and calculate the tax owing for each portion.
1. Determine which portions are subject to tax
The 20% portion that was acquired on January 1, 2025, will be exempt from the tax because more than 729 days have passed since it was acquired. The 30% portion purchased on January 1, 2026 and the 50% portion acquired on December 1, 2026 will be subject to the tax because these portions were disposed of less than 730 days after being acquired.
2. Calculate the tax owing for each portion:
Step 1: Calculate your taxable income
The proceeds from the disposition of the taxable property must be allocated proportionately between the portions. $480,000 (30% of $1,600,000) is allocated to the portion that was acquired on January 1, 2026. $800,000 (50% of $1,600,000) is allocated to the portion that was acquired on December 1, 2026.
The costs to improve the residential property that is a taxable property must also be proportionately allocated. Since all of the costs to improve the residential property relate to the portion that was acquired on January 1, 2025, Stephanie cannot deduct these costs because this portion is not subject to the tax.
Taxable income for the January portion is:
$480,000 – $300,000 = $180,000
Taxable income for the December portion is:
$800,000 – $500,000 = $300,000
Step 2: Calculate your net taxable income
The portion that was acquired on January 1, 2026 is eligible for the primary residence deduction because Stephanie used the residential property that is a taxable property as her primary residence for the entire time she owned the property and the portion was owned for more than 365 days. The portion that was acquired on December 1, 2026 is not eligible for the primary residence deduction because it was held for 91 days, which is less than the required 365 days. The $20,000 deduction must be proportionately allocated to the January portion.
Net taxable income for the January portion is:
$180,000 - 6,000 (30% of the $20,000 primary residence deduction) = $174,000.
Net taxable income for the December portion is:
$300,000
Step 3: Calculate your tax rate
Since the portion acquired on January 1, 2026 was held for more than 365 days, it is eligible for a reduced tax rate as follows:
20% x [ 1 - (425 - 365) ÷ 365 ] = 16.712%
Since the portion acquired on December 1, 2026 was held for only 91 days, it will be subject to the full 20% rate.
Step 4: Calculate your tax owing
The tax owing for the portion acquired on January 1, 2026 is:
16.712% x $174,000= $29,078.88
The tax owing for the portion acquired on December 1, 2026 is:
20% x $300,000= $60,000
3. Add together the tax owing for every portion
Stephanie’s total BC home flipping tax owing is:
$29,078.88 + $60,000 = $89,078.88
Partial dispositions
If you dispose of a portion of your taxable property, you may only deduct the proportion of the cost to acquire the taxable property and the cost to improve the residential property that is a taxable property that corresponds to the portion that you dispose.
Example 1: Gurpreet acquired 100% of a residential property that is a taxable property on November 15, 2025. Shortly after acquiring the taxable property, she completed $20,000 worth of improvements of an enduring nature. If on January 1, 2027, she decides to dispose of 50% of the taxable property, she will be required to pay the BC home flipping tax. She will only be able to deduct $10,000 (50% of $20,000) of the improvement costs, which is proportionate to the 50% portion that she disposed.
Example 2: On January 1, 2025, Kyle and Steve decided to acquire a residential property that is a taxable property together for $500,000. Each individual owns 50% of the taxable property as a tenant in common. They spent $10,000 to complete improvements of an enduring nature. If they each decide to dispose of a 25% portion of the taxable property on June 1, 2026, for $175,000, they will be subject to the BC home flipping tax. The taxable income from this disposition will be $175,000 – $125,000 (25% of $500,000) – $2,500 (25% of $10,000) = $47,500.