Purchase and sale of portions of property for BC home flipping tax
Last updated on December 2, 2024Sale of property purchased on different dates
Special rules apply if you sell a property and portions of that property were purchased on different dates. For example, these rules would apply if you sell 100% of a property and you purchased 20% of that property on January 1, 2025, 30% of that property on January 1, 2026, and 50% of that property on December 1, 2026.
If you sell a property and portions of the property were purchased on different dates, you will be subject to the BC home flipping tax for each portion of the 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 property are subject to the tax,
- Calculate the amount of tax owing for each portion of the 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 sale of a property where portions of that property were purchased on different dates.
A. Determine which portions of a property are subject to the tax
You must determine how long you owned each portion of a 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 purchased the portion and end with the day that it was sold.
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 sale of a property is calculated as:
Proceeds from the sale of the portion of the property
Minus:
Cost to purchase the portion of property and the cost to improve the portion of property
If the proceeds from the sale and the costs to purchase, sell, and improve the property cannot be specifically traced to each portion of the property that is sold, you must proportionately allocate the proceeds and costs to each portion.
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:
If a 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 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 sold.
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 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 sale of one portion of the property to reduce the amount of tax owing in respect of another portion.
Example calculation for sale of property purchased on different dates:
Stephanie purchased portions of a residential property on different dates. On January 1, 2025, she purchased 20% of the property for $200,000 and began living in a housing unit on the property as her primary residence. She then purchased 30% of the 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 sold 100% of the 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 purchased on January 1, 2025, will be exempt from the tax because more than 729 days have passed since it was purchased. The 30% portion purchased on January 1, 2026 and the 50% portion purchased on December 1, 2026 will be subject to the tax because these portions were sold less than 730 days after being purchased.
2. Calculate the tax owing for each portion:
Step 1: Calculate your taxable income
The proceeds from the sale of the property must be allocated proportionately between the portions. $480,000 (30% of $1,600,000) is allocated to the portion that was purchased on January 1, 2026. $800,000 (50% of $1,600,000) is allocated to the portion that was purchased on December 1, 2026.
The costs to improve the property must also be proportionately allocated. Since all of the costs to improve the property relate to the portion that was purchased 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 purchased on January 1, 2026 is eligible for the primary residence deduction because Stephanie used the 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 purchased 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 purchased 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 purchased 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 purchased on January 1, 2026 is:
16.712% x $174,000= $29,078.88
The tax owing for the portion purchased 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 sell a portion of your property, you may only deduct the proportion of the cost to purchase the property and the cost to improve the property that corresponds to the portion that you sell.
Example 1: Gurpreet acquired 100% of a property on November 15, 2025. Shortly after purchasing the property, she completed $20,000 worth of improvements of an enduring nature. If on January 1, 2027, she decides to sell 50% of the 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 sold.
Example 2: On January 1, 2025, Kyle and Steve decided to purchase a property together for $500,000. Each individual owns 50% of the property as a tenant in common. They spent $10,000 to complete improvements of an enduring nature. If they each decide to sell a 25% portion of the property on June 1, 2026, for $175,000, they will be subject to the BC home flipping tax. The taxable income from this sale will be $175,000 – $125,000 (25% of $500,000) – $2,500 (25% of $10,000) = $47,500.