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Terms and definitions for BC home flipping tax

Last updated on December 2, 2024

The BC home flipping tax is imposed under the Residential Property (Short-Term Holding) Profit Tax Act, which takes effect starting January 1, 2025.

The terms defined here are explanatory for the purpose of the BC home flipping tax. Where there is a conflict between terms defined on this page and the legislation, the legislation shall prevail.

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Common-law partner

Common-law partner has the meaning as in section 248(1) of the Income Tax Act (Canada). Please see this CRA webpage on common-law partners for further information.

Commercial property

In relation to taxable property under the BC home flipping tax, commercial property means a portion of residential property that is used primarily for a commercial purpose.

Commercial purpose

A commercial purpose does not include any of the following:

  • Holding the residential property for sale
  • Renovating the residential property for sale
  • Providing accommodation, under a tenancy agreement or a short-term vacation rental agreement, in a housing unit that is part of the residential property
  • A non-residential purpose carried out in a housing unit that is part of the residential property

Cost to improve the property

You may deduct the following costs of improving the property that are paid or payable by the seller from the proceeds of sale when calculating your taxable income (other than an ineligible amount):

  • Each outlay or expense that is an improvement of an enduring nature
  • The cost of any range, refrigerator, washing machine, dryer or other major appliance that you replaced and is included in the property sale
  • Costs to assess the feasibility of constructing or placing a new housing unit on the property
  • Costs to assess the feasibility of undertaking a substantial renovation of an existing housing unit that is part of the property

You may not deduct the following costs of improving the property:

  • Costs of annual, recurring or routine repair, maintenance or service
  • Financing costs of an improvement
  • Financing costs of a major appliance

Cost to purchase the property

The cost to purchase a property is equal to the total of the consideration paid or payable to purchase the property and the following amounts paid or payable in respect of the purchase of the property (other than an ineligible amount):

  • Tax under section 2(1) of the Property Transfer Tax Act, not including interest and penalties
  • Legal costs
  • Appraisal costs
  • Fees for registration under the Land Title Act
  • Costs of a home inspection carried out by a home inspector licenses under the Business Practices and Consumer Protection Act
  • Costs of title insurance
  • Costs of a survey of any residential property comprising the property
  • Tax under section 165(1) of the Excise Tax Act (Canada)
  • Costs to obtain documentation required by home insurance providers

You may only include amounts as part of the cost to purchase a property if they were paid or are payable in respect of acquiring the property. If you’ve acquired a property other than by purchasing a property (i.e. you were gifted the property), your cost to purchase the property is $0.

Dispose

Dispose, in relation to a disposition of taxable property, means a sale of the property in exchange for consideration in money or in kind.

Eligible relocation

Eligible relocation means a relocation of an individual that occurs to enable the individual:

  • To carry on a business or to be employed at a particular location, or
  • 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.

Housing unit

A self-contained unit of residential accommodation with cooking, sleeping, bathroom and living area facilities, but does not include a float home or manufactured home as defined in section 1 of the Manufactured Home Park Tenancy Act.

Ineligible amount

An amount which you cannot deduct from consideration received or receivable when you calculate the proceeds of the sale of a property, or the cost to purchase the property, or the cost to improve the property. If at least one of the following conditions apply, the amount is deemed ineligible:

  1. The taxpayer has been reimbursed or an amount is receivable or reasonably expected to be receivable as a reimbursement for a cost paid or payable at the time of filing a tax return, whether the amount reimbursed or to be reimbursed is received as any one of the following:
    • An inducement, whether as a grant, subsidy, forgivable loan, deduction from tax, allowance or any other form of inducement
    • A refund, reimbursement, contribution or allowance
    • Assistance, whether as a grant, subsidy, forgivable loan, deduction from tax, allowance or any other form of assistance
  2. The costs are not reasonable in the circumstances
  3. The costs have otherwise been deducted from the proceeds of the sale of a property or included in the cost to purchase the property or included in the cost to improve the property
  4. The costs are attributable to commercial property
  5. The amount is in respect of an outlay or expense described in section 67.5(1) [non-deductibility of illegal payments] of the Income Tax Act (Canada)
  6. The amount is a fine or penalty imposed in relation to one of the following:
    • The purchase or sale of the property
    • An improvement to the property

Indigenous Nation

  • A band as defined in section 2(1) of the Indian Act (Canada)
  • The Nisga’a Nation
  • A Nisga’a Village
  • The shíshálh Nation continued under the shíshálh Nation Self-Government Act (Canada)
  • The shíshálh Nation Government District continued under the shíshálh Nation Self-Government Act (Canada)
  • A Treaty First Nation
  • The Westbank First Nation as defined in the agreement approved under the Westbank First Nation Self-Government Act (Canada)

Net taxable income

Net taxable income is your taxable income minus the primary residence deduction.

Primary residence

Primary residence, in relation to a period, means the place in which an individual resides longer than any other place during the period.

Primary residence deduction (other than trusts)

If you have a residential property that includes a housing unit that you lived in as your primary residence during the period you held the property and you owned the property for at least 365 consecutive days before you sold it, you may be able to deduct the amount determined by the following formula:

  • $20 000 × your beneficial interest in the property expressed as a percentage of the entire beneficial interest in the property that is held by all persons.

Primary residence deduction (trusts)

Special rules apply for the primary residence deduction for trusts. See the trusts webpage for additional information on the primary residence deduction for trusts.

Proceeds from the sale of property

The proceeds from the sale of a property is equal to the consideration received or receivable for the sale of the property less the total of the following amounts paid or payable in respect of the sale of the property (other than an ineligible amount):

  • Legal costs
  • Appraisal costs
  • Costs for trading services as defined in the Real Estate Services Act
  • Costs of a home inspection carried out by a home inspector licensed under the Business Practices and Consumer Protection Act
  • Costs of a survey of any residential property comprising the property

Related person

The following persons are related to each other:

  • Related individuals
  • A corporation and a person or group of persons who control the corporation
  • 2 corporations if:
    • The corporations are controlled by the same person or group of persons, or
    • One of the corporations is controlled by the other corporation
  • A new corporation and any predecessor corporations if the new corporation formed as a result of the amalgamation of 2 or more predecessor corporations

Related individuals

Individuals are related to each other if:

  • The individuals are connected by blood relationship, marriage, common-law partnership or adoption, or
  • Immediately before a disposition of a property:
    • Each of the individuals held the taxable property for a minimum 365 consecutive days, and
    • The taxable property includes a housing unit that was the primary residence of each of the individuals during the period each individual held that taxable property

Residential property

  • A housing unit located in British Columbia together with any land subjacent to or immediately contiguous to the unit
  • Land located in British Columbia together with any building or other structure on or in the land if:
    • The land is zoned all or in part for residential use, and
    • No part of the land, building or other structure is included in a housing unit located in British Columbia together with any land subjacent to or immediately contiguous to the unit

Substantial renovation

Substantial renovation, in relation to an existing housing unit, means a renovation or alteration of the housing unit to such an extent that:

  • All or substantially all of the housing unit has been removed or replaced, other than structural components, which include, without limitation, the roof, the foundation, external walls, interior supporting walls, floors, and staircases, or
  • The habitable area of the housing unit is increased by at least 100 percent

Taxable income

Taxable income is the proceeds from the sale of the property minus the total of the costs to purchase the property and the cost to improve the property.

Contact information

Victoria Phone
250-387-3332
In Canada Toll Free
1-877-387-3332
Email
ITBTaxQuestions@gov.bc.ca