Terms and definitions for the BC home flipping tax

 

The BC home flipping 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.

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.

On this page

• Common-law partner
• Commercial purpose
• Cost to improve the property
• Eligible relocation
• Housing unit
• Indigenous Nation
• Net taxable income
• Primary residence
• Related person
• Related individuals
• Residential property
• Substantial renovation
• Taxable income

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 purpose

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.

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:

• 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

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.

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.

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 allowable expenses) minus the costs to acquire the property (minus required deductions) and the cost to improve the property.