Trusts for BC home flipping tax
Last updated on December 6, 2024If a trust sells a property on or after January 1, 2025, profit earned from the sale of the property may be subject to the BC home flipping tax if the trust purchased the property less than 730 days before the sale.
Example: If a trust purchases a property on March 1, 2025, and sells that property on January 1, 2026, the trust is subject to the BC home flipping tax.
On this page
- How the tax is calculated
- Exemptions for trusts
- Filing requirements
- Beneficiary liability for unpaid tax
How the tax is calculated
The BC home flipping tax applies to net taxable income from the sale of property that was owned by a trust for less than 730 days. The amount of tax that is payable for a trust is calculated in a similar manner to other taxpayers.
The tax is calculated by multiplying a trust’s net taxable income by its tax rate. Net taxable income is a trust’s taxable income less the primary residence deduction. The primary residence deduction is calculated differently for a trust than it is for other taxpayers, as outlined in the Primary Residence Deduction for Trusts section below.
Taxable income is calculated as a trust’s proceeds from the sale of the property, minus the cost to purchase the property and any eligible costs paid or payable by the trust to improve the property while the trust owned it.
Example 1: A trust purchases a property on January 1, 2025, and sells the property on March 1, 2025. The trust will be subject to a 20% tax rate because the property was sold less than 366 days after it was purchased.
Example 2: A trust purchases a property on January 1, 2026, and sells the property on April 1, 2027, resulting in net taxable income of $50,000. As the trust held the property for 456 days, it is eligible for a reduced tax rate. The trust’s tax rate is: 20% x [1-((456-365)/365)] = 15.014%. The tax payable for the transaction will be $7,507 ($50,000x0.15014).
For further information on calculating the net taxable income for a trust, see Calculate your tax.
Days of ownership
The number of days that a trust owns a property is calculated in the same way as for other taxpayers.
To determine whether a trust has owned a property for more than 729 days, start counting with the day that the trust purchased the property and end with the day the trust sold the property.
Example 1: If a trust purchased a property on May 1, 2023 and sold the property on January 31, 2025, the trust owned the property for 642 days:
- Since the trust did not own the property for more than 729 days, the BC home flipping tax applies on the sale of the property
Example 2: If a trust purchased a property on May 1, 2023 and sold the property on May 31, 2025, the trust owned the property for 762 days:
- Since the trust owned the property for more than 729 days, the BC home flipping tax does not apply on the sale of the property
A trust is considered a related individual in limited circumstances. If a trust purchases a property from a related person, the trust is deemed to have purchased the property on the date that the related person purchased the property. If a trust purchases a property from a related person and that purchase is part of a series of transactions, each of which involves a purchase from a related person, the trust is deemed to have purchased the property on the date that the first person involved in the series purchased the property.
A trust isn’t eligible for the exemption for sales between related persons
Example 1: A trust owns all of the outstanding voting shares of a corporation. If the corporation purchases a property on January 1, 2025, and sells the property to the trust on September 1, 2026, the trust is deemed to have purchased the property on January 1, 2025. Since the trust controls the corporation, the two are considered related persons and it is deemed to have acquired the property on the date that the related corporation purchased it. If the trust sold the property to an unrelated person on March 1, 2027, it would be exempt from the BC home flipping tax because more than 729 days have passed since it was deemed to have purchased the property.
Example 2: On December 1, 2025, Company A purchases a residential property. On March 1, 2026, Company A sells the property to Company B, which owns all of the outstanding shares of Company A. If Company B sells the property to a trust, which controls Company B, the trust will be deemed to have purchased the property on December 1, 2025 because the trust received the property from a related person in a series of related party transactions. If the trust sells the property to an unrelated person on February 15, 2027, it will be exempt from the BC home flipping tax because more than 729 days have passed since it was deemed to have purchased the property.
Primary residence deduction for trusts
A trust may be able to claim a primary residence deduction of up to $20,000 in calculating its net taxable income if it meets the following conditions:
- The trust held the property for a minimum of 365 consecutive days.
- That property includes a housing unit that was the primary residence of at least one beneficiary of the trust during the period that the trust held the property.
Example: A trust sells a house on March 1, 2026, which was purchased on January 1, 2025. Sandra is the beneficiary of that trust, and lived in the house for the entire time that the trust owned it. Since the trust sold the property less than 730 days after purchasing it, the trust must pay the BC home flipping tax. The trust is eligible for the primary residence deduction because its beneficiary, Sandra, lived in the house for the required amount of time.
The primary residence deduction for a trust is reduced by the trust’s interest in the property and the beneficiary’s interest in the property. The primary residence deduction is calculated according to the following formula:
[$20,000 × (beneficiary's interest × trust's interest)]
Example: A trust sells its 80% beneficial interest in a property that includes a housing unit on June 1, 2026, which was purchased on January 1, 2025. Marlon is a beneficiary of that trust, with a 50% beneficial interest, and lived in the housing unit for the entire time that the trust owned it. The trust must pay the BC home flipping tax because it was held for less than 730 days, but it is eligible for the primary residence deduction because the house was Marlon’s primary residence for the required amount of time. The trust is entitled to an $8,000 [$20,000 × (0.50 × 0.80)] primary residence deduction and may deduct this amount in calculating its net taxable income.
Exemptions for trusts
Many of the exemptions that are available for trusts are the same as are available for other taxpayers, unless otherwise noted.
Exempt property locations
Exempt property locations are the same for trusts as for other taxpayers.
Specified beneficiaries
A trust is exempt from the BC home flipping tax if all of the beneficiaries of that trust are persons that qualify as one of the following:
- A registered charity as defined in section 248(1) of the Income Tax Act (Canada)
- An association as defined in section 1(1) of the Cooperative Association Act
- The government
- An agent of the government
- An Indigenous Nation
- An organization included in the government reporting entity as defined in section 1(1) of the Budget Transparency and Accountability Act
- A government body as defined in section 1 of the Financial Administration Act
- A local public body as defined in Schedule 1 of the Freedom of Information and Protection of Privacy Act
- A public body referred to in Schedule 2 of the Freedom of Information and Protection of Privacy Act
- A corporation owned by a municipality
- A corporation owned by a regional district
- A corporation owned by an Indigenous Nation
- Certain housing corporations which are exempt from tax under section 149(1)(i) of the Income Tax Act (Canada)
- A non-profit organization described in section 149(1)(l) of the Income Tax Act (Canada)
- A limited-dividend housing company described in section 149(1)(n) of the Income Tax Act (Canada)
Specified trustees
A trust is exempt from the BC home flipping tax if the trustee of that trust qualifies as one of the following:
- A registered charity as defined in section 248(1) of the Income Tax Act (Canada)
- An association as defined in section 1(1) of the Cooperative Association Act
- Certain housing corporations which are exempt from tax under section 149(1)(i) of the Income Tax Act (Canada)
- A non-profit organization described in section 149(1)(l) of the Income Tax Act (Canada)
- A limited-dividend housing company described in section 149(1)(n) of the Income Tax Act (Canada)
Life circumstance exemptions
A trust is exempt from the BC home flipping tax if a beneficiary of that trust qualifies for a life circumstance exemption.
Exclusive commercial use
Information on exemptions for property for exclusive commercial use can be found here.
Building activity on land without a housing unit
Information on exemptions for building or renovating activities can be found here.
Renovations and construction of additional housing units
Information on exemptions for building or renovating activities can be found here.
Real estate investment trust (REIT) beneficiaries
Information on REIT beneficiaries can be found here.
Builders and developers
A trust is exempt from the BC home flipping tax if:
- In the ordinary course of its business, the trust or a person related to that trust ordinarily buys and sells property for the purpose of constructing or placing buildings on the property
- The taxable property was held for the purposes above.
For the purposes of this exemption:
- Individuals are not considered related persons
- The beneficiary of a trust is a person related to that trust
- Beneficiaries that are individuals are not considered to be persons related to a trust
As discussed above, a trust will be considered related to another person in limited circumstances. A trust is considered to be related to a corporation if the trust controls that corporation or is part of a group that controls the corporation. A trust can also be related to a beneficiary of the trust that isn’t an individual.
Example 1: A trust ordinarily buys and sells properties for the purpose of constructing apartments on these properties. The trust purchases a property on January 1, 2025 to construct an apartment building. If on June 1, 2025, the trust sells the property, the trust will be exempt from the BC home flipping tax because the trust’s ordinary course of business involves purchasing and selling properties for the purpose of constructing buildings on the properties.
Example 2: A trust purchases a residential property on March 1, 2025. The trust does not ordinarily engage in the construction or placement of buildings on property held for that purpose, but one of its beneficiaries is a developer which does. If the trust sells that property on December 1, 2025, it will be exempt from the BC home flipping tax because a person related to the trust buys and sells properties for the purpose of constructing buildings on the properties in the ordinary course of that person’s business.
Example 3: A trust purchases a residential property on January 1, 2025. The trust does not ordinarily engage in the construction or placement of buildings on property held for that purpose. The trust owns all of the outstanding voting shares of a construction company that routinely buys and sells properties on which it builds new housing units. If the trust sells that property on December 1, 2025, it will be exempt from the BC home flipping tax because the construction company, which is considered a person related to the trust, buys and sells properties for the purpose of constructing buildings on the properties in the ordinary course of its business.
Property sales between related persons
Trusts are not eligible for the exemption for property sales between related persons.
Filing requirements
The trustee of a trust that is subject to the BC home flipping tax is responsible for filing a return within 90 days of the sale.
The trustee of a bare trust is also responsible for filing a return.
Information on when a return is not required to be filed to claim specified exemptions can be found here.
Beneficiary liability for unpaid tax
The beneficiary of a trust that is subject to the BC home flipping tax will be liable for any tax and interest that is payable if the trustee distributes the proceeds from the disposition of the property to the beneficiaries and the trustee fails to pay the tax and file the return, as required under the Act. The beneficiary would be liable for the taxes owing by the trust up to the share of the proceeds of disposition paid to the beneficiary.
If a trust has multiple beneficiaries that are paid proceeds from the trust from the disposition of the property, the beneficiaries will be jointly and severally liable.