The BC Flipping Tax: What Homeowners, Investors, and Builders Need to Know

Since January 1, 2025, British Columbia’s Flipping Tax has applied to the disposition of taxable property, pursuant to the Residential Property (Short-Term Holding) Profit Tax Act (the “Act”).

Intended to be an anti-speculation measure, the legislation is far broader than many homeowners, investors, and builders may expect. The tax may apply even when a sale has nothing to do with “flipping.”

If you plan to buy, sell, transfer, gift, or reorganize ownership of residential property in BC, the Flipping Tax should now be a part of your planning.

Below, we break down what the tax is, who it affects, and notable issues to pay attention to.

What is the BC Flipping Tax?

The Flipping Tax applies when taxable residential property is disposed of within 730 days of acquisition. “Disposition” is defined broadly: it includes not only sales but also certain transfers, assignments, and income-tax-deferred transactions. A “disposition” occurs when the first installment of consideration is received or receivable.

Key definitions under the Act include:

“Taxable property”—a beneficial interest in residential property or a right to acquire a beneficial interest in residential property.
“Residential property”—a “housing unit” located in BC together with any land subjacent or immediately contiguous to the housing unit; and land located in BC (including vacant land) together with any building or other structure on or in the land if the land is zoned all or in part for residential use.
“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.

How Much is the Tax?

Within the first year post-acquisition, the tax is 20% of the net taxable income, which is proceeds minus cost of acquisition and the cost of improvement. The tax phases out proportionally over the second year until day 730. There is a primary residence deduction of $20,000.

Note that this net taxable income is calculated differently from the calculation of income under the Income Tax Act. It’s important to realize that this is a new tax, and even (or perhaps especially) experienced advisors should not trust their usual instincts about what counts as cost of acquisition. For example, maintenance costs are not added to the cost of improvement or acquisition, meaning they are not at all part of the net income calculation for this tax.

Who Must File a Flipping Tax Return?

If you dispose of residential property within 730 days, you generally must file a Flipping Tax return even if an exemption applies.

A filing is not required if:

you fall within certain narrow statutory exceptions (e.g., government, charity, Indigenous land); or
the property was used exclusively for a commercial purpose.

Importantly, trustees of bare trusts must file if the beneficial owner would be required to file.

Key Exemptions

Many exemptions exist, but most require filing. Exemptions include:

Life circumstances:

Death
Serious illness or disability
Divorce or relationship breakdown
Job loss or required relocation
Safety threats
Addition of household members (e.g., marriage, parent moving in)

Property-related exemptions:

Building or developing new residential property
Substantial renovations
Delays in construction over one year
Commercial-use properties
Indigenous land
Transfers to related persons (in specified circumstances)
Builders and developers selling in the ordinary course of business
Primary residences

Things to Watch For

When does the clock start and stop?

The 730-day clock includes both the acquisition date and the disposition date. Further, the Act contains important nuances to note:

If consideration is receivable before closing, the disposition date may be earlier than expected. This is because the disposition date can be the date the first instalment of consideration is received or receivable. This is an important consideration in drafting the purchase and sale agreement.
For pre-sale contracts, the acquisition date is the date the pre-sale contract is signed.
For transfers between related persons, the “acquisition date” may trace back through the chain of related ownership, even if a person in the chain is not related to another in the chain.

Tax-deferred rollovers under the Income Tax Act do not protect you

The Flipping Tax rules operate independently of the Income Tax Act. This means a Flipping Tax liability can arise even when no gain is recognized under federal tax rules. Examples of when this might happen include situations which would ordinarily be subject to a rollover or amalgamation. In fact, not only does the tax apply in these situations, but the cost of acquisition will generally not be the cost the original owner paid; the cost of acquisition will often be $0, because such rollovers generally occur without any actual consideration changing hands!

Partnerships create special challenges

Generally, each partner is taxed separately, based on changes in their beneficial interest. However, uncertainty remains regarding when partnerships are considered “related” to corporations. Early structuring and advice are essential for partnerships and joint ventures.

Why the Flipping Tax Matters Now

Although the tax applies to dispositions occurring in 2025 and beyond, properties purchased before 2025 are still subject to the rules if sold within 730 days of acquisition.

You should consider the Flipping Tax when planning:

Reorganizations;
Gifts or estate planning transfers;
Trust settlements or distributions;
Joint tenancy severances;
Pre-sale assignments;
Developer structuring; or
Partnership restructurings.

Conclusion

BC’s Flipping Tax represents a major shift in the taxation of residential property transactions. While aimed at curbing speculation, the legislation is highly technical and can easily apply to transactions that have nothing to do with flipping.

If you plan to sell, transfer, gift, or reorganize ownership of a residential property in BC, professional advice is essential—especially when trusts, partnerships, corporations, or pre-sales are involved.

If you have questions about how the BC Flipping Tax may apply to your situation and how to navigate this tax, reach out to a member of our Tax Group.