Aman Nanda

B.C. Introduces Tax on Homes Sold Within 2 Years of Purchase

The tax rate for properties sold within one year of purchase will start at 20% and gradually decrease to zero over the subsequent year.

The B.C. government has introduced a tax of up to 20% on the profits made when properties are sold out within two years of the purchases. This tax targets those who buy property and then quickly sell it for a profit.

The 20% rate will be there for a year after purchases. It will slowly decrease to zero between 366 and 730 days after the acquisition. 

B.C. Finance Minister Katrine Conroy unveiled the tax as one of the province’s newest strategies to combat speculation in the housing market, making housing unaffordable for many residents.

“As governments reduced their involvement, speculators took advantage, causing prices to soar,” Conroy remarked during her budget presentation in the legislature. 

“To address this issue, we are implementing a home-flipping tax to deter unethical practices.”

From 2025, British Columbia will cover the cost of one round of in-vitro fertilization. 

The decision is a part of the package that includes 20 new laws the government is aiming to pass this session. It lasts for three months.

The law is applied to the properties sold on or after January 1, 2025, including those purchased before that date.

The regulation extends to any home listing within the specified timeframe.

The Finance Minister’s budget for 2024-25 estimates that once this tax is implemented, it will bring in an extra $43 million in the fiscal year 2025-26.

The money will then be used to build more affordable housing throughout the province.

Sellers will be taxed around 10% after buying a home for a year and a half, with the tax lifted after the ownership of two years.

The tax will be applicable on the income from the sale of properties with a housing unit and properties that are zoned for residential use.

It also applies to the income made from condo assignments.

Depending on the government’s budget documents, it does not even apply to the land or the land portions used for non-residential purposes.

First-time homebuyer credit

The budget unveiled widened property transfer tax exemptions, raising the threshold for the First Time Homebuyers Program to $500,000 for homes valued at up to $835,000.

This initiative, according to the province, is expected to save buyers up to $8,000 per purchase and extend benefits to approximately 14,500 more buyers.

Furthermore, the province will exempt eligible purpose-built rental buildings with four or more units from property transfer tax until 2030.

The latest budget in British Columbia forecasts an unprecedented deficit of $7.9 billion.

The tax also provides exemptions for specific life events, including but not limited to –

  • separation, 
  • divorce, 
  • death, 
  • illness, 
  • disability, 
  • involuntary job loss, 
  • work-related relocation, 
  • personal safety concerns, or insolvency,
  • changes in household size.

The government’s budget documents emphasize that the purpose of this tax is to support the housing supply rather than hinder it. 

Exemptions will be granted to those who contribute to the housing supply or are involved in construction and real estate development.

Furthermore, individuals must pay this tax in addition to any federal or provincial income taxes arising from property sales.

Alex Hemingway, a senior economist at the Canadian Centre for Policy Alternatives, conveyed doubts regarding the tax’s efficacy in tackling speculation, as per a statement issued.

While he believes the flipping tax could somewhat reduce speculative activities, he emphasized that it fails to address the underlying issues causing the housing crisis. 

Hemingway noted that there is a general shortage of housing and, specifically, a shortage of affordable housing options.

Additionally, Hemingway cautioned that the tax might inadvertently decrease properties for sale and transactions, which could lead to a reduction in tax revenue generated from property transfers

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