Jan 31, 2025
The BC government announced a new 20% flipping tax in early 2024, and as of January 1st, 2025, it has officially come into effect. This tax applies to all residential properties, including pre-sales and assignments of contract. Whether you're a first-time home buyer, an investor, or someone considering selling a pre-sale contract, it's crucial to understand how this tax impacts your transaction.
Understanding BC’s 20% Flipping Tax
The flipping tax was introduced to curb rapid property flipping, which has been driving up housing prices. Under this new rule, anyone selling a residential property within two years of purchase will be subject to the tax:
If you sell within the first year, you will pay the full 20% flipping tax.
After one year, the tax decreases on a sliding scale until it is completely eliminated at the two-year mark.
After two years of ownership, no flipping tax applies.
This is a provincial tax and is separate from any federal taxes, capital gains tax, or other real estate-related levies.
How the Flipping Tax Affects the Pre-Sale Market
When this tax was first announced, many feared it would negatively impact the pre-sale market. However, further clarifications from the government indicate that the impact may be less severe than initially thought. Here’s why:
Pre-Sale Purchases and the Flipping Tax
The two-year period starts when you sign the contract with the developer, not when the property completes and you receive the keys.
For example, if you signed a pre-sale contract in 2023 and the project completes in Spring 2025, your two-year period is already over. This means you can sell before completion without incurring the flipping tax.
Assignment of Contract and the Flipping Tax
If you purchase an assignment of contract, your two-year period starts from the date you acquire the assignment, not from when the original buyer purchased it.
For example, if you buy an assignment today, close on the property in three months, and decide to sell within the first year, you will be subject to the flipping tax.
Your ownership officially begins when you pay the deposit and the contract is transferred to you.
Will This Tax Hurt the Pre-Sale Market?
Not necessarily. Most pre-sale projects take two to three years to complete, meaning that by the time buyers receive their units, they will have surpassed the two-year threshold. Additionally:
Most developers do not allow assignments until the project is near completion (typically within the last six months of construction).
If you purchase a pre-sale unit in a project with a two-year construction timeline, you are unlikely to be affected by this tax.
Key Takeaways for Buyers and Investors
If you’re purchasing a pre-sale directly from a developer, your two-year period starts when you sign the contract.
If you’re buying an assignment, your two-year period starts when you acquire the assignment.
If you sell within two years, check your tax liability before listing the property.
If you owe the flipping tax, it must be reported and paid within 90 days of the sale.
Even if you make no profit, you must still file the tax.
There are exemptions for primary residences and other specific cases—be sure to check the official guidelines.
Need More Guidance?
Navigating these new regulations can be complex. If you're considering buying or selling a pre-sale or assignment contract and want expert advice, book a call with us today. We’re here to help you make informed investment decisions in BC’s evolving real estate market.
For more details on the BC flipping tax, check the official government resources linked below.
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