Kelowna Real Estate News - New Home Flipping Tax discourages real estate speculators in an aim to make housing more accessible to families.
The provincial government revealed plans for the BC home flipping tax in late February, as part of the Provincial Budget 2024.
- Implementation Date: Set to take effect on income earned from homes purchased on or after January 1, 2025
- Objective: Aimed at discouraging short-term speculative property flipping under the Homes For People plan.
- Tax Structure: Utilizes a descending rate over time, starting at 20% for properties sold within a year of purchase, tapering to zero between one and two years.
Aimed at targeting real estate investors looking to profit off a quick real estate transaction flip, the biggest implications could be for investors in a rising market and the investor-driven new home presale market.
Implications for Presale Homebuyers:
- Acquisition Date: For presale home buyers, the two-year window starts from the date the presale contract is signed, not upon property completion.
- Encouraging Early Investment: This approach encourages early investment in presale projects and aims to minimize contract assignments.
- Tax Application on Assignments: Assignees of presale contracts are subject to the tax based on the profit, with the tax rate determined by the time between contract signing and assignment.
- Developer Exemption: Developers' income from selling presale contracts is exempt from the flipping tax.
Exemption Criteria
Exemption Criteria:
- Life Circumstances: Eligibility for exemptions exists under certain life circumstances like divorce, death, and job loss.
- Primary Residence Exemption: Allows up to $20,000 of income from the sale of a primary residence within two years to be exempt, balancing the tax's intent with genuine housing transitions.
- Property Coverage: The tax covers properties with residential units or zoned for residential use, including assignable purchase contracts. However, sales on reserve, treaty, and self-governing Indigenous lands are exempted.|
LEARN MORE
For more information visit the BC Government Website. As always, it is important to get specific legal advice from your lawyer pertaining to your situation and purchase.
