BC's Newest Tax Policy Is Coming For Your Profits Estimated reading time: 5 minutes In an effort to curb real estate speculation and support housing affordability, British Columbia has introduced the BC Home Flipping Tax. This new tax, effective January 1, 2025, applies to profits earned from selling residential properties held for less than 730 days. This post will provide a detailed overview of the tax, key exemptions, and how it may impact homeowners, investors, and developers across the province. Understanding the BC Home Flipping Tax The BC Home Flipping Tax is part of the provincial government's Homes for People Plan, designed to address housing affordability. The tax targets short-term property sales, aiming to deter individuals or entities from buying and quickly selling homes for profit. Key Details Effective Date: January 1, 2025 Applicable Period: Properties held for fewer than 730 days Tax Rate: 20% of net taxable profit if the property is sold within 365 days, gradually decreasing over the next 365 days Taxable Properties: Residential homes, pre-sale contracts, and properties zoned for residential use Who Is Subject to the Tax? The tax applies to individuals, corporations, partnerships, or trusts, regardless of residency. For example, if you purchased a property in BC on May 1, 2023, and sold it on January 31, 2025 (642 days), the profit is subject to the BC Home Flipping Tax. Important Exemptions Certain circumstances may exempt property owners from the tax. These include: Death of the property owner or related person Significant life events, such as job relocation, divorce, or health emergencies Primary Residence Deduction: If you lived in the property as your primary residence for at least 365 consecutive days, you may be eligible for a deduction of up to $20,000 from the taxable income. Example: Sam owned his house for 20 months and lived in it as his primary residence. Since he met the 365-day requirement, he qualifies for the deduction. However, pre-sale contract assignments are not eligible for the primary residence deduction. Exempt Property Transactions The tax does not apply to transactions that do not transfer beneficial ownership, such as: Deemed dispositions under the federal Income Tax Act Mortgages, liens, or charges Leases Gifts For example, if you gift a property to a family member, this transaction does not trigger the BC Home Flipping Tax. Days of Ownership: Key Considerations To determine if the tax applies, the holding period starts from the day you take legal ownership (closing date) to the day you sell. Special Rules for Pre-Sale Contracts The ownership period starts on the date you sign the contract and pay the deposit. If you assign your right to a pre-sale before completion, the date of the assignment is used to determine the tax eligibility. Related Party Transactions If a property is purchased from a related party, the ownership period can be "inherited" from the previous owner. Example: Michael buys a property from his father, who originally purchased it in 2020. Michael is deemed to have purchased the property in 2020 for tax purposes, potentially exempting him from the BC Home Flipping Tax. How the Tax is Calculated The tax is calculated based on the net taxable income from the sale. Here’s how it works: Determine the number of days the property was owned. Apply the corresponding tax rate (20% for properties sold within 365 days, decreasing thereafter). Subtract eligible deductions, such as the primary residence deduction if applicable. Example: Purchase Date: May 1, 2023 Sale Date: January 31, 2025 Days Owned: 642 days Since the ownership is less than 730 days, the profit is taxed at a rate corresponding to the holding period. Filing a BC Home Flipping Tax Return Filing a return is mandatory if: You sell a property within 729 days and do not qualify for an automatic exemption. Your exemption requires submission of supporting documentation. Returns must be filed within 90 days of the sale. Failure to file could result in penalties and interest. Impact on the Real Estate Market The BC Home Flipping Tax could lead to: Reduced speculative activity: Potential flippers may reconsider short-term transactions due to higher costs. More stable housing prices: By discouraging quick resales, the government aims to stabilize prices and improve access for long-term buyers. Increased due diligence: Buyers and sellers must carefully assess their timelines to avoid unexpected tax liabilities. Conclusion: What Homeowners and Investors Should Know The BC Home Flipping Tax represents a significant change in BC’s real estate landscape. Homeowners should be mindful of the 730-day rule when planning property sales to avoid unexpected tax obligations. Investors must evaluate their strategies, particularly for pre-sale contracts and short-term holdings. Staying informed about exemptions, filing requirements, and potential deductions is essential for navigating this new tax. For more updates on BC’s real estate regulations, keep an eye on government announcements and consult with real estate professionals. Disclaimer: The information provided is for general informational purposes only and should not be considered financial or legal advice. Consult a professional for guidance tailored to your specific situation.

December Reflects Seasonal Calm in Victoria’s Housing Market The Victoria real estate market reflected typical seasonal trends this December, with 421 properties sold in the region. This represents a 28% increase compared to the 329 sales in December 2023, yet a 23.6% decline from November 2024’s sales figures. The decrease aligns with expected patterns during the holiday season when buyers and sellers often pause their activity. Sales Breakdown: Condominiums: 135 units sold, reflecting a 25% increase year-over-year. Single-Family Homes: 191 units sold, up 20.9% from December 2023. Laurie Lidstone, 2024 Victoria Real Estate Board Chair, reflected:"2024 was a fairly calm year for local real estate. This kind of market stability benefits consumers by creating more predictability. Prices have remained relatively level for the past two years, making transactions more manageable and less stressful for buyers and sellers. Even with some fluctuations, we’ve seen strong consumer confidence throughout the year." Annual Summary and Market Inventory A total of 6,893 properties were sold throughout 2024—an 11% increase compared to the 6,207 properties sold in 2023, marking a year of increased sales despite economic uncertainty and evolving market conditions. The number of active listings at the end of December 2024 was 2,290, down 19.3% from November 2024 but up 7.4% from the 2,132 listings available at the end of December 2023. Lidstone added:"While we had more months with over 3,000 listings in 2024 than in recent years, overall inventory is still lower than historical averages. If demand increases significantly in 2025 without corresponding inventory growth, we could return to a market with upward pressure on prices. This is why the Victoria Real Estate Board continues to advocate for gentle density development to meet future housing needs." Pricing Trends Single-Family Homes:In December 2024, the MLS® HPI benchmark value for a single-family home in the Victoria Core was $1,306,400, representing a 2.7% increase from $1,272,000 in December 2023 and a 0.3% rise from $1,302,900 in November 2024. This steady increase reflects a more balanced pricing environment following the volatility seen in previous years. Condominiums:The benchmark value for a condominium in the Victoria Core was $547,800 in December 2024, a 1.6% decrease compared to $556,500 in December 2023. However, it showed a 0.6% increase from $544,400 in November 2024. The condominium market continues to adjust as buyers prioritize more affordable options amid economic pressures. Broader Insights:Single-family home prices saw moderate growth, while the condominium market remains more flexible, creating opportunities for budget-conscious buyers. With stable inventory levels, both buyers and sellers can navigate transactions with greater confidence. Factors Influencing the Market and Looking Ahead The real estate market is shaped by a range of factors, from government policy changes to economic shifts. Recent measures—such as extended amortization periods for first-time buyers and updates to property transfer tax thresholds—have improved housing accessibility and may encourage more buyers to enter the market in 2025. Chair Lidstone emphasized:"We’re optimistic that consistent interest rates will continue to support stability in 2025, enabling more buyers to feel confident making a move. However, the market remains complex, influenced by local, national, and global factors." With inventory remaining below long-term averages, the need for sustainable development remains at the forefront of housing discussions. If you’re considering buying or selling in 2025, connecting with your local REALTOR® will ensure you have the right strategy tailored to your goals. For more detailed market insights, visit the Victoria Real Estate Board’s current statistics page.

November Brings Balanced Conditions to Victoria's Real Estate The Victoria real estate market continued to demonstrate stability this November. A total of 551 properties were sold, reflecting a 39.8% increase compared to the 394 sales recorded in November 2023. However, sales dropped by 15.7% compared to October 2024, consistent with typical seasonal trends. Sales Breakdown: Condominiums: 186 units sold, up 55% year-over-year. Single-Family Homes: 263 units sold, up 36.3% year-over-year. Laurie Lidstone, 2024 Victoria Real Estate Board Chair, observed: "I've found that buyers and sellers are feeling optimistic right now. With the steady decrease we've seen in interest rates and the continued balance in the market, consumers feel more empowered to make decisions around home ownership, knowing they have a stable real estate environment to navigate." Inventory and Market Conditions At the end of November 2024, there were 2,836 active listings, a 10.3% decrease from October but a 7.3% increase from November 2023. Lidstone added: "Though inventory dipped below three thousand listings, availability is far better than in recent years. As the holidays approach, seasonal factors are evident, but the momentum from November could carry into December. If you’re considering a new home for the holidays, connect with your local REALTOR® to plan your next move." Pricing Trends Single-Family Homes:The MLS® HPI benchmark value for a single-family home in the Victoria Core in November 2024 was $1,302,900, reflecting a 1% increase from November 2023, when the benchmark was $1,290,100. This marks a slight gain from October 2024’s benchmark of $1,300,200. Year-Over-Year Context: This modest increase suggests a more stable pricing environment for single-family homes after a period of fluctuation in 2023. Monthly Trends: November’s small upward tick is consistent with a balanced market, showing demand remains steady even as sales volume slows seasonally. Condominiums:The benchmark value for a condominium in the Victoria Core was $544,400 in November 2024, a 4.7% decrease from November 2023’s value of $571,300 and down from $547,800 in October 2024. Year-Over-Year Context: The decline in condominium values reflects ongoing affordability adjustments in this sector as buyers prioritize cost-effective options. Monthly Trends: The slight drop from October indicates the season’s impact on demand, as buyers potentially pause their searches amid holiday planning. Broader Insights:While the single-family home market has seen modest price growth, the condominium market continues to adjust, providing opportunities for buyers seeking affordability. Both markets, however, benefit from the stable inventory levels, making it easier for buyers to find homes within their budgets. Looking Ahead to the Winter Market The steady sales activity and balanced inventory create a favorable environment for both buyers and sellers. With interest rates trending downward and stable pricing, December may offer continued opportunities for those in the market. For tailored insights and assistance, connect with your local REALTOR® to navigate Victoria’s real estate market confidently. For more detailed statistics and market updates, visit the Victoria Real Estate Board.