How the BC Home Flipping Tax Works on Presales

For properties sold within two years of acquisition, the BC home flipping tax applies to the profit from the sale. However, the two-year window doesn’t start when the property is completed; it starts from the date you signed the presale contract. This means that:

• If you sign a presale contract and hold it for two years, you could sell the property immediately upon completion without paying the BC flipping tax.
• For example, if construction takes two years, by the time the property is complete, you would have already passed the two-year window, and no flipping tax would apply.

Why This Strategy Works

The presale strategy works because the flipping tax doesn’t reset once the property is completed. It continues to count from the day the contract was signed. By using this method, you can bypass the tax that would normally apply if you bought and sold a completed home within two years.

Federal Home Flipping Tax Considerations

While the BC flipping tax may not apply to presales held for over two years, the federal home flipping tax could still affect you if you sell the property within 12 months of acquiring it. The federal tax treats profits from sales within the first year as business income, which means 100% of the profit is taxable.

Exemptions to Consider

Both the federal and provincial flipping taxes offer exemptions, including:

• Death
• Divorce
• Job relocation
• Illness

In addition, builders adding to the housing supply—such as those constructing multiplexes or additional units like basement suites—can often be exempt from the provincial flipping tax.