Escaping the BC Home Flipping Tax: How to Avoid It by Purchasing a Presale

How to Escape the BC Home Flipping Tax with a Presale

Escaping the BC Home Flipping Tax: How to Avoid it by Purchasing a Presale

With BC’s new home flipping tax coming into effect on January 1, 2025, many investors and homeowners are looking for ways to avoid the tax. One strategy? Presale properties. Here’s how you can take advantage of presales to sidestep the BC home flipping tax.


What is a Presale Property?

A presale property is a home that is purchased before it is built. Buyers often sign a contract to purchase a unit that will be completed several months or years later. This gives the buyer time to plan financially while securing a property in a new development.

Presale Properties: Your Key to Avoiding the Flipping Tax

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.

Conclusion: Plan Your Investment Wisely

Buying a presale property can be a strategic way to avoid the BC home flipping tax, but it’s important to understand the timing and how federal taxes might still apply. For investors looking to sell soon after purchase, the presale strategy offers a way to legally bypass the tax while still profiting from BC’s real estate market.

Want help navigating these new tax rules or planning your next presale investment? As a 10-year Master Medallion member, associate broker, MBA candidate, and investment property specialist, I’m here to guide you through the complexities of real estate taxation and investment planning. Contact me today for expert advice and personalized strategies.

Looking to create your investment strategy? I can help with that.

Get in touch today and let me help you find just the right place. Click on the link  or  me at 604-376-3350 to get the process started. 

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ABOUT LIZ PENNER YOUR BEST LANGLEY REAL ESTATE AGENT

Liz Penner is a top-selling licensed real estate salesperson with the Fraser

Valley Real Estate Board and has been a top-selling realtor specializing in the residential resale of condos, townhomes, and houses for over a decade. Liz assists residents of the Langley and Surrey areas to sell real estate while looking out for the client’s best interests. Liz also helps first-time homebuyers, families, and repeat purchasers with their property search process, ensuring that her clients get access to the very best homes on the market while receiving excellent service ensuring that they find the perfect place to call home.

Liz holds a BBA in leadership and has completed a variety of specific training through the Fraser Valley Real Estate Board in the areas of selling strata properties, foreclosures, estate sales, and new construction properties. Liz is also well versed in POAs, the Strata Property Act, and more. If you are looking for a knowledgeable and professional real estate agent that is willing to do everything possible to ensure that you get top dollar for the sale of your home or to find the dream home you are looking for in the Surrey and Langley, BC areas then get in contact today.

If you are looking for a knowledgeable and professional real estate agent that is willing to do everything possible to ensure that you get top dollar for the sale of your home or to find the dream home you are looking for in the Surrey and Langley, BC areas then get in contact today.