In recent years, several public policy measures have been introduced to address the short-term holding of property for profit, commonly known as "property flipping," which may or may not involve renovations.
The Government of Canada introduced a measure on January 1, 2023, in which the profit from property flipping is fully taxable as business income if the residential property is sold within the first year of possession (with some exceptions). The British Columbia government also announced a home flipping tax, which will take effect on January 1, 2025. This tax will apply to properties sold within one year of possession and to properties sold from one to less than two years after possession with a decreasing rate.
The analysis below examines the flipping of residential properties purchased from 2019 to 2021 in British Columbia. "Property flipping" refers here to the purchase and resale of residential property within one year of possession. Based on this definition, residential properties can be flipped by owners who make no improvements to the house, by investors who renovate to seek capital gains or by individuals who need to sell quickly because of changing life circumstances such as a death, divorce or job change.
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