Yesterday the provincial government tabled the legislation to enact the provincial flipping tax to go into effect January 1, 2025. The bill contains additional important details and clarifications related to the tax. They have been summarized below:
General Details:
• The flipping tax will apply to the taxable income on a property sold within 730 days of ownership. If the property is sold within 1 year the tax will be the full 20%, from 366 -729 days the tax will decrease on a pro-rated basis to zero.
• The tax applies to housing units, bare properties zoned for residential use and assignment sales or purchase contracts.
• The tax does not apply to property on First Nations Land .
• Properties purchased in 2023 and 2024 will be subject to the tax retroactively if sold within 730 days after January 1, 2025.
• The provincial flipping tax is separate and in addition to the federally administered anti-flipping rule.
Pre-sales and Assignments:
• For the purpose of the tax, people who have acquired a pre-sale contract will be considered to have acquired the property on the day they entered the contract.
• If you are assigned a pre-sale contract and close on the property, the date you were assigned the contract is considered the acquisition date for the purpose of the tax.
• Any profit gained from assigning a pre-sale contract will be subject to the flipping tax.
Exemptions:
• Exemptions for life circumstance such as death, divorce, illness, relocation for work, insolvency, etc. will be available.
• Exemptions for builders will be available such as if a housing unit is added to an existing property or property is purchased for the purpose of constructing buildings.
• Exemptions for certain entities such as registered charities, government, etc. are available.
The full list of exemptions and details can be found here
Primary Residence Deduction:
• Individuals who sell a primary residence within 730 days of ownership will be able to claim a deduction of $20,000 from their taxable interest if the property was their primary residence and they lived in it for at least 365 consecutive days before selling it.
