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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.

https://news.gov.bc.ca/releases/2024FIN0019-000462 

Changes to Rules Governing Short-Term Rentals
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Today the provincial government announced changes to the legislation governing short-term rentals. The changes are fairly comprehensive and cover the majority of aspects governing short-term rentals. The new regulations are intended to give municipalities and the province more power to regulate short-term rentals across the province. The intended changes are as follows:

Principal Residences Only
• As of May 2024, all short-term rentals in communities with populations 10,000 or over will be limited to principal residences only.
• Designated Resort communities, communities with populations under 10,000 will be exempt from the principal residence rule but can choose to implement if they wish to.
• In the interior of the province the communities included under this principal residence rule will be:
o Kelowna
o Kamloops
o Vernon
o Penticton
o West Kelowna
o Fort St. John
o Cranbrook
o Salmon Arm
o Lake Country
o Dawson Creek
o Summerland
o Coldstream
o Nelson

Fine Increases
• Fines for short-term rentals owner/operators breaking local municipal by-law rules will increase to $3000 per infraction, per day.

• Like municipalities, Regional Districts will be given the power to set the maximum penalty of $50,000 for severe contraventions of by-laws.

Data Sharing and Enforcement
• Short-term rental platforms will be required to share data with municipalities to improve local enforcement.

• It will also be mandatory for platforms to share information with the Province, including information about short-term rental hosts. The Province will have the ability to share this data with municipalities to coordinate regulation.

• Short-term rental platforms will be required to include businesses license and registration numbers on listings when they are required by a municipality.

• Regional Districts will be granted business regulation and licensing powers parallel to those of municipalities. This means Regional Districts will be able to require businesses, including short-term rental businesses, to obtain and maintain a business license to operate.

Non-Conforming Exemption
• The current exemption for short-term rentals operating in municipalities that restrict their use because they were operating prior to the by-law, often referred to as a non-confirming exemption, will be removed.

Provincial Registry and Enforcement Unit
• The province will create a short-term rental registry. Operators will be required to include a valid provincial registration number on their listings.
• Once established operators will have 3 months to register their companies and 6 months to register their units.
• A provincial enforcement unit will be established to issues orders and administer penalties.

Implementation is expected to be phased out throughout this year and 2024. The fines and bylaw powers will come into effect immediately upon royal assent of the bill. The principal residence rule, removing the non-conforming exemption and the requirement to display business licenses will come into May 2024. The provincial registry and data sharing requirements will come into effect summer to late 2024.

You can see the full government press release below.

https://news.gov.bc.ca/releases/2023HOUS0060-001598

MEDIA RELEASE

Local Residential Market Sales Trending Upwards Heading into Spring

KELOWNA, B.C. – April 6 th, 2023. Residential real estate market moving in a positive direction for spring as sales activity picks up after a slow start at the beginning of the year, reports the Association of Interior REALTORS® (the Association).

A total of 1,207 residential unit sales were recorded across the Association region in March representing a 37.2% decrease in sales compared to the same month last year, yet up compared to February’s 831 unit sales.

“The upwards movement in sales activity compared to the previous month is showing signs that market activity is on its way to recovering from the previous month’s slump, while still maintaining healthy market activity,” says the Association of Interior REALTORS® President Lyndi Cruickshank, adding that “a more balanced market allows both parties to confidently move forward with their real estate aspirations.”

New residential listings saw an increase over the previous month’s 1,579 with 2,442 new listings recorded, despite a 15.7% decrease within the region compared to March 2022. Overall inventory saw a healthy 61.1% uptick with 5,903 units currently on the market at the close of March. The highest percentage increase in active listings was recorded in the South Okanagan with a total increase of 81% compared to the same month last year.

“This is the highest volume of new listings we’ve had for some time now, indicating that we are heading in a positive direction,” notes Cruickshank, adding “while we’re not out of the woods yet, this will help provide more options to buyers and sellers.”

“The spring months usually witness a surge in market activity, and REALTORS® will certainly be instrumental in providing adequate information and support during this period. Whether you are a buyer or a seller, it’s always a good idea to work with a real estate professional who can assist you in navigating current market conditions,” says Cruickshank.

The benchmark price for single-family homes in the Central Okanagan, North Okanagan, South Okanagan and Shuswap/Revelstoke regions all saw decreases in year-over-year comparisons, with the highest percentage decrease for single-family homes in the Central Okanagan region coming in at $1,001,500. The townhome and condominium categories all saw decreases across the various sub-areas in the benchmark price with the exception of townhomes in the North Okanagan, which saw a 9.2% increase compared to March 2022.

Given the high stakes on such a significant financial transaction, home sellers and buyers can benefit from the knowledge and skills of a practiced REALTOR®. Contact your local REALTOR® to find out more about the real estate market and how they can help you achieve your real estate goals

The Association of Interior REALTORS® is a member-based professional organization serving approximately 2,600 REALTORS® who live and work in communities across the interior of British Columbia including the Okanagan Valley, Kamloops and Kootenay regions, as well as the South Peace River region.

The Association of Interior REALTORS® was formed on January 1, 2021 through the amalgamation of the Okanagan Mainline Real Estate Board and the South Okanagan Real Estate Board. The Association has since also amalgamated with the Kamloops & District Real Estate Association and the Kootenay Association of REALTORS®

For more information, please contact:
Association statistical information: Email media@interiorrealtors.com
Province-wide statistical information:
BCREA Chief Economist, Brendon Ogmundson, bogmundson@bcrea.bc.ca

About HPI
The MLS® Home Price Index (HPI) is the most advanced and accurate tool to gauge home price levels and trends by using benchmark pricing rather than median or average. It consists of software tools configured to provide time-related indices on residential markets of participating real estate boards in Canada.

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