Home Flipping Tax Summary

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What is the Home Flipping Tax and how does it affect you?

As of January 1, 2025, British Columbia’s Residential Property (Short-Term Holding) Profit Tax Act, commonly known as the Home Flipping Tax, came into effect. The tax targets speculative real estate activity by taxing profits from the sale of residential properties held for less than 730 days. The tax applies not just to physical properties but also to the assignment of pre-sale contracts and includes individuals, corporations, trusts, and partnerships.

If you sell a property within 365 days of buying it, you will pay 20 percent tax on the profit. If you sell between 366 and 730 days, the tax rate gradually decreases to zero by day 730 determined by the following formula:

The profit is calculated as the sale price minus the purchase price and any improvement costs. A deduction of up to $20,000 is available if you lived in the home as your primary residence for at least 365 days. This deduction does not apply to pre-sale assignments.

There are exemptions. Some people and organizations do not need to pay or file, including charities, Indigenous nations, non-profits, and government organizations. Other exemptions, such as those for death, divorce, illness, job loss, or relocation, still require you to file a return but may reduce or eliminate the tax owed. Builders and developers will also be exempt if the property was held for construction or development.

Anyone who sells a property within two years must file a return within 90 days of the sale, even if they qualify for an exemption. Failure to file can lead to penalties.

TL;DR:

Who Does It Apply To?

  • Individuals, corporations, trusts, and partnerships
  • Sales of physical properties and assignment of pre-sale contracts

How Much Is the Tax?

  • 20% tax on profit if you sell within 365 days of purchase
  • Gradually decreases to 0% by day 730
  • Profit = Sale price – Purchase price – Improvement costs
  • Up to $20,000 deduction if the home was your primary residence for at least 365 days (does not apply to pre-sale assignments)

Are There Exemptions?

Yes, but you may still need to file:

  • Full exemptions (no tax, no filing): Charities, Indigenous nations, non-profits, government organizations
  • File required, possible reduction/elimination of tax: Death, divorce, illness, job loss, relocation
  • Builders/developers are exempt if the property was held for construction or development

Filing Requirements

  • If you sell within two years, you must file a return within 90 days of the sale, even if exempt.
  • Failure to file can result in penalties.

If you are selling or assigning property in 2025 or later,  you should seek a professional tax advisor or contact us for legal advice to understand the consequences and requirements of such transactions.

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Dog Bites In BC: One Bite Free?

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What happens if you have been bitten by a dog? What are the legal consequences for the dog owner? In British Columbia, a plaintiff who has been bitten by a dog can establish liability against the dog owner under the scienter doctrine, through negligence, or pursuant to the Occupiers Liability Act.

Under scienter, the law has developed to allow dogs “one bite free”. This is because it must be proven that the dog has a propensity for aggression. The law presumes that dogs are not naturally dangerous and that an owner should not be liable for the dog’s aggressive behaviour unless the owner was aware of such aggressive behaviour.

 Scienter places strict liability on the dog owner only if the plaintiff can establish the following three components:

  • the identity of the dog owner;
  • the dog had manifested a propensity to attack or bite mankind; and
  • the dog owner knew of their dog’s propensity.

The Court applied scienter in Prasad v Wepruk, 2004 BCSC 578 [Prasad]. In Prasad, a 77-year-old mailman was viciously attacked by a bouvier dog. The Court used the testimony of neighbours as evidence to determine that the dog had a propensity for aggression by appearing vicious while snarling and growling at the neighbours when they passed by. The Court concluded that the owner had knowledge of this propensity. As a result, the dog owner was liable.

If a plaintiff cannot establish the three requirements for scienter, the plaintiff can establish negligence on the part of the dog owner or the owner of the property where the injury took place if the plaintiff can prove:

  • the dog owner knew or ought to have known that the dog was likely to injure someone; and
  • the dog owner failed to take reasonable steps to prevent the injury.

In other words, was the dog attack reasonably foreseeable? In many cases, the courts determine the dog’s action was unexpected or that there was no evidence of the dog’s past aggression.

An action for damages may also be brought by a plaintiff pursuant to the Occupiers Liability Act. Similar to negligence, the plaintiff must establish that the dog owner or property owner knew or ought to have known that the dog was likely to be a risk, and that the owner failed to take reasonable steps to prevent such risk.

Other provinces have stricter laws respecting dog bites. In Ontario, once ownership of the dog is proven, the owner is liable for all injuries caused by the dog regardless of the owner’s knowledge of their dog’s aggressive propensity. In 2006, stricter laws were proposed in BC. The proposed laws would have removed the knowledge requirement, essentially making the scienter doctrine inapplicable. However, these laws were not passed. Thus, the “one bite free” principle prevails in BC.

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Estate Planning & Risks of Joint Tenancy

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Estate Planning – Considerations when Adding a Child as Joint Tenant to your Property

Many parents put their children on title to their residence as a form of estate planning. While this can help avoid probate fees and possibly assist with ease of administration of an estate, the case of Gully v. Gully, 2018 BCSC 1590 [Gully], demonstrates that parents must be careful when adding children onto title to their residence.

In Gully, a mother added her son as a joint tenant on title to her Burnaby property. She did so based on legal advice she received, including that her estate could avoid probate fees. She did not tell her son that he had been added as a joint tenant to title of the property.

In August of 2017, the son, and his company, consented to a judgment of $800,000.00 in favour of Ledcor Construction Limited (“Ledcor”). Ledcor discovered that the son was on title to the property and registered their certificate of judgment on the son’s undivided half interest in the property.

The mother sought a declaration, amongst other things, that the son held the property on a resulting trust for her estate. The court found that the son did not hold the property on a resulting trust for the estate and permitted Ledcor to retain their judgment on title, ultimately stating:

 [24]        Ms. Gully took a risk in registering her son as a joint tenant on her property. Whether she was properly advised of that risk is not before me. However, once she made the decision to register an interest in the Burnaby Property in Mr. Gully’s name, third party creditors of Mr. Gully became entitled to register judgments against Mr. Gully’s interest in the Burnaby property.

If you would like to book an appointment with any of our estate planning lawyers, please contact Heath Law LLP at
250-753-2202 or TOLL FREE: 1-866-753-2202.

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Personal Injury Damages – Avoiding Homeowner Liability

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As the weather becomes colder, it is important to be aware of the increased risks that result from the accumulation of snow and ice. In Canada, property owners and occupants have a responsibility to act reasonably to remove snow and ice to ensure that their property is not slippery or otherwise unsafe. The responsibility to remove snow and ice extends to the walkways in front of the occupier’s home.

What happens if someone falls?

If a person slips or trips on snow or ice that accumulated due to the owner/occupier’s negligence in failing to keep the property safe, he or she may sue for damages to recover the losses suffered. In order for a person who suffers a slip and fall on ice or snow to prove that the owner/occupier was negligent, he or she must show that the conduct of the owner/occupier fell below the accepted standard for clearing snow and ice. People walking on snowy or icy surfaces are also expected to take reasonable care by walking carefully and wearing reasonable footwear. If a person who suffers a fall was not acting reasonably, a Court may find that he or she was contributorily negligent and may reduce any damages awarded.

Removal of Snow or Ice?

Ensuring that your property is free of ice and snow can be challenging during the winter months, particularly when temperatures are changing quickly. However, an owner/occupier must only act reasonably in the circumstances to ensure that his or her property is safe, which means clearing snow and ice within a reasonable amount of time. Determining what is reasonable will depend on a number of factors, including typical weather conditions in the area and if the snow or ice was sudden or unexpected.

In addition to an owner/occupier risking liability for damages due to their negligence for failing to keep their property clear of snow or ice, they could also be exposed to a fine from the City/Municipality where the property is located.  Many cities have bylaws that prescribe specific time requirements for salting sidewalks and shovelling driveways or walkways. For example, in Nanaimo, British Columbia, owners/occupiers must remove snow and ice from walkways within 24 hours of the snow or ice accumulating.

Although a City may set certain time limit for snow or ice removal, a Court may still find an owner/occupier liable for damages if it concludes that the snow or ice should have reasonably been removed before the time period prescribed by the City. For this reason, it is important to be careful to diligently maintain your property and walkways during the winter months.

 

 

 

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My Rented Suite is Damaged – Do I Have to Pay Rent? Residential Tenancy Act

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You have signed a one-year lease for a basement suite. The top floor is also rented out by the same landlord to another tenant. You come home from work to find that water has come through the floor above and ruined a number of your personal items. Extensive work is required to return the suite to livable standards. The landlord begins this work by undertaking extensive repairs on the walls and ceiling. As a result, you cannot live in the suite. You move in with a friend and wait for the repairs to be completed. It is now the first of the month. Your landlord is asking for the rent.

Are you legally obligated to pay rent while you are not living in the suite?

As a renter, you are bound by the BC Residential Tenancy Act (the “Act”).  There are only 5 specific instances where a Tenant can refuse to pay the full amount of rent. A Tenant can refuse to pay the full amount of rent only when:

  • An Arbitration Board has given an order to reduce the rent;
  • The tenant has followed the proper procedure to claim money spent on emergency repairs;
  • The landlord has illegally increased the rent;
  • The landlord has overcharged for a pet or security deposit; or
  • The tenant and the landlord have agreed in writing to reduce the rent due to one of the other sections of the Act (e.g. ending the tenancy early).

Since your situation does not fall into one of the 5 categories, it appears that you would have to pay rent to your landlord. If you do not pay rent, the landlord is entitled to file a file a Notice which enables them to end the tenancy after 10 days. The landlord is able to file this notice the day after rent is due.

While it appears that you have to pay rent, there might be other options available to you. For example, 1 option is that you could file a claim for dispute resolution under the Act and seek a rent reduction.

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