A Comprehensive Guide to Real Estate Taxes in British Columbia
Buying or selling real estate in British Columbia (BC) is a major financial decision, especially in highly sought-after areas like Victoria, Saanich, and Oak Bay. Beyond the property price itself, various federal and provincial taxes can significantly impact your transaction. Being aware of these taxes ensures compliance, helps you avoid unexpected costs, and allows for informed decision-making.
In this detailed guide, we’ll explore the various taxes that homebuyers and sellers may encounter in BC. By understanding how these taxes work, you can better plan for their financial impact and make strategic decisions in the real estate market.
1. Underused Housing Tax (UHT)
Introduced in January 2022, the Underused Housing Tax (UHT) is a federal tax designed to encourage the use of residential properties and address housing affordability issues.
Who Pays?
Non-residents, foreign corporations, and certain Canadian entities.
Tax Rate:
1% of the property’s assessed value.
Exemptions:
Properties used as a principal residence.
Properties rented out for at least 180 days per year.
Properties undergoing major renovations or owned by a deceased individual.
Filing Requirement: Even if exempt, affected property owners must file an annual UHT return to avoid penalties.
Impact on Victoria, Saanich, and Oak Bay: These areas are popular for vacation and secondary homes, making them particularly relevant for UHT compliance. Non-resident owners should carefully assess their obligations.
2. Goods and Services Tax (GST)
The Goods and Services Tax (GST) is a federal tax that applies to the purchase of new or substantially renovated residential properties in Canada. Unlike resale homes, which are typically exempt, newly built homes, pre-construction properties, and major renovations are subject to a 5% GST charge.
Who Pays GST on Real Estate?
✅ Buyers of new construction homes – If you purchase a brand-new home, condo, or townhome from a builder, GST applies.
✅ Buyers of substantially renovated homes – If a home has been renovated by at least 90%, it is considered "new" for tax purposes.
✅ Pre-construction purchases – If you buy a pre-sale condo or home directly from a developer, GST applies upon completion.
✅ Short-term rental properties – If you buy a property for short-term rentals (e.g., Airbnb), you may have to pay GST and charge GST on rental income.
GST Rate and Costs
The standard GST rate is 5% of the purchase price.
📌 Example:
You purchase a new home for $500,000.
The GST owed is $25,000 (5% of $500,000).
The total purchase price becomes $525,000 unless the builder includes GST in the list price.
GST Rebates: How to Reduce the Cost
Buyers may be eligible for a partial rebate on the GST, depending on the price of the home.
✅ New Housing Rebate (for personal use)
Full rebate: If the home is priced at $350,000 or less, you can receive a 36% rebate on the GST, effectively reducing it to 3.2% instead of 5%.
Partial rebate: Homes priced between $350,000 and $450,000 qualify for a reduced rebate.
No rebate: Homes priced above $450,000 do not qualify for a rebate.
📌 Example of a Rebate:
If you buy a new home for $400,000, the GST is $20,000.
You qualify for a partial rebate of $6,000, reducing your GST cost to $14,000.
✅ Rental Rebate (for long-term rentals)
If you purchase a new home to rent out as a long-term rental, you may qualify for a GST rebate similar to the personal use rebate.
The rebate is available only if the home is rented for at least one year.
How GST Affects Buyers and Sellers
🔹 For Buyers:
If you're purchasing a new home, be aware that GST is added on top of the purchase price unless the builder includes it in the final cost.
If you qualify for a GST rebate, you must apply for it after purchase—it is not automatically deducted at closing.
🔹 For Sellers:
If you sell a newly built home or extensively renovated property, you may be responsible for remitting GST to the CRA.
If you sell a property that was previously used for short-term rentals, the sale may be subject to GST, depending on its use.
Final Thoughts
GST can add a significant cost to purchasing a home in BC, especially in markets like Victoria, Saanich, and Oak Bay, where new construction is common. Understanding when GST applies, how much it costs, and whether you qualify for a rebate is essential for making informed real estate decisions.
If you’re purchasing a new home or investment property, consult with a real estate lawyer or accountant to ensure you understand the tax implications and explore any potential rebates or exemptions.
3. Anti-Flipping Tax
Introduced in 2023, the Anti-Flipping Tax is a federal measure designed to reduce speculative real estate transactions by discouraging short-term property flipping. The tax aims to stabilize the housing market by preventing rapid property turnover that inflates home prices and limits affordability for long-term buyers.
How Does the Anti-Flipping Tax Work?
The tax applies to profits earned from selling a property within 12 months of purchasing it. Instead of being taxed as a capital gain, which benefits from a 50% inclusion rate, the profit is fully taxed as business income—meaning 100% of the gain is subject to taxation at the seller’s marginal income tax rate.
This change can result in a significantly higher tax burden for short-term sellers.
📌 Example of Tax Impact:
A property is purchased for $800,000 and sold for $1,000,000 within 8 months.
The profit of $200,000 is fully taxed as business income rather than capital gains.
If the seller is in the 40% tax bracket, they owe $80,000 in taxes (40% of $200,000).
Under previous capital gains rules, they would have been taxed on only $100,000 (50% of the gain), resulting in $40,000 in taxes.
The Anti-Flipping Tax effectively doubles the tax owed on the profit.
Who Does This Tax Apply To?
The Anti-Flipping Tax applies to:
Individuals selling residential property within 12 months of purchasing it.
Canadians and non-residents alike.
Primary residences, investment properties, and vacation homes.
Are There Any Exceptions?
Yes. The government recognizes that some unforeseen life events may force a homeowner to sell within a year. In these cases, the tax does not apply if the sale is due to:
✅ Death – If the seller or an immediate family member passes away.
✅ Divorce or Separation – If the seller separates from a spouse and has lived apart for at least 90 days.
✅ Job Relocation – If the seller moves at least 40 km closer to a new place of work.
✅ Serious Illness or Disability – If the seller or an immediate family member develops a serious medical condition requiring relocation.
✅ Insolvency or Financial Hardship – If the seller can no longer afford the property due to financial difficulties.
✅ Expropriation or Natural Disaster – If the property is expropriated by the government or becomes uninhabitable due to fire, flood, or other disasters.
Sellers must provide evidence of these circumstances to qualify for an exemption.
How Does the Anti-Flipping Tax Impact Buyers and Sellers?
🔹 For Buyers: This tax encourages buyers to hold onto properties for longer periods, especially if purchasing for investment purposes. Buyers should carefully consider long-term ownership plans before purchasing.
🔹 For Sellers: Those considering selling within a year of purchase should evaluate whether an exemption applies or prepare for a higher tax burden. Investors looking for quick flips may need to adjust their strategies.
Final Thoughts
The Anti-Flipping Tax is one of several policies aimed at stabilizing the Canadian housing market and discouraging speculation. Whether you’re a buyer, investor, or homeowner, understanding the tax implications of short-term property sales can help you make informed real estate decisions. If you're considering selling a property within 12 months, it’s essential to plan ahead and consult with a tax professional to explore your options.
4. Canadian Non-Resident Withholding Tax
The Canadian Non-Resident Withholding Tax is a federal tax that applies when a non-resident sells real estate in Canada. Since non-residents do not regularly file Canadian tax returns, the Canada Revenue Agency (CRA) requires buyers to withhold a portion of the sale price to ensure the government collects any applicable taxes on capital gains.
Who Pays?
This tax applies only to non-residents of Canada who are selling real estate. However, it is the buyer's responsibility to withhold and remit the tax to the CRA, which can impact both parties in a transaction.
Withholding Tax Rates
25% of the gross sale price for most properties.
50% of the gross sale price for Canadian rental or business properties.
✅ Example:
A non-resident seller sells a property in Victoria for $1.5 million.
The buyer must withhold 25% of the sale price, which equals $375,000, and remit it to the CRA.
However, the actual tax owed could be much lower depending on the seller’s capital gains and deductions.
How to Reduce the Withholding Amount
Non-residents can apply for a CRA Clearance Certificate (Form T2062) to reduce or eliminate the withholding amount.
📌 Process:
1️⃣ The seller applies for the Clearance Certificate within 10 days of closing.
2️⃣ If approved, the CRA calculates the actual capital gains tax owed rather than applying the full 25% withholding rate.
3️⃣ Once the certificate is issued, the buyer can release the excess withheld funds back to the seller.
⚠️ Without this certificate, the buyer must remit the full withholding amount to the CRA.
Capital Gains Tax for Non-Residents
The withholding tax is not the final tax obligation. The non-resident seller must file a Canadian tax return for the year of the sale to report the actual capital gains. If the withholding tax was higher than the actual tax owed, the seller may receive a refund.
Impact on Buyers and Sellers
🔹 For Buyers: Since the buyer is legally responsible for withholding and remitting the tax, they should ensure the seller applies for a Clearance Certificate to avoid complications.
🔹 For Sellers: Non-resident sellers should apply for the Clearance Certificate as early as possible to avoid unnecessary delays in receiving sale proceeds.
Final Thoughts
The Canadian Non-Resident Withholding Tax ensures that non-residents pay taxes on property sales, but it can be significantly reduced with proper planning. If you’re a non-resident looking to sell property in BC, consulting a real estate lawyer or tax specialist can help streamline the process and maximize your post-sale proceeds.
5. Property Transfer Tax (PTT)
The Property Transfer Tax (PTT) is a significant one-time tax levied by the BC provincial government on all real estate transfers. It applies whenever a property changes ownership, whether through purchase, inheritance, or gifting (with some exemptions).
How is PTT Calculated?
PTT is calculated as a percentage of the property’s fair market value at the time of transfer. As of 2025, the tax rates are:
1% on the first $200,000 of the purchase price.
2% on the portion between $200,000 and $2 million.
3% on the portion between $2 million and $3 million.
5% on any amount exceeding $3 million.
Example Calculation:
For a property purchased at $1.5 million, the PTT breakdown is:
1% on the first $200,000 = $2,000
2% on the next $1,300,000 = $26,000
Total PTT = $28,000
PTT Exemptions & Rebates
There are specific exemptions and rebates that may apply to reduce or eliminate PTT costs, particularly for first-time homebuyers and those purchasing newly built homes.
First-Time Homebuyer Exemption:
Eligible first-time buyers may qualify for a full exemption on homes priced up to $835,000 and a partial exemption for homes up to $860,000.
To qualify, buyers must:
Be a Canadian citizen or permanent resident.
Have lived in BC for at least one year prior to the purchase.
Use the purchased home as their primary residence.
Newly Built Home Exemption:
Buyers of newly constructed homes may receive a full exemption from PTT for properties valued up to $1.1 million, with a partial exemption available for homes up to $1.15 million.
Family Transfers:
Transfers between spouses or direct family members (such as parents to children) may qualify for a PTT exemption under certain conditions. This often applies to inherited properties or when adding a spouse to the title.
Relevance for Buyers in Victoria, Saanich, and Oak Bay
In these high-demand markets, where home prices frequently exceed $1 million, PTT can be a significant expense. Buyers should be prepared for this cost and explore exemption opportunities where applicable. For example:
A $1.2 million home would incur a $22,000 PTT.
A first-time buyer purchasing an $850,000 home might still qualify for a partial exemption, reducing their tax burden.
A newly built $1 million home could be fully exempt from PTT, leading to considerable savings.
6. BC Home Flipping Tax (Effective January 2025)
The BC Home Flipping Tax is a new provincial tax designed to discourage short-term real estate speculation by taxing profits from properties sold within two years of purchase. Set to take effect on January 1, 2025, this tax targets individuals and corporations who buy and resell homes quickly for profit, a practice that has contributed to rising home prices and reduced housing affordability.
How Does the BC Home Flipping Tax Work?
The tax applies to profits earned on the sale of residential properties within two years of purchase. The rate is highest for homes sold within one year and decreases on a sliding scale until the 24-month mark, after which it no longer applies.
Tax Rates (Effective 2025)
20% tax on profits if the property is sold within 12 months of purchase.
10% tax on profits if the property is sold between 12 and 24 months after purchase.
No tax after 24 months (2 years).
📌 Example of Tax Impact:
You purchase a home for $900,000 and sell it six months later for $1,100,000.
The profit of $200,000 is subject to the 20% flipping tax.
You would owe $40,000 in tax (20% of $200,000) in addition to any other applicable taxes (such as capital gains tax).
Who Does This Tax Apply To?
✅ Individuals and corporations who sell a home within 24 months of buying it.
✅ Applies to detached homes, condos, townhouses, and some vacant land zoned for residential use.
✅ Non-residents and foreign buyers are also subject to the tax.
🔹 Who is Exempt?
The government has recognized that some homeowners may need to sell within two years due to unforeseen life circumstances. In these cases, the flipping tax does not apply if the sale is due to:
✅ Death of the homeowner or immediate family member.
✅ Divorce or separation, provided the spouses have been living apart for at least 90 days.
✅ Serious illness or disability requiring relocation.
✅ Job loss or relocation where the owner moves at least 40 km closer to a new job.
✅ Financial hardship, such as bankruptcy or foreclosure.
✅ Expropriation by the government (e.g., if the property is taken for public infrastructure projects).
Sellers must provide evidence of these circumstances to qualify for an exemption.
How Does the BC Home Flipping Tax Affect the Market?
🔹 For Buyers:
Investors and speculators will need to hold properties longer to avoid the tax.
Buyers purchasing a home with the intent to quickly resell should consider the tax implications before proceeding.
🔹 For Sellers:
Homeowners considering selling within two years of purchase should evaluate whether they qualify for an exemption or prepare for additional tax costs.
Developers and investors may adjust their strategies to account for the new tax, potentially affecting new construction pre-sales.
7. Speculation and Vacancy Tax (SVT)
The Speculation and Vacancy Tax (SVT) is a provincial tax in British Columbia designed to increase the availability of rental housing by discouraging property speculation and keeping homes from sitting vacant. If you own a residential property in a designated taxable region, such as Victoria, Saanich, Oak Bay, or Nanaimo, and it is not your primary residence or a long-term rental, you may be required to pay this tax.
Tax Rates (2024)
2% of the property’s assessed value for foreign owners and satellite families (households where the majority of income is earned outside Canada).
0.5% of the property’s assessed value for Canadian citizens and permanent residents who are not satellite families.
For example, a foreign owner of a $1.5 million vacant home in Victoria would owe $30,000 per year, while a Canadian citizen would owe $7,500.
Who Needs to Pay?
The SVT applies to property owners in taxable regions of BC. However, many homeowners qualify for exemptions, meaning they won’t have to pay the tax—but they must file a declaration each year by March 31st to confirm their exemption.
Exemptions
You may be exempt from the SVT if your property meets any of the following criteria:
✅ Primary Residence – The home is your main residence.
✅ Long-Term Rental – The home is rented for at least six months of the year (in increments of 30+ days).
✅ Newly Built Homes – Homes that are new and unsold as of December 31st are exempt for the first year.
✅ Medical or Hardship Exemptions – If you were unable to live in or rent out the home due to medical issues, legal restrictions, or major renovations, you may qualify.
✅ Separation or Divorce – If you’re going through a divorce or separation, you may be exempt.
✅ Inheritances & Estates – If you inherited the home, you may qualify for an exemption.
✅ Work-Related Exemption – If you must live elsewhere for work but still own a home in BC, you may qualify.
✅ Strata Rental Restrictions – If your strata prohibits rentals, you may be exempt (though this exemption is being phased out).
⚠️ Important: Even if you qualify for an exemption, you must still file a declaration annually before March 31st. Failure to do so could result in being taxed at the full 2% rate.
Impact on Buyers and Sellers
🔹 For buyers: If you're purchasing a home in BC and do not plan to live in it full-time or rent it out, you should factor in the SVT as an additional cost.
🔹 For sellers: The SVT may affect demand, particularly from out-of-province and foreign buyers who might be deterred by the extra tax burden. However, buyers looking for rental investment properties may see opportunities.8. Foreign Buyer Tax (Paused until 2025)
Previously, foreign buyers had to pay 20% of the purchase price in designated areas, including Victoria, Saanich, and Oak Bay.
9. Property Tax
Property tax is an annual municipal tax that property owners must pay to fund essential public services such as schools, emergency services, road maintenance, and infrastructure development. In British Columbia, property tax rates vary by municipality and are based on the assessed value of the property as determined by BC Assessment.
How is Property Tax Calculated?
Each municipality sets its own tax rate, known as the "mill rate", which is applied to the assessed value of your property. The total amount due is a combination of municipal taxes, provincial school taxes, and other levies.
📌 Example Calculation (Victoria, BC)
Your home is assessed at $1,200,000.
The estimated municipal tax rate is 0.4% and the provincial school tax rate is 0.2%.
Total property tax = (0.4% + 0.2%) × $1,200,000 = $7,200 per year.
Additional Charges:
Some municipalities add extra levies for services such as garbage collection, transit, or regional development projects.
💡 Tip: You can find your exact property tax rate by checking your municipality’s website or BC Assessment.
Key Property Tax Components in BC
✅ Municipal Property Tax – Funds local government services, including fire, police, parks, and road maintenance.
✅ Provincial School Tax – Helps fund public education and is set by the BC government.
✅ BC Assessment Authority Levy – Covers the cost of property assessments conducted by BC Assessment.
✅ Regional District Levies – Some properties are subject to additional levies for regional infrastructure projects.
✅ Additional Levies – May apply for transit (e.g., BC Transit in Victoria), hospitals, or water services.
Property Tax Exemptions & Rebates
While property taxes are mandatory, there are several exemptions and rebates available:
✅ Home Owner Grant (for BC Residents)
If you live in your home as your primary residence, you may qualify for the Home Owner Grant, which reduces your property tax bill.
The grant is $570 for most homeowners and $770 for seniors, veterans, and people with disabilities.
Eligibility: Available for properties with an assessed value up to $2,125,000 (as of 2024).
✅ Property Tax Deferment Program
Seniors (55+), widows, and people with disabilities can defer property taxes through the BC Property Tax Deferment Program.
Parents of dependent children under 18 may also qualify.
This program allows eligible homeowners to pay their property taxes later, with low-interest financing from the government.
✅ Exemptions for Non-Profit and Agricultural Properties
Certain non-profits, religious organizations, and agricultural properties may qualify for full or partial property tax exemptions.
How Property Taxes Impact Buyers and Sellers
🔹 For Buyers:
When purchasing a home, you should factor property taxes into your ongoing costs.
Higher-value properties in Victoria, Saanich, and Oak Bay will have higher annual tax bills.
If buying an investment property, consider tax rates and rental income potential when budgeting.
🔹 For Sellers:
If you sell a home mid-year, property taxes are typically prorated between the buyer and seller at closing.
If taxes have been prepaid for the year, the buyer reimburses the seller for their portion.
🔹 For Investors:
Short-term rental properties (e.g., Airbnb) may face higher tax rates or additional levies depending on local regulations.
Some municipalities apply a vacancy tax on properties left empty for extended periods.
10. Capital Gains Tax
The Capital Gains Tax is a federal tax that applies when selling an investment property, secondary residence, or any real estate that is not a primary residence. Unlike some other real estate taxes, capital gains tax is not a fixed percentage—instead, it is based on your profit (capital gain) and your personal income tax rate.
If you sell a property for more than you originally paid for it, the profit is considered a capital gain, and 50% of that gain is taxable at your marginal tax rate.
How is Capital Gains Tax Calculated?
1️⃣ Determine the Capital Gain
Selling Price − Original Purchase Price − Eligible Expenses = Capital Gain
2️⃣ Apply the 50% Inclusion Rate
50% of the Capital Gain is taxable.
3️⃣ Apply Your Income Tax Rate
The taxable portion of the capital gain is added to your income and taxed at your marginal tax rate (based on total income for the year).
📌 Example:
You bought a rental property in Victoria for $1,000,000 five years ago.
You sell it for $1,500,000, making a capital gain of $500,000.
50% of the gain ($250,000) is taxable.
If your marginal tax rate is 40%, you would owe $100,000 in capital gains tax (40% of $250,000).
Exemptions and Ways to Reduce Capital Gains Tax
While capital gains tax applies to most investment and secondary properties, there are strategies and exemptions to reduce or defer the tax burden:
✅ Primary Residence Exemption
If the property was your primary residence for the entire time you owned it, you do not have to pay capital gains tax when you sell it.
This exemption does not apply to rental properties or vacation homes.
✅ Capital Gains Reserve (Spreading the Tax Over Time)
If you sell a property through a payment plan (e.g., the buyer pays you over several years), you can spread the capital gain over up to five years, reducing your tax burden each year.
✅ Reinvesting Profits (Deferral Strategies)
Some investors use real estate reinvestment strategies to defer or minimize taxes, such as reinvesting proceeds into a new investment property.
✅ Capital Loss Offsetting
If you have other investment losses, you can use them to offset capital gains, reducing the tax you owe.
This applies to real estate, stocks, or other investments that were sold at a loss.
✅ Using RRSPs and TFSAs for Tax Efficiency
Capital gains tax does not apply to investments held within a TFSA.
Selling a property and reinvesting profits in an RRSP could lower taxable income in the same year.
How Capital Gains Tax Affects Homeowners and Investors
🔹 For Homeowners:
If you're selling a primary residence, capital gains tax does not apply due to the Primary Residence Exemption.
If you're selling a vacation home or second property, be aware that capital gains tax will be due.
🔹 For Investors:
Real estate investors should plan ahead to reduce the tax impact on rental or investment properties.
Holding a property long-term and using tax strategies can help minimize capital gains tax.
🔹 For Sellers in BC’s High-Value Markets (Victoria, Saanich, Oak Bay)
Many properties in Greater Victoria and Vancouver Island have appreciated significantly over the years.
If you’re selling a home that has gained value, consulting a tax professional can help you strategize tax-efficient selling options.
Final Thoughts
Navigating the complex tax landscape in BC real estate requires careful planning and professional advice. Whether you’re buying a home in Victoria, selling an investment property in Saanich, or managing a vacation home in Oak Bay, understanding these taxes will help you make informed decisions and avoid costly surprises.
If you’re considering buying or selling, reach out to a local realtor or tax professional to ensure you’re fully prepared for the financial implications of your transaction. With the right guidance, you can confidently navigate the BC real estate market and achieve your real estate goals.