At our Video Tax News Tax Update seminars last year (this year's are open for registration, by the way), we had a few people ask about the impact of the BC Home Flipping Tax that applies on sales of residential real estate within two years of acquisition.
I requested a Technical Interpretation on the matter, and received the attached response from CRA back in mid-June, but I have not seen it released to the tax services yet. Apparently it is hard to scrub my name, as there's nothing else that should need redaction (and really, my name could be disclosed too, but I know CRA has policies they have to follow). I am following Ryan Minor's example and posting this so the tax community can have this information a bit faster. Please feel free to share it with your own networks (like anything posted on social media).
CRA's view is that this tax has no income tax impact - it is not deductible, nor is it a cost incurred to dispose of the asset. Their reasoning is well set out in the Interpretation itself. Owners of BC real estate, and their advisors, should be alert to this possible cost, up to 20% of any gains, on sale of BC residential real estate owned for under two years.
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Hugh Neilson
Kingston Ross Pasnak LLP
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