Exemption for property sales between related persons
Last updated on December 2, 2024The following exemptions apply to property sales between related persons. You will still need to file a BC home flipping tax return but will not have to pay the tax if you meet the requirements.
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Exemption for related individuals
If you and the individual purchasing your property are considered related individuals, you will not have to pay the tax.
Individuals are considered related if they are connected by blood relationship, marriage, common-law partnership or adoption.
Example 1: If you purchased a property on June 1, 2024, and sold the property to your brother 18 months later, you are exempt from the BC home flipping tax.
Individuals are also considered related if immediately before the sale of a taxable property, all of the following are met:
- Each individual owned the property for a minimum 365 consecutive days
- The property includes a housing unit that each individual lived in as their primary residence while they owned the property
Example 2: Lee and Aaron, who are friends and not otherwise related, purchase a house together on September 1, 2025, and live in that house as their primary residence for the entire time they own the property together. If on December 31, 2026 (more than 365 consecutive days later), Lee decides to sell his interest in the house to Aaron, Lee will be exempt from the BC home flipping tax because Aaron and Lee meet the requirements for being related individuals.
Exemption for persons related to corporations
If a person (which for this exemption can be an individual, corporation or partnership but not a trust) sells a property to a related corporation, the person will not have to pay the tax. This exemption applies to sales that take place between:
- A person or group of persons and a related corporation
- Two related corporations
- A partnership and a related corporation
For the purposes of this tax, a group of persons consists of members that are all related to every other member of the group, or members that, in relation to a corporation, are all parties to a written agreement respecting the right to elect the directors of that corporation. All members in the group of persons need to be parties to the Contract of Purchase and Sale for the taxable property.
A person or group of persons and a related corporation
A corporation is related to a person or group of persons that controls the corporation. A person or group of persons controls the corporation when that person or group of persons has the right to elect the majority of the board of directors of the corporation.
Example: Three individuals collectively hold 51% of the voting shares of a corporation and have signed an agreement regarding the right to elect the directors of the corporation. The group of three individuals will have control of the corporation, meaning that the group will be related to the corporation.
Two related corporations
Two corporations are related if the corporations are controlled by the same person or group of persons, or one of the corporations is controlled by the other corporation.
Example 1: Alex owns all of the outstanding voting shares of Corporation A and Corporation B. If Corporation A purchases a property from Corporation B on December 1, 2025, and Corporation B originally purchased the property on March 1, 2025, Corporation B is exempt from the BC home flipping tax. Corporations A and B are related persons because they are each controlled by the same person, Alex.
Example 2: Corporation B owns 60% of the voting shares of Corporation C. If on January 1, 2026, Corporation B sells a property to Corporation C and Corporation B originally purchased the property on March 1, 2025, Corporation B is exempt from the BC home flipping tax. Corporations B and C are related persons because Corporations B controls Corporation C.
A new corporation and any predecessor corporations are related if the new corporation was formed as a result of the amalgamation of 2 or more predecessor corporations.
Example 3: If Corporation C is formed as a result of Corporations A and B amalgamating, Corporation C will be related to Corporation A and Corporation B.
A partnership and a related corporation
A partnership can be related to a corporation it controls. A partnership may also cause two corporations to be related if both corporations are controlled by that partnership or a group of persons that includes that partnership.
Example: A partnership owns 55% of the outstanding voting shares of Corporation A and 75% of the outstanding voting shares of Corporation B. The partnership will be related to Corporations A and B because the partnership controls each of these corporations. Since Corporations A and B are both controlled by the same person, the partnership, Corporation A and Corporation B are also related persons.