CRA indicates that the BC Home Flipping Tax cannot be deducted in computing gain on the flip

In general, the “BC Home Flipping Tax” is imposed where a residential property located in B.C. that was owned for fewer than 730 days is disposed of for proceeds that exceed the cost of acquiring the property and other allowed costs.

CRA indicated that if the disposition occurred on income account, the tax did not qualify by virtue of s. 18(1)(a) for deduction in computing the profit given inter alia that “the expense appears to be incurred only if there is profit” and it “is not incurred for making the disposition but is rather incurred as a consequence of making the disposition.”

Similarly, if the disposition occurred on capital account (keeping in mind the narrowing of this field by virtue of s. 12(13)), it did not qualify as a disposition expense under s. 40(1)(a)(i) given inter alia that it “is incurred not in making the disposition, but as a consequence of making the disposition” and, therefore, is not “incurred for the purpose of making the disposition.”

Neal Armstrong. Summaries of 12 June 2025 External T.I. 2025-1051441E5 under s. 18(1)(a) – income-producing purpose and s. 40(1)(a)(i).