Tag Archive: Property

1. British Columbia Proposes New Home Flipping Tax

   22 March 2024 3:02 pm Leave a Comment

   British Columbia Proposes New Home Flipping Tax – Introduction

   In a bid to address the housing supply crisis, British Columbia (BC) has announced plans to introduce a provincial legislation that targets real estate investors with a new home flipping tax.

   Aimed at discouraging quick resale for profit, this tax could significantly affect the dynamics of property transactions in the province.

   Understanding the Home Flipping Tax

   Scheduled for homes sold from 1 January 2025, onwards, the proposed tax specifically targets properties resold within two years of acquisition.

   Here’s a breakdown of how it’s designed to work:

   • The tax applies to residential properties, zones for residential use, and rights to acquire such properties.
   • A 20% tax rate on the profit generated from the sale of these properties within the first year (365 days) post-purchase.
   • The tax rate decreases to zero for sales occurring between 366 to 730 days after purchase, though details on the declining rate mechanism remain unspecified.

   Examples of the Potential Impact

   Example 1

   Mrs Miggins bought a property  on 1 February 2024 and sold on 1 January 1, 2025.

   Mrs Miggins will incur a 20% tax on sale proceeds, as the sale falls within the first 365 days.

   Example C

   Mr Blackadder bought a property on 1 February 2024 and sold on 1 April 2025.

   This falls into the second year post-purchase, attracting a tax rate lower than 20% (though not yet determined.

   Example 3

   Baldrick purchased a property on 1 May  2023 and sold on May 15, 2025.

   Baldrick escapes the tax entirely as the sale falls outside the two-year window.

   Exemptions to the Tax

   Notably, the legislation considers life changes and other circumstances, providing several exemptions to the tax.

   These include cases of divorce, job relocation, and personal safety concerns, among others.

   Additionally, selling one’s primary residence may allow an exclusion of up to $20,000 from taxable income generated from the sale.

   There are also provisions for exemptions in situations enhancing the housing supply or involving construction and development activities.

   Interaction with Canada’s Federal Residential Property Flipping Rule

   It’s crucial to note that the proposed provincial tax will complement, not replace, Canada’s existing Residential Property Flipping Rule.

   This federal rule already treats income from properties sold within 365 days as taxable business income, disallowing capital gains exclusion rates or the Principle Residence Exemption.

   Consequently, properties flipped within the first year post-purchase in B.C. will be subject to both federal business income tax and the provincial flipping tax.

   The Way Forward for Investors and Developers

   The introduction of this new tax undoubtedly represents as potential extra cost of doing business for real estate investors and developers, They will, of course, need to recalibrate their strategies.

   Conclusion – British Columbia Proposes New Home Flipping Tax

   The new tax is clearly designed to  curb speculative buying and support the local housing market.

   However, those who are active investors and developers, will need to consider how these new tax proposals will effect their activities

   Final thoughts – British Columbia Proposes New Home Flipping Tax

   If you have any queries about this article on ‘British Columbia Proposes New Home Flipping Tax’ or Candian tax matters more generally, then please get in touch.

    

2. Israel Real Estate Tax Appeals – Ruling on luxury apartments

   24 November 2022 4:36 pm Leave a Comment

   Introduction

   A new ruling was issued by Judge Yardena Seroussi in respect of an appeal to the Real Estate Tax Appeals Committee. The ruling concerned how luxury apartments should be taxed.

   Israel Real Estate Tax Appeal – The facts of the case

   The Appeals Committee considered whether a land appreciation tax exemption should be granted to several sellers during the sale of a luxury apartment.

   It was claimed by the vendors that they were entitled to the full sum of the maximum exemption for a single apartment prescribed by law.

   However, the Israel Tax Authority held that the exemption applies only to sales of an entire apartment unit and not each share in a multiple ownership arrangement. Accordingly, it calculated its tax on the maximum exemption per seller—not according to their actual portion of ownership.

   The owner of a single apartment is entitled to an exemption from land appreciation tax, up to the amount permitted by law.

   At the moment, this amount stands at ILS 4.6 million.

   It is worth noting in the case that:

   • the apartment sold for in excess of ILS 10 million;
   • the vendors were separate family units (a family unit consists of parents and children under 18 years of age); and
   • each of the two rights-holders in the apartment applied for an exemption at the full maximum sum.

   The decision

   The Israel Tax Authority had decided that the exemption was available in respect of the entire apartment rather than to each individual seller.

   However, the Appeals Committee ruled that the exemption applied to the sale of a single apartment and therefore the exemption should be granted to each separate vendor.

   This was on the basis that the sellers were not part of the same family unit

   Is an appeal likely?

   It seems quite likely the Israel Tax Authority will appeal this ruling.

   If you have any queries about this Israel Real Estate Tax Appeal or Israel tax matters in general, then please do not hesitate to get in touch.

   The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article