Taxes When You Sell a Home in BC (2026)

Updated October 2026

This is general information, not tax advice. Your situation (rental use, a suite, a second property, non-resident status) can change the answer, so talk to an accountant before you sell.

Selling the home you live in: the principal residence exemption

If the home was your principal residence for every year you owned it, the gain on the sale is generally tax-free. You still have to report the sale on your tax return for the year you sell. That means filling in Schedule 3 and designating the home as your principal residence on Form T2091(IND). Forget, and the Canada Revenue Agency can charge a penalty of $100 a month, up to $8,000.

A family can only designate one principal residence per year. If you own a cabin, a rental or a second home too, or you've rented out part of the house, get advice on how the exemption applies.

Capital gains inclusion rate: the increase proposed in 2024 was cancelled in March 2025, so taxable capital gains are still one-half of the gain.

BC Home Flipping Tax

Since January 1, 2025, BC charges a tax on profits from selling a home within 730 days (about two years) of buying it.

Sold within 365 days: 20% of the taxable profit.
Sold between 366 and 729 days: the rate drops gradually to zero.
Owned 730 days or more: no flipping tax.

There are exemptions for life events such as separation, a death in the family, disability, illness, a job relocation, or a household change. There's also a deduction of up to $20,000 if the home was your principal residence for at least 365 days. You file a separate return within 90 days of the sale. See the BC Home Flipping Tax pages.

Speculation and Vacancy Tax in Vernon and Coldstream

The City of Vernon (except Predator Ridge) and the District of Coldstream have been in BC's Speculation and Vacancy Tax area since 2025. Most owners who live in their home are exempt but must file a declaration each year. The tax applies to homes left empty or used as vacation homes by owners who don't qualify for an exemption. For 2026 the rate is 1% of assessed value for Canadian citizens and permanent residents. It is higher for foreign owners.

If you've been paying the tax on a second home, selling may be the simplest way to stop. How the tax works.

GST on a home sale

Most resale homes in BC sell without GST, but it can apply to a new or substantially renovated home, a condo used for nightly or rental-pool rentals, or property used for a business. When it applies, it's 5% of the price. See Does GST apply when you sell a home in BC?

Non-resident sellers

If you're not a resident of Canada for tax purposes, extra steps apply. You must notify the CRA within 10 days of the sale using Form T2062. Without a clearance certificate, the buyer's lawyer must hold back a portion of the price, usually 25%, until the CRA is satisfied. Start early; certificates can take time. CRA guidance.

Selling an Okanagan home from the UK: costs to know · 2:30

Frequently asked questions

Do I pay capital gains tax when I sell my house in BC?

Not if it was your principal residence for every year you owned it. You still need to report the sale and designate it on your tax return.

What is the BC Home Flipping Tax?

A provincial tax on profits from homes sold within 730 days of purchase, in effect since January 1, 2025. The rate is up to 20% and falls to zero at two years, with exemptions for certain life changes.

Is Vernon in the Speculation and Vacancy Tax area?

Yes. The City of Vernon, except Predator Ridge, and the District of Coldstream have been included since 2025. Most owner-occupiers are exempt but must file an annual declaration.

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Sources: CRA, reporting the sale of your principal residence; Capital gains increase cancelled, March 2025; BC Home Flipping Tax; Speculation and Vacancy Tax rates.

Common questions

Answered by Sean Phillips, REALTOR®, Coldwell Banker Executives Realty. Updated October 2026.

How much is the BC Home Flipping Tax if I sell my house within two years?

The BC Home Flipping Tax is 20% of the taxable profit on a home sold within 365 days of buying, falling to zero at 730 days. It has applied since January 1, 2025, and between 366 and 729 days the rate drops gradually. Exemptions cover life events such as separation, a death in the family, disability, illness, a job relocation or a household change. A deduction of up to $20,000 applies if the home was your principal residence for at least 365 days. You file a separate return within 90 days of the sale. Confirm your situation with the province or an accountant.

Do I have to report the sale of my home on my tax return in BC if the gain is tax-free?

Yes. In BC, even when the gain is tax-free, you must report the sale of your principal residence on your tax return for the year you sell. That means filling in Schedule 3 and designating the home as your principal residence on Form T2091(IND). If you forget, the Canada Revenue Agency can charge a penalty of $100 a month, up to $8,000. A family can designate only one principal residence per year. This is general information, so check with an accountant or the CRA about your situation.

Is Vernon in BC's Speculation and Vacancy Tax area, and what is the rate?

Yes. The City of Vernon, except Predator Ridge, and the District of Coldstream have been in BC's Speculation and Vacancy Tax area since 2025. Most owners who live in their home are exempt but must file a declaration each year. It applies to empty homes and vacation homes whose owners don't qualify for an exemption. For 2026 the rate is 1% of assessed value for Canadian citizens and permanent residents, and higher for foreign owners. If you pay it on a second home, selling may be the simplest way to stop. Confirm with the province or an accountant.

How do I avoid capital gains tax in Canada when selling a house?

Claim the principal residence exemption: a Vernon, BC home that was solely your principal residence every year you owned it is generally tax-free when sold. You must report the sale and designation on Schedule 3 and Form T2091(IND) to get the exemption, and only one home per family unit can be designated per year (as of October 2026).

There are exceptions. Profit on a home owned under 365 days is generally taxed as business income with no exemption, unless certain life events apply. BC's separate home flipping tax of up to 20% can also apply to homes owned under 730 days (as of October 2026). Confirm your situation with the CRA's principal residence guide or an accountant.

Can I sell my house to my son for $1 in Canada?

Yes, you can sell your house to your son for $1 in BC, but the CRA treats the sale as if you received fair market value.

Income tax: your gain is worked out using fair market value, not the $1. It's usually tax-free if the home was solely your principal residence every year you owned it, but you still have to report the sale on Schedule 3 and Form T2091(IND).
Property transfer tax: this is also based on fair market value. Your son may not have to pay it at all if the home was your principal residence or his for six straight months right before the transfer, and he's a Canadian citizen or permanent resident.

These are the rules as of October 2026. Before transferring a Vernon home, confirm the details with an accountant or lawyer and check the CRA Capital Gains guide (T4037).