I am a Beneficiary of BC Real Property – What Taxes Should I Seek Advice On?

When a beneficiary is considering keeping a gift of BC real property from an estate, it is important to obtain advice regarding the various taxes that may apply to the property:

1) Property Transfer Tax

Unless a limited exemption applies, the transfer of legal title to property will be subject to Property Transfer Tax. Unless the Will states otherwise, it is typically the responsibility of the recipient (beneficiary) of the property to pay this tax.

2) Vacancy Taxes

If the property may be vacant for most of any calendar year during ownership, vacancy taxes may apply:

i) Properties in BC

Properties in many jurisdictions in BC that are vacant for most of a calendar year are subject to the Speculation and Vacancy Tax (“SVT”). For 2026 and subsequent years, the SVT rate is set at 1% for Canadian citizens and permanent residents of Canada or 3% for foreign owners and untaxed worldwide earners. This tax applies each and every year the property is vacant.

ii) Properties in Metro Vancouver

In addition, properties located in Metro Vancouver that are vacant for most of a calendar year are subject to the Empty Homes Tax (“EHT”) at a current rate of 3%. This tax applies each and every year the property is vacant.

3) Anti-Property Flipping Rules

Beneficiaries considering selling inherited property in the near future should also be aware of anti-property flipping rules.

i) Provincial Anti-Property Flipping Tax

If the sale occurs within two years of acquisition, the transaction may be subject to provincial anti-property flipping tax. The tax that may be charged is 20% of the net taxable income from the sale if the sale occurs within one year of acquisition. The rate declines if the sale occurs after one year but within two years of acquisition.

ii) Federal Anti-Property Flipping Tax

If the sale occurs within one year of acquisition, the transaction may also be subject to federal anti-property flipping tax rules, which treat gains as business income rather than capital gains, meaning gains are exposed to full taxation at the individual’s graduated tax rate and the principal residence exemption does not apply.

4) Tax on Capital Gains

If the beneficiary plans to sell the property in the future, that sale may be subject to tax on capital gains unless the beneficiary uses the property as their principal residence.

5) Additional Considerations for Non-Canadian Beneficiaries

i) Federal Underused Housing Tax (“UHT”)

The UHT is a 1% annual tax on the value of vacant or underused residential property in Canada. Budget 2025 proposes eliminating the UHT as of 2025, so this tax may not apply in subsequent years.

ii) Federal Prohibition Against Acquiring Canadian Property

Federal legislation currently in effect until January 1, 2027 prohibits non-Canadians from directly or indirectly purchasing residential property in Canada. An exemption exists for acquisitions resulting from death.

6) Land Owner Transparency Register

All property transfers require registration in BC’s Land Owner Transparency Register, disclosing certain information about the property owner, including whether the property is held in trust.