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