British Columbia is seeking to introduce a tax of up to 20% on profits made from selling a residential property within two years of purchase, the western Canadian province announced as part of its 2024 budget on Thursday.

The new property flipping tax, which will include certain exemptions like divorce, death, disability and relocation, among other things, will impose a 20% tax on income earned from properties sold within 365 days of purchase. The tax will decline to zero between 366 and 730 days after the purchase.

The proposal is subject to legislative approval and is separate from federal property flipping rules. The move is aimed at discouraging speculation which can push prices of residential properties quickly higher.

Canada is facing a housing affordability crisis, which has been blamed on an increase in migrants and international students, fueling demand for homes just as rising costs have slowed construction. (Reporting by Utkarsh Shetti in Bengaluru; Editing by Kim Coghill)