Anti-Flipping Tax - What you Need to Know!

On January 1, 2023 the new residential anti-flipping tax rule came into effect. The intention of the new law is to stabilize housing prices.

A flipped property is defined as a house owned for less than 365 days. Any gain realized is taxable as business income (100% of the profit is taxable) and not as a taxable capital gain (which is taxed on 50% of net profits).

Exceptions are life events including the death of an individual or related party, an addition to a household or breakdown of a relationship, a threat to personal safety, serious illness or disability, work relocation or termination, insolvency or destruction of the home.

Taxpayers who hold properties longer than 12 months with the intention of not satisfying the strict definition of a "flipped property" when selling could still find themselves the subject of a CRA audit. The audit would be based on the current rules, which disallow capital gain treatment if the intention was to flip the home.

A rental home is taxed with capital gains which is taxed on 50% of the net profits.