RESIDENTIAL PROPERTY FLIPPING RULE

Effective January 1st, 2023, the Residential Property Flipping rule is a measure from the Canadian Federal Government to curb property flipping. In times of a heated real estate market, there are many opportunities for investors to purchase homes with the intention of simply selling them months later for a profit (sometimes a hefty profit).

The rule states that any property owner who acquires a property and sells it in under 12 months will be fully taxed on the profit as 100% business income. The flipping tax is intended to significantly slow down the rapid rate of home price escalation from speculative demand, but it is not intended to discourage people from buying homes for long-term rental investment opportunities.

Some exceptions for the flipping tax include death of the owner, employment loss, divorce, or disability. As well, builders will be exempted to ensure it does not hamper new housing supply.

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If you are an owner of a property that may be subject to this tax at the time of your sale, do consult with your accountant to explore your options and consider your position.