Canadian Anti-Flipping Tax

This new rule applies to flipped residential property dispositions that occur on or after January 1, 2023.

Anyone who sells a property which they owned for less than 12 months will be considered to have “flipped” the house and any profits from the deal will be 100% taxable as business income.

Typically business losses are deductible against non-capital (business) income. But in this case, this rule will only apply to the gaines and individuals will not be able to report business losses or a non-capital loss on the property.

As well, profits arising from an assignment sale would be deemed to be business income if the rights to purchase a property were assigned after having been owned for less than 12 months.

For example: Jon and Sam bought a home for $500,000 and sold it in the first 6 months for $600,000. Their profits of $100,000 would be taxed as full business income. Assuming their tax rate is 25% they would owe the government $25,000.