Canada’s new anti-flipping tax: what we know so far


Canada has introduced a new "anti-flipping" tax.

House flipping is a legal venture, and many people undertake house flipping as a money-making endeavour.  In fact, some folks flip houses as their main source of income.

"Flipping a house" means purchasing a home and selling it again within a short period of time for profit. Typically people take the time and effort to upgrade elements of the property that will increase its purchase price before re-selling it.

Canada's federal budget has introduced a new anti-flipping tax that aims to have the profit of these quick-turnaroud sales be reported business income - and taxed accordingly.

This new tax has emerged due to concerns from the Department of Finance that profits from property flips were not being reported (or taxed) correctly.  Sometimes the profits are being reported as tax-efficient capital gains, while other times the principal residence exemption is claimed in an attempt to shelter the profits from tax.

This new anti-flipping tax could help reduce speculative demand and help to cool the excessive price growth we’ve seen in the past few years in the Canadian real estate market.

So here's what we know so far about the new anti-flipping tax in Canada:

  • In effect as of January 1, 2023.
  • Applies to dispositions of residential property (including rental property) that are held for less than 1 year.
  • The realized profit from flipping property is 100% taxable as business income and does not qualify for the 50% capital gains rate or the principal residence exemption.
  • Exceptions include a certain number of life events including the death of the individual or a related party, an addition to a household, breakdown of a relationship, a threat to personal safety, serious illness or disability, work relocation or termination, insolvency or destruction or expropriation of the home.

Non-compliance will get you in hot water with the CRA.  If this tax regulation affects you -- or you think it might affect you -- you should speak with a qualified accountant to determine specific implications, if any, to your situation.