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Published | Categories : Income tax - businesses, Income tax - individuals

New Rule on Flipping a Property (Home or Rental Property)

Since January 1, 2023, the profit from flipping residential property (including rental property or a purchase option) you held for fewer than 365 consecutive days is fully taxable as business income. As a result, you are not eligible for the 50% capital gains inclusion rate or the principal residence exemption.

Situations when the rule does not apply

This rule does not apply if the property is sold due to one or more of the following life events:

  • You or a related person dies.
  • A related person joins your household (birth of child, adoption, or care of elderly parent) or you join a related person's household.
  • Your marriage or common-law partnership breaks down (if you were living apart from your spouse for at least 90 days prior to the property's sale).  
  • Your personal safety or a related person's personal safety is threatened (e.g. domestic violence).
  • You or a related person has a disability or serious illness.
  • You or your spouse or common-law partner works at a new location and your new residence is at least 40 km closer to the new work location.
  • Your or your spouse's or common-law partner's employment is involuntarily terminated.
  • You are insolvent.
  • Your property is destroyed (e.g. natural disaster) or expropriated.

Even if the new rule does not apply because of the above events or because you held the property for fewer than 365 consecutive days, the profit may still be fully taxable if it is determined to be business income or a capital gain.

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