If you have held title to a property for less than 12 months please read:
Just a reminder of Bill C-32, the sale of residential property that an owner has held for fewer than 12 months will be considered flipping and the profits from the sale will be taxed as business income. It applies to residential properties (including rental properties) sold on or after January 1, 2023.
More details here What residential property owners need to know about Canada’s new anti-flipping rules
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I have summarized the most important facts below:
What are the exceptions?
Exceptions to the new anti-flipping measure are available to individuals who sell their residential property within 12 months. These exceptions include:
- Death
- Addition to household (including birth, adoption, or of elderly parent)
- Breakdown of marriage or common-law partnership
- Threat to personal safety
- Serious illness or disability
- Work relocation (new home must be at least 40 kilometers closer to new work location)
- Involuntary termination of employment
- Insolvency
- Involuntary disposition (e.g., due to natural disaster)
Caution: Such exceptions are helpful to reduce the tax impact of the rules for many homeowners, but it may be necessary to produce documentation to support the exception, and many other situations will fall outside of the exceptions. You MUST check and verify with your Accountant or Tax lawyer as your Realtor will only have what info is available online and each situation has its own uniqueness.
Check if your sale will be impacted by the new tax
Before you put your property on the market, review the new measures enacted by the Federal Government to evaluate whether they will affect your sale. The rules may also impact decision-making for purchases of residential real estate, whether it be for personal use or investment purposes.
New Construction and HST
Most condo and home developers already factor the HST rebate into their prices, so it's built-in. If you sell the property before the 12 months are up, CRA will require that you pay back the HST Rebate in full. Ensure you review HST tax questions with your Accountant or Tax Lawyer.
Link to a helpful Articles:
https://www.grantthornton.ca/insights/flipping-a-house-your-gain-could-be-fully-taxable-under-proposed-new-rule/
https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/residential-property-flipping-rule.html
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| Thinking of investing, selling or leasing in the GTA? Contact Michael Kelly today for all of your real estate needs! |
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Michael Kelly, Sales Representative
Sutton Group Realty Systems, Brokerage
Independently Owned and Operated
mobile: 647-408-5226
phone: 905-896-3333
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